'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)