Capital Regulation

The government has also asked the RBI to consider implementing a months-long moratorium on the debt repayments and to relax NPA classification norms.

Given that regulatory action is driving debt rescheduling, lenders need not simply assume lifetime expected credit losses under MFRS 9 are relevant for all receivables.

Besides an NSFR relaxation, banks can drawdown on the capital conservation buffer, operate below 100% LCR, and utilise regulatory reserves they have set aside.

The debt moratorium will be implemented for personal loans, credit card debt, SME loans, among other sectors. Financial institutions are also directed to provide new working capital loans.

OJK will extend loan payment deadlines for MSMEs by up to one year and prohibit the use of debt collection services, while Bank Indonesia asks banks to lower lending rates.

The RBNZ will reduce the required minimum CFR from 75% to 50% to help banks make credit available for mortgage holidays and business finance guarantees.

Banks can avoid reclassifying borrowers as defaulters until 30 June, allowing them to avoid extra provisioning and offer businesses new loans.

The 200 basis point cut will release up to 200bn pesos in bank liquidity. Lenders are encouraged to continue lending and to offer debt relief to borrowers.

Credit card balances should be converted to term loans. Banks will have to maintain a minimum NSFR of 80% instead of 100% from 1 July.

The 100-trillion-won package includes funding for businesses, two market stabilisation funds, support for new bond issuance and liquidity support for brokerage firms.