BI urged to ease liquidity to block bank run

JAKARTA (JP): Bank Indonesia, the central bank, should inject fresh blood into the banking industry by easing rupiah liquidity if it does not want to see a bank run or even default, bank dealers said yesterday.

They said several banks now faced liquidity problems and were forced to postpone or cancel credits already in the pipeline and adjust the rates for the already disbursed credits.

"We already face liquidity problems, we don't know what will happen if the central bank continues to maintain this tight monetary policy for another week," a bank dealer said.

Bank Universal president Stephen Z. Satyahadi confirmed that his bank had also postponed disbursing credits due to the current unstable and high rate condition.

Businesspeople and analysts have also called on the government to supply rupiah bit by bit to the market to reduce the current cutthroat competition among banks in attracting depositors and prevent a bank run.

Businessman Sofyan Wanandi, for instance, said businesses had lost direction as they did not know when the tight monetary policy would end.

Bank Indonesia governor J. Soedradjad Djiwandono yesterday called on businesses to support the government's measures and adjust themselves to the current situation.

"Everyone in the real sector must know what will be the effect of the current situation and must adjust themselves," the governor told journalists.

"It (the tight monetary policy) affects the government, the import and export sector as well as the private sector," he added.

Bank Indonesia's managing director Paul Soetopo Tjokronegoro assured the market earlier this week that the central bank would supply enough money to meet banking and business needs.

But until yesterday, the central bank still had not bought short-term securities (SBPU) from commercial banks and continued to drain excess liquidity through its short-term promissory notes SBIs.

Banking analyst Laksamana Sukardi said that if the central bank kept the current tight liquidity for another week, there could be a bank run.

Several banks were rushed by depositors earlier this week due to widespread rumors on their liquidity problems.

Several commercial banks have on-counter announcements advising depositors to inform them beforehand if they want to withdraw a certain amount of money due to tight rupiah liquidity.

A customer service officer at publicly listed Bank Tamara at its headquarters on Jl. Sudirman said yesterday that a customer can still freely withdraw up to Rp 50 million (US$17.54 million).

But if a customer wanted to withdraw more than that, they must fill in several forms and could only take the money later in the day or the following day, she said.

"This procedure must be implemented now, but it will only be temporary," she said.

However, she said if the total amount was under Rp 10 million, her bank would immediately approve the withdrawal.

State-owned Bank Negara Indonesia's and Bank Bali's Melawai offices in South Jakarta also have an announcement advising depositors wanting to withdraw more than Rp 20 million to inform the bank 24 hours before the withdrawal.

A Bank Bali officer said that kind of advise was common practice among banks during this tight rupiah situation. Even in a normal situation, banks advised depositors wanting to withdraw a large amount of funds to inform them beforehand.

"Branch offices do not keep a lot of funds, so it is normal to advise customers about that. Banks do not want to keep a large amount of funds idle at branch offices," he said.

Bank Artha Graha has also called on customers wanting to withdraw more than Rp 10 million to inform the bank several hours beforehand.

"We made this announcement long before the rupiah crisis. We do this because we want to serve our customers better," an Artha Graha customer service officer said. (08/aly/das/rid)