BRI Erases Rp5 Trillion Credit Book, What Does It Mean?

BRI Erases Rp5 Trillion Credit Book, What Does It Mean?

JAKARTA – Until May 2020, PT Bank Rakyat Indonesia (Persero) Tbk. stated that they had written off or deleted credit books worth Rp5 trillion.

BRI Finance Director Haru Koesmahargyo said that despite the write off , the company will continue to seek credit repayments by billing.

A number of other efforts the company can do to resolve the problem loans are by accelerating the sale of collateral through an auction or by working with property agents.

Actually, what does it mean to delete books or write offs in the banking industry?

OJK-Pedia on the official website of the Financial Services Authority (OJK) explained that the write off of books conducted by banks is bad debts that can not be collected anymore written off from the balance sheet ( on-balance sheet ) and recorded in an administrative account ( off-balance sheet ).

Write-off of bad loans is charged to the allowance for possible losses on earning assets. Even though the non-performing loan has been written off, it is only administrative in nature, so that debtors are still being collected.

The proceeds of the principal bill are recorded in the allowance account for the write off of productive assets, while the interest bill is recorded as other bank income ( write off ).

Meanwhile, the Finance Director of PT Bank Negara Indonesia (Persero) Tbk. Sigit Prastowo explained the book write-off process was the final step after various efforts to improve and save credit quality were carried out.

Remove the book after the assessment of the debtor is deemed to have no business prospects.

“The book write-off process is carried out with the principle of prudence and in accordance with proper governance. After the book write-offs are carried out, BNI will continue to seek credit repayments through the receipt of its recovery ,” Sigit said.