Bank Indonesia (BI) decided to relaxes the macro-prudential intermediation and loan to value (LTV) ratios to strengthening banking intermediary function. The new policy will be implemented starting Dec. 2, said the central bank on Wednesday (Nov 27).
The new rules contained in BI Regulation (PBI) No.21/12/PBI/2019 concerning 0n Macro-prudential Intermediation Ratio and Macro-prudential Liquidity Buffer for Conventional Commercial Banks, Sharia Commercial Banks, and Sharia Business Unit.
Based on the official statement, BI said, the macro-prudential intermediation ratio (MIR) rule has been replaced with the loan to deposits ratio that only included deposits in the component. In the newest regulation, the Bank adding loan or financing component received by the bank as a bank funding sources in the MIR calculation.
While, the new LTV ratio has been regulate through PBI No. 21/13/PBI/2019 regarding LTV ratio for housing loan and down payment for automotive. The central bank lowering the ratio for housing loan by 5 percent and adds by 5 percent for green housing loan. The rule also applies for second housing loan and pivot house.
Beside giving relaxation for housing loan, BI also relaxes down payment rule for automotive loan by 5 to 10 percent. Similar with housing loan, the rule will be added by 5 percent to green automotive loan.
The rule is the continuation of BI policies, which hold BI-7 days reverse repo rate (BI-7DRR) at 5 percent, deposit facility rate 4.25 percent and lending facility rate 5.75 percent. The Bank wants to boost the economy by using macro-prudential policy including relaxed the reserve requirement for commercial and sharia banks by 50 bps to 5.5 percent and 4 percent, respectively.
