No.17/51/DKom
Bank Indonesia relaxed macroprudential policy
by raising the loan-to-value (LTV) ratio, or financing-to-value (FTV) ratio,
for property loans and reduced the downpayment on automotive loans. The
policy was made in an effort to maintain the momentum of economic growth.
The salient points of the new policy include
raising the LTV ratio on property credit and the FTV on sharia property credit.
The LTV/FTV ratio was increased 10% for landed houses, apartments as well as
home stores/home offices from 21m2 to 70m2 and
above. Meanwhile, the smaller downpayment
affects (sharia) automotive loans for two-wheelers as well as three-wheelers
and more. The downpayment has been reduced to 5%. Furthermore, Bank Indonesia
also regulated the procedures and requirements for banks wishing to apply the
LTV/FTV ratio and downpayments in accordance with the new policy.
In addition to relaxing LTV/FTV policy and smaller
downpayments, the guarantee a developer must provide to the bank to obtain
credit was also loosened through an indent mechanism in the form of fixed
assets, moveable assets, bank guarantees, a standby letter of credit and/or
deposited funds and/or an escrow account at the lending bank. The value of the
guarantee is the difference between the loan/financing commitment and the
credit disbursed by the bank. Meanwhile, third-party guarantees are accepted in
the form of a corporate guarantee, standby letter of credit or bank guarantee.
In general, the policies were relaxed because
of interconnectedness between property credit and automotive loans and their
significant effect on other sectors. Ultimately, the knock-on effect of looser
credit requirements will stimulate economic growth and expand the
intermediation function in terms of extending credit to the public. The new
requirements are contained within Bank Indonesia Regulation (PBI) No.
17/10/PBI/2015 concerning the Loan-to-Value (LTV) ratio or Financing-to-Value
(FTV) ratio of Property Credit or Financing and Downpayments on Automotive
Loans or Financing, effective from 18th June 2015.
Bank Indonesia also determined that the
application of the new LTV/FTV policy and downpayments would be pegged to bank
performance in terms of managing non-performing loans (NPL), or non-performing
financing (NPF), in order to mitigate risk and avoid escalating potential
credit/financing risk. Consequently,
credit will be extended to a broader customer base while adhering to prudential
principles.
A detailed breakdown of the new LTV/FTV and
downpayment policy is presented as follows:
Table
1. LTV/FTV Policy for Conventional and Sharia Property Credit (Murabahah and
Istishna)
|
Property Type (m2)
|
1st Credit Facility
|
2nd Credit Facility
|
3rd Credit Facility
|
|
Before
|
After
|
Before
|
After
|
Before
|
After
|
|
Landed
House
|
|
> 70
|
70%
|
80%
|
60%
|
70%
|
50%
|
60%
|
|
22-70
|
-
|
-
|
70%
|
80%
|
60%
|
70%
|
|
Up to 21
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Apartment
|
|
> 70
|
70%
|
80%
|
60%
|
70%
|
50%
|
60%
|
|
22-70
|
80%
|
90%
|
70%
|
80%
|
60%
|
70%
|
|
Up to 21
|
-
|
-
|
70%
|
80%
|
60%
|
70%
|
|
Home
Store/Home Office
|
|
|
-
|
-
|
70%
|
80%
|
60%
|
70%
|
Table
2. LTV/FTV Policy for Sharia Property Credit (MMQ and IMBT)
|
Property Type (m2)
|
1st Credit Facility
|
2nd Credit Facility
|
3rd Credit Facility
|
|
Before
|
After
|
Before
|
After
|
Before
|
After
|
|
Landed
House
|
|
> 70
|
80%
|
85%
|
70%
|
75%
|
60%
|
65%
|
|
22-70
|
-
|
-
|
80%
|
80%
|
70%
|
70%
|
|
Up to 21
|
-
|
-
|
-
|
-
|
-
|
|
|
Apartment
|
|
> 70
|
80%
|
85%
|
70%
|
75%
|
60%
|
65%
|
|
22-70
|
90%
|
90%
|
80%
|
80%
|
70%
|
70%
|
|
Up to 21
|
-
|
-
|
80%
|
80%
|
70%
|
70%
|
|
Home
Store/Home Office
|
|
|
-
|
-
|
80%
|
80%
|
70%
|
70%
|
Table
3. Downpayments on Automotive Loans
|
Vehicle Type
|
Conventional Banks and Islamic Banks
|
|
Before
|
After
|
|
Two-wheelers
|
25%
|
20%
|
|
Three-wheelers
or non-productive
|
30%
|
25%
|
|
Three-wheelers
or productive
|
20%
|
20%
|
Jakarta, 23 June 2015
Communication Department
Tirta Segara
Executive Director
