Indonesia eyes reinstating Covid-era bad debt policy

JAKARTA — Indonesia's financial regulator is studying a government proposal to reinstate a Covid-era loan restructuring incentive, one of its commissioners said, as some bankers cautioned about the potential moral hazard created by relaxing prudential rules.

President Joko Widodo this week proposed reinstating a policy which allowed banks to avoid making provisions for bad loans to help shore up liquidity in the banking system as investors pull funds out of Indonesia and other emerging markets.