Paid-up capital of banks<\/p>\n
From Bisnis Indonesia<\/p>\n
The Bank Indonesia governor stated on Feb. 10 that the paid-up
\ncapital of banks would be Rp 1 trillion at the end of 1998, Rp 2
\ntrillion at the end of 1999, and Rp 3 trillion at the end of
\n2003.<\/p>\n
The regulation for foreign exchange banks is Rp 100 billion in
\n1999, with a 10 percent capital adequacy ratio (CAR), and Rp 150
\nbillion in 2001, with a 12 percent CAR.<\/p>\n
The new regulation is highly startling, although rumors to
\nthat effect have been circulating for some time. It was estimated
\nthat paid-up capital would be fixed at Rp 500 billion, gradually
\nbecoming Rp 1 trillion in consideration of the very difficult
\nmonetary conditions. Perhaps Bank Indonesia has not yet
\nconsidered the following:<\/p>\n
1. Paid-up capital of national private banks vary widely, from
\nless than Rp 10 billion to more than Rp 1 trillion for 146 banks.<\/p>\n
2. A merger or a consolidation cannot be effected in 10
\nmonths, especially when it concerns dozens of banks.<\/p>\n
3. The requirements on mergers for banks that have gone public
\nare more complex because the procedure involves the Capital
\nMarket Supervisory Agency as well as Bank Indonesia and the
\nMinistry of Finance.<\/p>\n
4. The increase of the paid-up capital from Rp 1 trillion to
\nRp 2 trillion (at the end of 1999) is impossible to realize.
\nForeign partners are not yet in sight because of the high country
\nrisk.<\/p>\n
5. If banks fail to meet the requirements they must close,
\nthen there will be unrest and no confidence in the government.<\/p>\n
6. A compulsory merger or consolidation does not guarantee
\nhealthy banks because capital is not the only deciding element.<\/p>\n
7. It is said that Bank Indonesia has allocated Rp 50 trillion
\nto help out the liquidity of big banks (Business News, No.
\n6122\/11-2-1998), so if small banks merge with a big bank, the
\nobjective of the merger is not attained.<\/p>\n
If the decision is irrevocable, the victim will be the
\nIndonesian banking community. This would be very tragic. In 1988,
\na regulation was introduced stating the paid-up capital was Rp 10
\nbillion. After 10 years, everybody is being choked with a paid-up
\ncapital of Rp 1 trillion. Perhaps there will be a new policy
\nafter March 1998?<\/p>\n
Name and address<\/p>\n
known to the editor<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/paid-up-capital-of-banks-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }