BI to issue up to eight new rulings

BI to issue up to eight new rulings

Dow Jones, Jakarta

Bank Indonesia plans to issue as many as eight regulations aimed at improving the quality of the national banking industry and economy, Burhanuddin Abdullah, the central bank governor, told reporters on Monday.

"We plan to announce the new regulations tomorrow," he said.

The new regulations will include allowing commercial banks to lend up to 30 percent of their total capital for infrastructure development projects, up from the current 20 percent.

The regulatory easing is to stimulate lending for needed infrastructure projects and "any other government project designed to spur the economy," Burhanuddin said.

The higher limit for lending to certain sectors, including infrastructure, will increase bank loans by more than Rp 100 trillion (US$11 billion) in 2005, he said.

Burhanuddin said the new regulations will also cover banks' asset quality, foreign loans, consumer protection and the channeling of loans for areas devastated by the tsunami on Dec. 26.

He said he expects Indonesia's banks to be able to better compete with their counterparts in the region by 2008, after the implementation of the new regulations.

The government is closely monitoring local banks after it spent around $60 billion to bail out the banking system following the 1997-1998 Asian financial crisis.

In a latest move, the central bank revoked the license of PT Bank Global, a small listed bank, early this month after alleged fraud hurt its financial health.