Banks Set New Interest Rates
Wednesday, 24 September, 2008 | 11:50 WIB

TEMPO Interactive, Jakarta:Bank managers in Indonesia have agreed on a ceiling for interest rates, effective Monday last week. The ceiling is calculated at 12.5 percent for three-month deposits, and 12 percent for 6 or 12-month deposits.

The National Banking Association chairman, Sigit Pramono, told Tempo yesterday that the step was taken to “control banks from going wild”.

He said the competition between banks to obtain capita in order to maintain liquidity is getting more difficult and unhealthy, because it can cause an imbalance between capital funds and loan distribution.

He said the increase in the Bank Indonesia rate, was one of the reasons why banks are raising their own interest rates. Pressures caused by inflation and worsening bank liquidity problems helped boost savings.

Capital from third parties remains minimal. Loans disbursed have reached Rp 1.148.4 trillion, while bank capital stands at Rp 1.155.4 trillion. “It’s getting more difficult for banks to disburse their loans because of the low inflow of capital from third parties,” Sigit said.

Bank Indonesia deputy-governor, Budi Rochadi confirmed the agreement between banks, saying, ”Bank Indonesia does not have the right to manage market interest rates. That’s up to the banks.”

Lippo Bank treasury director, Gotfried Tampubolon, refused to comment, however he stressed that if the high interest rates continue, it is the bank customers who will benefit while the banks “will face difficulties.”

Bank Indonesia’s Research and Management director, Halim Alamsyah, said banks must review their credit plans and adjust them to their capacity to garner capital.

Until last July, the savings and loans ratio was 78 – 79 percent, with less than 4 percent in non-performing loans. “Efforts to obtain capital is slowing down, so we must make be precise in our calculations,” he said.

EKO NOPIANSYAH