BI launches new fund transfer operation

JAKARTA (JP): Bank Indonesia (BI) officially launched on Friday an electronic clearing and settlement facility in a bid to speed up interbank transactions.

The central bank's deputy governor, Aulia Pohan, said that with the BI-Line facility, all transfers of funds between banks would be performed electronically.

"Fund transfers between banks are conducted through the banks' personal computer units that are on-line with BI," Aulia said.

Aulia said under the new system, fund transfers between banks could be done within 15 seconds, as transfer orders and verification were all operated electronically.

Previously, interbank fund transfers were performed manually by exchanging transaction documents between the two banks, with BI acting as an agent in verifying the authenticity of the papers.

Head of the development of the national payment system department of the central bank, Mohamad Ishak said banks only needed to have one personal computer and a dedicated telephone line.

"The BI-Line system is simple, and practically cost-free to participating banks, as BI will provide all necessary software for computers to ready them for the BI-Line," Mohamad said.

He said the BI-Line facility has since March been implemented by eight local banks, and will be further implemented in another 30 banks by mid-August.

The new electronic transfer service is part of the central bank's program to boost its clearing and settlement activities.

The central bank launched last week a new clearing and settlement operation to speed up fund transfers between customers of different banks to less than 24 hours, from at least two days previously.

BI-Line, Mohamad said, was a stepping stone toward the installment of further improved technology called Real Time Gross Settlement (RTGS) in September next year.

Mohamad said RTGS was a more integral and secured system application in payment technology systems. It can handle a significantly larger volume of simultaneous transactions in less than a second.

"In the development of the RTGS for BI we have been assisted by international institutions, including an expert from the Federal Reserve of the United States, who is sharing experiences and skills with us."

He said local vendors for the RTGS project included PT Lintas Artha, PT Mekar Prana Indah and PT Praweda of Soedarpo Corporation.

"These companies' roles include supplying the necessary infrastructures, such as dedicated communication lines for the RTGS project." (udi)