'Curbs on Bank's activities in bourse are understandable'

'Curbs on Bank's activities in bourse are understandable'

NUSA DUA, Bali (JP): Businessmen understand the reasons
behind the restrictions imposed by Bank Indonesia (the central
bank) on commercial banks' involvement in the stock market, the
chairman of the Association of Indonesian Issuers, Rosano Barack,
said here.

Speaking to reporters at the conclusion of the two-day seminar
on local investors here Friday evening, Rosano said he and the
chiefs of the other listed companies were not disappointed with
the monetary authority's policy.

The governor of Bank Indonesia, Soedradjad Djiwandono, said at
the opening of the seminar Thursday the central bank would
continue to ban banks from buying stocks, providing credits for
share purchases on the capital market and taking securities as
collateral.

Soedradjad said the monetary authority wanted to see the
current consolidation of banks satisfactorily completed before
allowing them to play in the capital market.

"However, we allow banks to provide custodian services, extend
credit to securities companies and use shares listed on the
capital market as additional collateral," Soedradjad added.

Rosano said several banks had been ready to expand their
investments in the stock market. "But allowing them to do it is
like pinpointing which banks are healthy and which ones are in
poor condition. This could result in a rush on particular banks,"
he said.

He noted that other countries had removed such restrictions
to encourage trading on their capital markets.

But he foresaw an easing of the restrictions sometime in the
future, whenever the condition of the banking industry had
improved significantly.

"We don't know exactly when. But the governor of Bank
Indonesia has told us to be patient. He told us that the time
will come for the monetary authority to ease the restrictions,"
he said. (bnt)