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.