Domestic banks raise deposit rates up to 55%

JAKARTA (JP): Domestic commercial banks raised interest rates on their one-month deposits yesterday to as high as 55 percent, following Bank Indonesia's increase of rates payable on short- term promissory notes (SBIs) on Tuesday.

State Bank Ekspor Impor Indonesia (Bank Exim) offered the highest interest rates to its customers yesterday. The bank's rates for one-month deposits were raised to 55 percent, up from the previous level of 47.5 percent.

Bank Exim's three-month deposit rates rose to 37.5 percent, while six and 12 month rates stood at 25 and 23 percent respectively.

State Bank Rakyat Indonesia (BRI) interest rates for one-month deposits rose from 47.5 percent to 52.5 percent, and for three- month deposits rates from 31.5 percent to 35.5 percent.

State Bank Negara Indonesia (BNI), which is listed on the Jakarta Stock Exchange (JSX), followed suit and raised interest rates for one-month deposits to 52.5 percent, up from 47.5, and to 35.5 percent, up from 31.5 percent, for three-month deposits. Six-month deposit rates rose by three percentage points to 24 percent.

The country's largest private bank, Bank Central Asia (BCA), raised one-month deposit rates to 50 percent, up from 47.5 percent, and three-month rates to 35 percent, up from 31.5 percent.

Publicly listed Bank Bira raised one-month deposit rates to 50 percent, three-month deposits rates to 30 percent, six-month rates to 23 percent and one year deposit rates to 20 percent.

However, Bank Internasional Indonesia (BII) one-month and three-month deposit rates remained constant at 45 percent and 30 percent respectively.

Publicly listed Lippo Bank raised one-month deposits rates from 40 percent to 47.5 percent, while Bank Artha Graha raised one-month interest rates to 40 percent.

Several state and private banks have set one-month deposit rates at 52.5 percent. They include Bank Bumi Daya, Bank Dagang Negara and Bank Tabungan Negara, all state owned, and Bank Bali, Bank Swadesi, Bank Duta, Bank Alfa, Bank Bukopin, Bank Dharmala, Bank Universal, Bank Dagang Nasional Indonesia and Bank Buana, which are run by the private sector.

On Tuesday, Bank Indonesia raised the interest rates on SBIs for all maturities by between 3 and 5 percentage points in an effort to strengthen the rupiah and curb inflation.

The central bank raised the overnight SBI rate to 44 percent, up from 40 percent, the two-day SBI rate to 45 percent from 41 percent, three-to-six day SBI rates to 46 percent from 42 percent, one week rates to 48 percent from 43 percent, and two week rates to 49 percent from 44 percent.

The one-month SBI rate was raised to 50 percent from 45 percent, the two-month rate to 44 percent from 40 percent, the three month rate to 34 percent from 30 percent, the six month rate to 23 percent from 20 percent and the one year rate to 21 percent from 18 percent.

Bank Indonesia governor Sjahril Sabirin said the increase was the only way to strengthen the rupiah, whose sharp depreciation against the U.S dollar sparked the economic crisis.

"Our main priority now is to settle the rupiah at a realistic level. SBIs are the most appropriate instrument to use to attain this goal," Sjahril said.

SBI rates have risen twice since last month.

The increase early last month immediately pushed up one-month deposit rates to as high as 67.5 percent, which fell back to 47.5 percent three days later after state and private banks agreed to limit the increase to a maximum of 5 percentage points above the benchmark SBI rates.

Bank Indonesia limits commercial bank interest rates to within 25 percentage points of prevailing SBI rates.

The Association of Private National Banks said yesterday that its members remained committed to limiting rates on offer to within five percentage points of SBI rates to discourage destructive competition between banks. (gis/aly)