News
LENDING & CREDIT | Cesar Tordesillas, Indonesia
view(s)

Indonesia to standardize commercial bank interest rates

Unable to lower commercial bank interest rates, Indonesia's central bank decided to nominate the rates beginning the close of the first quarter.

 

Hoping that the country’s lenders would follow by example, the central bank has cut its own key policy rate three times in the past five monthly meetings. But many of Indonesia’s commercial banks have not lowered their lending rates correspondingly.

Bank Indonesia governor Darmin Nasution lamented that commercial lenders have not offered any “positive” response to the central bank’s earlier lending rule, which required the lenders to publish their prime lending rates.

To further encourage the lenders, Bank Indonesia is requiring them to publish targets on trimming their lending rates and boosting operational efficiency.

Bank Indonesia is also holding talks with the country’s lenders, the Finance Ministry and the State Enterprises Ministry “with the sole goal that lending rates will be reduced,” Darmin said.

Bank Indonesia will set the benchmark prime lending rate for banks by categories, such as their total assets and the type of loans they give. Banks with a certain amount of assets will receive a certain reference prime lending rate. About two thirds of Indonesia’s 120 commercials banks have assets greater than Rp 10 trillion.

Juniman, an economist at Bank Maybank Indonesia in Jakarta, said on Friday that the new regulation is meant to improve the country’s banking system.

“By knowing and standardizing these rates, it will be easier for Bank Indonesia when it needs to set monetary policy,” he said.

Bank Mandiri, the country’s largest lender by assets, set its rate at 10.5 percent for corporate loans, 12.5 percent for retail loans and 11.25 percent for housing loans.

Bank Indonesia has maintained 27 percent lending growth at commercial banks this year, Darmin said, after growth rose an estimated 24 percent last year.

For the source of this story, click here.

Do you know more about this story? Contact us anonymously through this link.

Click here to learn about advertising, content sponsorship, events & rountables, custom media solutions, whitepaper writing, sales leads or eDM opportunities with us.

To get a media kit and information on advertising or sponsoring click here.