BI must punish erring banks: DPR
BI must punish erring banks: DPR
JAKARTA (JP): The House of Representatives (DPR) suggested yesterday that Bank Indonesia (BI), the central bank, be given authority to take tougher measures against banks violating its rulings on the Legal Lending Limit.
"So far only the Ministry of Finance has the authority to take legal action against violators of the Legal Lending Limit (limits of lendings to affiliated companies)," A.A. Baramuli, the chairman of the House's Commission VII, told the press here yesterday.
Commission VII deals with, among other things, the banking industry and trade.
"I think the central bank should be able to take harsher sanctions, such as suspension of the violators' licenses," said Baramuli, an outspoken House member of the Golkar faction.
Governor of Bank Indonesia, Soedradjad Djiwandono, stated last week that the central bank will take legal action against banks found violating the legal lending limit regulation.
He said the number of banks violating the legal lending limits had reached an alarming level.
"Such violations have been increasing recently. Last year's number was higher than that in the previous year," he said, adding that such violations very often resulted in problem loans.
Explanation
Baramuli said yesterday that Commission VII will ask the central bank to give a detailed explanation of the violations.
"We'll ask Bank Indonesia to explain this problem during our next hearing with its officials," he said.
Asked by reporters whether information on the Legal Lending Limit violations is protected by the provision on banking secrecy, Baramuli said he did not know. "Detailed guidelines for the implementation of the banking secrecy provision have yet to be issued." he said.
"We will try to find out the government's policy on banking secrecy," he stated.
Meanwhile, bank analyst I Nyoman Moena criticized the rating by Moody' Investor Service, an U.S. rating institution, which has rated Indonesia' state-owned banks low.
"Their rating assessment is not comprehensive. They don't see Indonesian banks contextually," he told the Antara" financial information service yesterday.
According to Moena, Moody's data was not enough to evaluate the performance of the state banks.
In its latest evaluation, the American institution rated all the state banks at Baa3 for their "long term foreign currency bonds" and Ba1 for their "long term foreign currency deposit obligations", which are the lowest of its three categories.
He said that actually there are many measures which can be used to evaluate a bank. Moody's evaluation was only based on the micro aspect and not on the macro aspect of the banking industry.
"The macro aspect, that is the policy of the Indonesian government on the banking industry, strongly influences their performance," he said.
He cited BTN as an example. This bank specializes in providing housing credits to help the government in its efforts to construct houses for the general public.
He said, however, that despite this low rating, the public still trust the state banks. "I don't see any negative impact caused by Moody's low rating yet," he said. (13)