Indonesian gov't asks banks to cut lending rate for small business

Indonesian Industry Minister MS Hidayat on Monday said that he expected banks to reduce loan interest rate for small and medium enterprises, as an effort to boost business at the sector.

The expectation comes as the government has vowed to boost the real sectors in the country with over 230 million populations to accelerate economic growth in the southeast Asia largest economy.

The country's central bank had imposed a tight monetary policy by cutting 300 basis points on its benchmark interest rate for a ninth straight months since December 2009 to speed up credit distribution.

Hidayat said that the bank should lower the rate from the current level of 14.5 percent to 12 percent.

The minister also asked to ease the rules for the business by deleting the asset guaranty requirement for borrowing money.

The government has targeted to distribute over 20 trillion rupiah (some 2.1 billion U.S. dollars) credits for the small and medium business sector.　

Source: Xinhua