OJK grants special credit treatment to earthquake-hit borrowers in 8 NTT regencies

Implications

Facts

Decision: OJK announced on 2 October that it applies special treatment under POJK 19/2022 to credit and financing for debtors affected by the earthquake in East Nusa Tenggara (NTT). ¹ The treatment runs for three years from 28 September 2026 and covers 8 regencies: Ende, Flores Timur, Manggarai, Manggarai Barat, Manggarai Timur, Nagekeo, Ngada and Sikka. ²

Measures: asset quality of loans up to IDR 10 bn may be assessed only on repayment timeliness; ³ restructured credit is classified as current; and new financing to affected debtors is assessed separately from existing exposures rather than under a single-obligor approach.

Scope: banks, finance companies, venture capital firms, peer-to-peer lenders, pawn companies and other financial service providers. The release gives no figures on affected debtors or outstanding credit in the regencies.

Analysis

Inclusion of non-banks: the relief extends to pindar and pawn lenders, the channels many low-income households in eastern Indonesia use. Nationally, the pindar 90-day arrears ratio (TWP90) rose from 4.32% in July ⁴ to 4.73% in August, ⁵ so lenders gain room to restructure without immediate reclassification at a time when arrears were already rising.

Time series: pindar outstanding growth had already slowed to 22.07% in August ⁶ as platforms tightened approvals; restructuring capacity in the affected regencies will compete with that tighter risk appetite.

Counterpoints and uncertainties

Payment-based grading and current classification of restructured loans can delay recognition of losses; if local economic recovery is slow, problems may surface when the treatment ends. The release does not say how large the affected loan base is, so the impact on any lender's ratios is uncertain.