Banks told to improve prudential management<\/p>\n
JAKARTA (JP): A top consultant says Indonesian banks must
\nimprove prudential management and include government-appointed,
\nprofessional independent auditors within their boards of
\ncommissioners.<\/p>\n
The chief executive of Reform Consulting, Laksamana Sukardi,
\ntold a seminar on \"Bad Loans, Problem Loans\" here Saturday that
\nthese steps could prevent activities which could lead to bad
\nloans and cause severe financial losses on the part of creditors.<\/p>\n
\"Independent auditors, who will have the authority to
\nimplement a management process audit, should be professionals who
\nare not easily tempted or pressured by shareholders or
\nsuperiors,\" Laksamana said.<\/p>\n
His proposals come amid public concern that bad loans have
\nbeen increasing in the country since the introduction of a tight
\nmoney policy in 1990 following the announcement of deregulatory
\nmeasures in the banking industry in 1988.<\/p>\n
Laksamana said auditors will act independently if they are
\nappointed by Bank Indonesia, the central bank, to which they will
\nbe responsible.<\/p>\n
Laksamana suggested that the presence of such independent
\nauditors should be an absolute obligation for banks in the
\nfuture.<\/p>\n
He said before providing loans to customers, banks should test
\ntheir credit initiation, analyze the feasibility of their
\nbusinesses, document the credit well and monitor the use and
\nmanagement of the loan funds.<\/p>\n
\"The absence of any of these factors may cause the credit to
\ngo sour,\" he warned.<\/p>\n
Bapindo<\/p>\n
\"In the Bapindo case, none of these steps were taken. In fact,
\neach one involved has violated the standard procedures,\" he said.<\/p>\n
The state-owned Bank Pembangunan Indonesia (Bapindo) provided
\nloans of US$430 million to the Golden Key Group without any
\ncontract of transaction. The loans have now gone sour and a
\nnumber of Bapindo executives and the owner of the business group
\nhave been detained. Several high-ranking officials have been
\nquestioned by the Attorney General's Office for their alleged
\nsupport of the provision of the loans.<\/p>\n
Laksamana, who was a former vice president of Citibank and
\nformer top executive of Lippobank, said that bad loans and
\nproblem loans encountered by the banking system are caused mainly
\nby a lack of control from Bank Indonesia and an uncontrolled
\ndesire of the major shareholders of the banks to exploit the
\nfunds for their own interest.<\/p>\n
Meanwhile, President of Bank Dharmala T.A. Sutanto suggested
\nthat banking executives take an oath at the time of their
\nappointment and that a special court be established to deal with
\nbanking problems. (10)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/banks-told-to-improve-prudential-management-1447899208",
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