Financing from the Capital Market Cross The Role of Banking

By : Herry Barus And Aldo Bella Putra | Friday, December 29 2017 - 23:00 IWST

Gubernur BI Agus Martowardojo (Foto Rizki Meirino)
Gubernur BI Agus Martowardojo (Foto Rizki Meirino)

INDUSTRY.co.id - Jakarta - The contribution of financing from banks to the domestic economy is lower compared to the capital market contribution, as indicated by the non-bank instrument financing portfolio that grew 24.1 percent annually (yoy), while credit grew by 7.47 percent (yoy) until November 2017.

Governor of Bank Indonesia (BI) Agus Martowardojo said here on Thursday (28/12/2017) that the growth of financing through capital market instruments reached Rp276.5 trillion during January to November 2017, or in contrast to the growth of bank credit until the end of the year failed to grow double digits.

The Central Bank estimates that bank credit growth will only reach eight percent (yoy) by the end of 2017.

"In terms of loan portfolio, we see that there are still challenges, but financing through the capital market as of November 2017 is Rp276.5 trillion or up 24 percent compared to November 2016," said Agus.

Agus detailing the most widely used financing instruments in the capital market is bonds with absorption of funds reached Rp162, 7 trillion. Then stock instruments amounted to Rp73.8 trillion and medium term notes, certificates of deposit, and "Promissory Notes" which cumulatively amounted to Rp40 trillion.

The Central Bank previously explained that the growth of bank credit is still slowing is the demand for sluggish credit from corporate customers and individuals. This is evident from the excess liquidity of banks deposited in BI accounts and also the high level of unused bank loans (undisbursed loans).

According to data from the Financial Services Authority (OJK), as of the third quarter of 2017, "idle" banking credits reached Rp 1,400 trillion, up 9.62 percent year-on-year compared to 2016. Other causes of the credit crunch are a banking attitude that is still cautious to channel credit for the improvement of assets.

Chairman DK OJK Wimboh Santoso as reported by Antara previously said there is actually a positive impact of high financing from the capital market than banks. This is because it represents the long-term financing instruments of the financial services industry, especially for infrastructure projects that have become more diverse.

Thus, the financing of the economy depends not only on bank loans.

However, Wimboh expects banks to continue to optimize their intermediary function by channeling credit to specific sectors and segments.

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