BI issues eight regulations to help economic growth<\/p>\n
Zakki P. Hakim, The Jakarta Post, Jakarta<\/p>\n
The central bank issued eight new regulations on Tuesday as part
\nof a measure to encourage national banks to increase lending to
\nthe real sector and help accelerate economic growth.<\/p>\n
While some of the rulings were designed to help provide
\nassistance, in terms of lending exposure, for victims of the
\ntsunami disaster, the main goal would be to improve the banking
\nindustry's performance, said Bank Indonesia governor Burhanuddin
\nAbdullah on Tuesday.<\/p>\n
\"The issuance is the beginning of a long journey to solve
\nnumerous problems in the economy and the banking sector,\" he
\nannounced during a press conference, while adding that part of
\nthat journey included preparations for the banking industry to
\nadopt internationally recognized best banking practices by 2008,
\nnotably those included in the Basel Accord II.<\/p>\n
The regulations cover legal lending limits (LLL), banks'
\nassets, lending quality, debtor information systems, foreign
\nloans, a customer complaint settlement mechanism, banking
\nproducts transparency and special treatment for banks in areas
\ndevastated by the tsunami.<\/p>\n
The move means that more funds will be available for the real
\nsector, which has yet to fully recover from the 1990s economic
\ncrisis, without jeopardizing prudent banking practices.<\/p>\n
The new legal lending limit ruling will allow commercial banks
\nto lend up to 30 percent of total capital to finance projects
\nrelated to infrastructure development, and the building of basic
\npublic services. That figure is up from the current 20 percent.<\/p>\n
Burhanuddin said earlier that the higher limit for lending to
\ncertain sectors, including infrastructure, should increase bank
\nloans by more than US$11 billion this year.<\/p>\n
On assistance for tsunami victims, the central bank has eased
\nthe procedures for loan applications in Aceh and North Sumatra
\nprovinces, notably lending for small- and medium-sized
\nenterprises (SMEs).<\/p>\n
More than 160,000 people have been killed, or are presumed
\ndead in northern Sumatra after the Dec. 26 earthquake and
\nresulting tsunami, which also left countless businesses
\ndestroyed.<\/p>\n
Meanwhile, there were also rulings which covered consumer
\nprotection issues.<\/p>\n
The central bank required all commercial banks to settle
\ncustomer complaints through a standardized mechanism set out by
\nBank Indonesia. Another regulation on the issue required banks to
\ninform their customers of the benefits and risks of each banking
\nproduct they were offering. The ruling also limits the banks in
\ndispersing personal data on their customers.<\/p>\n
Elsewhere, at the press conference, Burhanuddin admitted that
\nthere were still some weaknesses in the banking sector, but added
\nthat the national banking industry had seen rapid improvement in
\nover the past five years.<\/p>\n
The government has been closely monitoring local banks after
\nit spent around $60 billion to bail them out in the aftermath of
\nthe monetary crisis.<\/p>\n
Still, fraudulent banking practices continue. The latest was
\nearlier this month, where the central bank had to close down Bank
\nGlobal due to its financial woes, allegedly as a result of bank
\nscams.<\/p>",
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