Minggu, 12 Desember 2010

BI ready with 17 new rulings to better manage banking system

Bank Indonesia (BI) will announce at least 17 new banking regulations in January to better manage the banking system and bring inflation in check in line with economic targets.

BI deputy governor Muliaman Hadad said Friday that the regulations included bankers’ fit and proper tests, disclosure of the prime lending rate, banks’ business plans and exit policies.

“Hopefully we can finalize the package of 17 regulations before year-end so it can be introduced at the beginning of January,” he told reporters on the sidelines of a meeting with Southeast Asian central bankers in Jimbaran, Bali.

Muliaman explained that the drafting of the regulations had been completed but they were currently being reviewed by the central bank’s legal department.

“They are being made congruent to avoid clashes between one ruling and another,” he added.

Bank Indonesia recently announced several policies that analysts considered a mixed-bag, including the loan-to-deposit ratio (LDR) and primary minimum reserve requirement (GWM) regulations.

The primary reserve requirement policy, aimed at absorbing excess liquidity that could further fuel inflation, requires banks to store 8 percent of their total deposits with the central bank starting Nov. 1, up from the previous 5 percent.

The policy prompted several banks to increase their lending rates to plug their so-called “cost of fund”, a move that hampered lending growth.

Meanwhile, the LDR policy aims at boosting banks’ lending, requiring them to disburse more loans and have LDRs between 78 and 100 percent.

According to analysts, the policies clash as one hurts lending while the other aims at providing more loans. However, the central bankers have repeatedly insisted that the policies will work if properly implemented.

The requirement imposed on banks to publish their prime lending rate will encourage a healthier competition among them because the public will know which bank offers low rates to borrow money for working capital, investment or consumption, deputy governor Halim Alamsyah recently said.

“So if banks raise their rates, the public will know,” he said.

Meanwhile, Wimboh Santoso, BI’s regulatory and research director, said Thursday that with the latest lending figures, banks must disburse between Rp 60 trillion and Rp 70 trillion in loans in December alone in order to meet the central bank’s 22 to 24 percent loan growth target for this year.

“Banks must disburse Rp 17 trillion in loans per week to make that happen,” he said at the Jimbaran meeting.

This year, lending has grown by 18.44 percent up to Dec. 3, while on a yearly basis, loan growth has reached 22.14 percent.

Analysts are pessimistic about the matter, saying the central bank’s target is unlikely to be met.

Source
http://www.thejakartapost.com/news/2010/12/11/bi-ready-with-17-new-rulings-better-manage-banking-system.html