REPUBLIKA.CO.ID, JAKARTA -- The Financial Services Authority (OJK) has forecast that the banking industry's non-performing loans (NPL) ratio will decline along with the conclusion of the restructuring and consolidation process at the end of 2017.
"As the commodity prices declined, the NPL increased," OJK Chief Commissioner Wimboh Santoso stated at the Bank Indonesia compound here on Friday.
Most NPLs are in the form of commercial credits, the former chief commissioner of state lender Bank Mandiri noted.
"Banks reviewed their businesses, as most of the NPLs were found in commercial credits. Some of them have been restructured, while others have been written off. This is called the restructuring and consolidation process, he explained.
The restructuring process is expected to be completed at the end of 2017, he remarked.
The restructuring chiefly deals with the information and technology (IT) sector in order to supervise debtors, he stated.
"IT is strengthened to monitor debtors more accurately. Thus, if they have problems, they could be monitored from now on," he pointed out.
As of June 2017, the banking industry's gross and net NPL ratios were recorded at 3.0 percent and 4.1 percent respectively. The gross NPL ratio has declined from 3.1 percent as of May 2016.
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