Central Banks

Indonesia central bank relaxes lending rules alongside rate cut

The Bank Indonesia headquarters stand in Jakarta, Indonesia
Dimas Ardian | Bloomberg | Getty Images

Indonesia's central bank said on Thursday it would relax some lending rules, effective later this year, to provide further support to economic growth after announcing its third rate cut since July.

Bank Indonesia (BI) will broaden the definition of deposits in its macroprudential intermediation ratio, which is its preferred way of regulating banks' loan-to-deposit ratio, Governor Perry Warjiyo said.

BI will also relax rules on loan-to-value ratios for property and vehicle loans, allowing smaller downpayment of up to 10 percentage points in typical cases and 5 percentage points for low emission vehicles.

BI, which also cut its benchmark interest rate by 25 basis points to 5.25% on Thursday, sees loan growth accelerating to 11%-13% in 2020, from the 10%-12% target range this year.