December 14, 2011
ank Indonesia has issued a regulation allowing lenders to outsource debt collectors, it announced on Tuesday, drawing the ire of lawmakers who had wanted the practice banned.
Following the death of a Citibank Indonesia customer allegedly at the hands of hired debt collectors, the House of Representatives demanded in April that the central bank ban lenders from outsourcing debt collection.
The central bank’s Web site on Tuesday said the regulation had been issued last Friday but was only announced on Tuesday.
Irwan Lubis, deputy director of banking research and regulation at Bank Indonesia, said the argument behind the regulation was that debt collecting services were “not the core business of banks.”
Outsourcing is only allowed in cases involving doubtful loans or bad debts, he said.
A doubtful loan means full repayment is questionable and a customer is at least 180 days late in paying installment. Bad debts refer to loans on which payments have not been received for at least 360 days.
“Collecting non-performing loans is not a core business,” Irwan said. “NPLs currently are not big and do not disturb the operations of lenders. Most importantly, what can be outsourced is just the collection service.”
He said the central bank would establish strict guidelines for the selection of the third parties allowed to collect debts from bank customers.
“Banks must also review the business licenses, reputations and track records of the third parties,” he said.
Many banks operating in the country, including foreign lenders, outsource debt collection services to trim operational costs.
Citibank Indonesia, the largest foreign bank in the country, recorded a 27 percent drop in profit from January to September as its operating costs increased, partly as a result of having to hire around 1,400 debt collectors over the past several months due to a ban on outsourcing.
After a Citibank credit card customer died while being questioned by debt collectors, Bank Indonesia banned Citibank from issuing new credit cards for two years and from outsourcing its debt collection.
Harry Azhar Azis, deputy chairman of House Commission XI for finance and banking, said the House would summon the central bank’s board of governors over the new regulation.
“We will question BI over this decision. We are sticking to our previous decision, which is not allowing banks to outsource debt collecting services,” Harry told the Jakarta Globe.
The central bank regulation forbids outsourcing any job that is directly related to banking, such as account officer, credit analyst, customer service and teller positions.
Some non-core jobs, such as positions in call centers, telemarketing, security and cleaning services are allowed to be outsourced, Irwan said.
“Jobs that can be outsourced are those that are less risky [for a third party], do not require high qualifications in the banking sector and do not involve making decisions that could affect a bank’s operations,” he said.
According to central bank data, by the end of September, there were 14.3 million bank credit cards but the total value of monthly transactions was not immediately available.
(hmm, better not default on your creditcard payments good people, otherwise you'll get the treatment Al Capone style!
(also from the JG)
di 13 dec 2011 - 22:58