BI revises ruling on bank guarantee scheme<\/p>\n
JAKARTA (JP): Bank Indonesia (BI) has revised the formula
\ndevised for calculating the maximum interest rates which make
\nthird party funds eligible for protection under the government
\nbank guarantee scheme.<\/p>\n
Bank Indonesia deputy director for monetary management
\nTarmiden Sitorus said that the change was made because the
\ninterest rate was now less volatile compared to previous years.<\/p>\n
He said that under the revised ruling, the maximum interest
\nrate for banks' third party funds eligible for the guarantee
\nscheme was calculated based on the average time deposit interest
\nrate of the previous month at selected banks (those contributing
\nto the Jibor or Jakarta interbank offering rate), plus a 300
\nbasis point margin for rupiah deposits and 100 basis points for
\nU.S. dollar deposits.<\/p>\n
Under the previous ruling, the maximum interest rate was
\ncalculated based on the average interest rate of the previous
\nweek.<\/p>\n
Tarmiden also said that under the new ruling, the interest
\nrate limit would be valid for a one-month guarantee period,
\ncompared to a one-week period previously.<\/p>\n
He added that the announcement of the interest rate limit
\nwould now be made two-days prior to the end of each month.
\nPreviously, the announcement was made every Friday.<\/p>\n
He said that a new interest rate limit would be announced
\nFriday (today), which would be valid for the entire month of
\nApril.<\/p>\n
The government launched the bank guarantee scheme in early
\n1998 in a bid to help revive confidence in the country's
\nembattled banking sector. Under the program run by Bank
\nIndonesia, the government will guarantee third party funds, both
\nin rupiah or foreign currencies, deposited in domestic banks in
\ncase the banks are closed down. The government also guarantees
\ninterbank loans.<\/p>\n
But the government will not guarantee third party funds
\ncarrying interest rates beyond the tolerable limit set by the
\ncentral bank.<\/p>\n
Last week, the maximum interest rate for a 1-month rupiah time
\ndeposit was set at 15.39 percent, 3 months at 15.78 percent, 6
\nmonths at 15.84 percent, 12 months at 15.9 percent and 24 months
\nat 16.65 percent.<\/p>\n
For a U.S. dollar 1-month deposit the interest rate was set at
\n6.63 percent, 3 months at 6.71 percent, 6 months and 12 months at
\n6.77 percent, and 24 months at 6.85 percent.<\/p>\n
The interest rate limit for rupiah interbank loans last week
\nwas set at 13.26 percent, and 4.9 percent for dollar loans.<\/p>\n
Tarmiden said that under the new ruling, the interest rate
\nlimit on interbank loans was calculated based on the weighted
\naverage of the overnight interbank market rate offered by the
\nJibor banks in the previous month.<\/p>\n
He said that the interest rate limit of the interbank loans
\nwould also be valid for a one-month period compared to the
\nprevious one-week period.<\/p>\n
Meanwhile, another Bank Indonesia senior official, Nelson
\nTampubolon, said the central bank and the government were still
\nin the process of discussing how to end the costly bank guarantee
\nscheme.<\/p>\n
He said that there was a plan to introduce a deposit insurance
\nscheme to replace the government blanket guarantee scheme.<\/p>\n
He said that it was too early to decide when the government
\nguarantee scheme would be replaced.<\/p>\n
\"The government guarantee is still needed to maintain
\nconfidence in the domestic banking sector,\" he said.(rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bi-revises-ruling-on-bank-guarantee-scheme-1447893297",
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