Indonesia: Consumer Credit Interest Highly Affected by BI Rate, LPS Says

• Jun 18, 2018

TEMPO.CO, Jakarta – Chief of Commisioners of the Indonesia Deposit Insurance Corporation (LPS) Halim Alamsyah said that interest rate for consumer credit will be the most affected by the increase of Bank Indonesia 7 Day Repo Rate (7DRR). The increase in 7DRR will increase the consumer credit interest rate.

“So if there is an interest rate increase, consumer credit will be the first affected, because it has the highest risk,” Halim said on Saturday, June 16, 2018.

Halim said that currently, the highest credit interest rate is the interest rate for consumer credit. This condition is caused by high demand.

Halim asserted that consumer credit has higher risks. Halim explained that such high risk is caused by the fact that consumption credit often requires minimum collateral, some even does not require collaterals.

“That is why banks put the risks [of consumption credit] into the component in calculating credit interest rate,” Halim explained.

Source: https://en.tempo.co/read/news/2018/06/16/056919281/Consumer-Credit-Interest-Highly-Affected-by-BI-Rate-LPS-Says