Jakarta – Indonesia's central bank may ease regulations covering non-performing loans in order to make it easier for banks to increase their lending, a central bank deputy governor said this week, part of wider measure to spur growth.

Muliaman Hadad declined to give details of the possible revisions, as these are still being discussed by Bank Indonesia.

However, he said that the revisions would probably affect ways of calculating commercial banks' risk-weighted assets, and would take into account borrowers' business prospects and ability to service debt.

"I expect there will be more room for banks to extend loans," Hadad said. "We cannot just sit on our hands, we have to make some efforts," he told reporters on Wednesday, adding that the revisions are due to be announced on Jan. 30.

The authorities have taken several steps to spur growth in Southeast Asia's biggest economy amid a global slowdown.

The central bank cut its key interest rate by 50 basis points to 8.75 percent on Jan. 7, and has said it may cut rates again to spur growth. But commercial banks have been slow to follow suit.

Bank Indonesia forecast economic growth this year would slow to between 4 and 5 percent from an estimated 6.2 percent in 2008, amid slowing global demand for Indonesia's commodities and minerals.

The central bank had forecast loan growth to slow to 18-20 percent this year from an estimated 30 percent in 2008. As of November 2008, non-performing loans stood at 4 percent, the central bank data showed.