BI to bar rogues from bank sector<\/p>\n
JAKARTA (JP): Bank Indonesia, the central bank, will soon
\nintroduce a ruling barring certain people from becoming
\nshareholders or executives of banks.<\/p>\n
Bank Indonesia (BI) Governor J. Soedradjad Djiwandono said on
\nSaturday that the ruling would be important in protecting
\ncommercial banks from unreliable and irresponsible people, who
\ncould undermine their operations.<\/p>\n
\"The criteria for barring people will be soon issued,\" he said
\nin his address to a seminar on the 1995-96 state budget plan.<\/p>\n
Soedradjad said that the ruling would be one of the measures
\nto be taken by the central bank during the next fiscal year,
\nwhich begins in April.<\/p>\n
Bank Indonesia will also issue a ruling requiring commercial
\nbanks to submit corporate plans and reports about credits given
\nto affiliated companies, shareholders or members of their
\nexecutive boards, as well as to institutional borrowers.<\/p>\n
The central bank governor said that debt problems would remain
\none of the major challenges to the country's banking industry
\nnext year despite improvements in the collectibility of their
\nloans.<\/p>\n
\"For that purpose, Bank Indonesia is considering gradual
\nwrite-offs of the bad debts of private banks,\" he said, adding
\nthat the measure would enable banks to operate more flexibly.<\/p>\n
Other measures to be taken next fiscal year include
\nimprovements to guidelines for formulating lending standards,
\nimprovements to the information system on lending and
\nimprovements the internal auditing system.<\/p>\n
Not just good<\/p>\n
Regarding the performance of Indonesia's commercial banks last
\nyear, Soedradjad said that \"it was not just all right\".<\/p>\n
He expected that the banking industry would continue to
\nimprove both in terms of management and operation, given the fact
\nthat state-owned and private banks had generally been able to
\nmeet, not only Bank Indonesia's requirements, but also
\ninternational standards set by the Basel-based Bank for
\nInternational Settlements.<\/p>\n
Speaking at the seminar, which was held by the Prasetya Mulia
\nschool of management, the central bank governor said that 92.9
\npercent of the country's banks have met the minimal Capital
\nAdequacy Ratio (CAR) of eight percent.<\/p>\n
\"The average CAR of the country's banks reached 12.2 percent
\nas of September,\" he said, indicating that the ability of most
\nbanks to meet the minimal CAR requirement was an important sign
\nof improvement in the banking industry.<\/p>\n
He said that the quality of banking credits had also shown
\nimprovement, resulting in better profitability.<\/p>\n
\"The average return on assets of banks reached 1.3 percent as
\nof last September,\" he said, adding that the figure was higher
\nthan the minimal standard of 1.2 percent set by the central bank.<\/p>\n
Soedradjad said that the central bank would maintain its
\nprudent monetary policy despite the improvement in both the
\nindustrial and banking sectors last year.<\/p>\n
He said that keeping the inflation rate at below 10 percent,
\nmaintaining the current account deficit at below two percent of
\nthe Gross Domestic Product, as well as maintaining the
\ncompetitiveness of the rupiah are the central bank's main
\nconcerns.<\/p>\n
To achieve its targets, Soedradjad said, the central bank
\nwould limit the expansion of money in circulation and credits at
\n20 percent and 19 percent, respectively, to curb inflationary
\npressures, which are expected to grow in line with stronger
\ndomestic demand and a predicted increase in the construction of
\nnew industrial factories.<\/p>\n
\"We have to be cautious about possible economic overheating,\"
\nhe said, adding that the inflation rate, which reached 9.24
\npercent in 1994, should be pushed down this year to ensure that
\nthe economy, whose growth has been projected to increase from 6.7
\npercent last year to above seven percent this year, will not
\noverheat. (hen)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bi-to-bar-rogues-from-bank-sector-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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