Banks told to lower loan rates

Banks told to lower loan rates

Vice President Jusuf Kalla called on local banks on Wednesday to
lower their interest rates in order to help revitalize the
private sector as well as improve the competitiveness of their
businesses in the global market.

"Banks should lower their interest rates to help nurture the
real sector, although I understand that the central bank has
adopted a tight fiscal policy by gradually increasing its
benchmark interest rate to help ease inflationary pressures," he
said.

Kalla said banks should lower their interest rates to about 6
percent like those given by banks in Malaysia.

This figure is lower than Bank Indonesia's benchmark interest
rate, which currently stands at 8.02 percent.

Kalla's remark was made during a ceremony to mark a working
meeting of state-owned Bank Rakyat Indonesia (BRI) held to revise
its business strategy after the government reorganized the bank's
board of management.

At present, the private sector still has to pay very high
interest rates for loans with most banks having interest rates of
over 7 percent.

Kalla also suggested that banks boost their efficiency in
order to offset a decline in their revenues as a result of
providing lower interest rates by reducing their overhead costs
as well as the luxurious facilities enjoyed by their officials.
-- JP