Indonesia's financial regulator is considering imposing a limit on the microlending interest rate to reduce the cost of funds for small and medium businesses in Southeast Asia's largest economy, a spokesman said on Monday.
Indonesia's financial services authority aims to bring down the average interest rate from around 20 percent currently, but has not decided on the new limit.
"Our main aim is to develop the small and medium businesses because our view is that the microlending interest rate is too high. That hampers the activities of these small and medium businesses," the spokesman said by telephone.
Indonesia's economy unexpectedly failed to gain traction in the second quarter due to weak investment and exports, underscoring problems the new president will need to deal with to get the country's growth rate back up.
Lenders such as PT Bank Rakyat Indonesia Tbk, PT Bank Mandiri Tbk, PT Bank Danamon Indonesia Tbk and PT Bank Pembangunan Daerah Jawa Barat dan Banten Tbk are likely to come under selling pressure if they have to significantly cut their microlending interest rates, Maybank Kim Eng said in a report.
Around 50 percent of the interest incomes of Bank Rakyat and Bank Mandiri come from their microsegment, the brokerage added.
