The rule is expected to reduce COVID-19’s economic impacts on banks due to debtors’ slumping performance that could increase the risks of bad loans and disrupt the banks’ performances and the country’s financial stability, the OJK said added.The relaxations are also applicable for small and medium enterprises (SMEs), as well as the government’s microcredit program (KUR) recipients.In addition, the OJK is also mulling a stimulus for multifinance companies to delay payments related to channeling and joint financing schemes with banks. Multifinance companies would also be allowed to restructure their debts with the same restructuring method used in the banking industry, especially for financing using the executing method.Read also: Garuda, ‘severely affected’ by COVID-19, may restructure bonds: MinisterIn the executing method, a loan disbursed by a bank to a multifinance company will then be channeled to individuals or businesses with its account receivables as collateral for the loan.“We are [expanding the relaxations] not just for banks, but also for multifinance firms so that the business sector can go about their businesses despite the COVID-19 pandemic,” OJK chairman Wimboh Santoso said in a separate statement. Topics : The Financial Services Authority (OJK) has launched new stimulus to control the banking and non-banking industries’ bad loans ratio and ease loan repayment amid the COVID-19 pandemic that is expected to hit businesses.The first stimulus, regulated in a new OJK rule issued on Thursday, relaxes debt quality assessment and restructuring requirements for debtors that are hit hard by the pneumonia-like disease spread.Banks now only assess the quality of a loan worth up to Rp 10 billion (US$ 594,282) based on a debtor’s timeliness in paying the loan’s principal and interest. Previously, the banks also assessed the debtor’s business prospects and financial condition. Banks are also allowed to declare a good loan despite declining quality due to the pandemic and to not categorize it as a non-performing loan (NPL).“Banks will also be more flexible in controlling bad loans and allow the former to continue giving new loans to their debtors,” the OJK wrote in a statement on Thursday, adding that the rule is being implemented from March 13 to March 31, 2021.Read also: Government allocates $8b to stimulate economy as businesses, workers suffer from COVID-19 impactsDebtors who restructure their loans will get improvement in their loan quality after the process and banks can implement such a policy for any loan amount.