Sustainable Credit Disbursement in Indonesia Continues to Rise

Finance

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Adi Ahdiat 04/07/2024 16:31 WIB

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According to the Financial Services Authority (OJK) report, the disbursement of bank credit to the sustainable sector in Indonesia has continued to increase in recent years.

Value of Bank Credit Channeling to the Sustainable Sector in Indonesia (2019-2022)

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Value of Bank Credit Channeling to the Sustainable Sector in Indonesia (2019-2022)

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Disbursement of bank credit to the sustainable sector in Indonesia has continued to increase in recent years.

This was stated by Dian Ediana Rae, Executive Head of Banking Supervision at the Financial Services Authority (OJK).

According to Dian, the total value of sustainable credit or financing in 2019 had reached Rp927 trillion.

This figure gradually increased to Rp1,571 trillion in 2022.

However, of this amount, credit channeled to the new and renewable energy (NRE) sector was only Rp42.6 trillion or 2.8%.

Dian stated that the banking industry still faces various challenges in channeling credit to the NRE sector.

Examples of these challenges include limited data on NRE and limited experience within the banking industry in assessing credit risk related to such projects.

NRE projects are also considered to require long-term financing, and not all banks have sufficient liquidity.

"Currently, the OJK is continuously striving to encourage the banking industry to gradually begin overcoming these challenges through capacity building to improve banking understanding of financing risks in NRE projects," said Dian, as reported by *Antara* (22/2/2024).

"By overcoming these challenges, it is hoped that the banking industry can be more active in channeling credit to the NRE sector and accelerate the transition towards clean and sustainable energy," she added.

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."