Bank Indonesia to talk with banks on high lending rates
Bank Indonesia to talk with banks on high lending rates
The Jakarta Post, Jakarta
Bank Indonesia (BI) plans to summon the management of some of
the country's major banks to discuss problems concerning their
reluctance to cut lending rates despite the sharp drop in the
central bank's benchmark interest rate.
"The meeting would not be a forum where the central bank
imposes its will upon the banking industry to disburse loans for
the business sector," Bank Indonesia senior deputy governor Anwar
Nasution was quoted by Antara as saying on Wednesday.
He said that the meeting would take place on Thursday and
would be participated in by 14 banks.
The benchmark interest rate of the one-month Bank Indonesia
SBI promissory notes has dropped from more than 17 percent in the
beginning of 2002 to the current 9.30 percent.
The central bank has hoped that the lower benchmark rate would
encourage banks to also cut lending rates to make their loans
more affordable for the corporate sector. This in turn should
help accelerate economic growth.
But the banking industry is apparently turning a deaf ear to
the central bank's call as bank lending still stood high at
around 17 percent to 18 percent.
Earlier, some analysts warned that some banks were still
facing difficulties in issuing new loans due to their limited
capital and outstanding non-performing loans (NPL), making
lending to the business sector a risky undertaking.
Anwar attributed the high lending rates to the mounting NPL.
However, Anwar acknowledged a number of major banks such as
Bank Central Asia and Panin Bank had significantly reduced their
interest rates.
"But for banks that have been able to resolve the problem of
NPLs, there is no excuse for them not to disburse loans," he
said.
Elsewhere, Anwar slammed banks' effort to boost their capital
adequacy ratio through the issuance of bonds.
"Banks should earn their profits from interest on loans rather
than from bonds," he said, adding that most of banks still
counted on the interest accrued from large government bonds.