Bank liquidations

Bank liquidations

Take your pick between doing business with hundreds of unsound banks, or dealing with a handful of sensible operations - the second option is of course preferable.

The government offers a similar choice. Its banking recapitalization program empowers impaired institutions which still have prospects and liquidates inept ones.

The term "liquidation" haunts the community due to the bank liquidation program of 1997-1998. Confidence in the banking sector plummeted as the masses withdrew their savings.

However, the community should not panic because the government has guaranteed their savings and accounts. To assuage fears, the government's activities should be transparent in the recapitalization and liquidation programs.

The assessment of banks in C category (those whose Capital Adequacy Ratio is less than minus 25 percent), needs to be clarified. While many are mismanaged, the current economic downturn should also be taken into account.

Banks dogged by the prevailing economic climate should not be processed in the same way as the corrupt mismanaged ones. Only banks unwilling to save their own institutions should be liquidated and their owners brought to court.

-- Republika, Jakarta