Govt begins repayment of small depositors

Govt begins repayment of small depositors

Urip Hudiono, Jakarta

The government started on Monday repaying small depositors of the
now defunct Asiatic Bank and Bank Dagang Bali (BDB), with some Rp
114 billion (US$13.41 million) in funds having been set aside for
the first stage of the payment process.

The government will reimburse other depositors who have yet to
cash in their savings within two weeks at the latest, said Isa
Rahmatarwata, the head of the government's bank guarantee
implementation unit (UP3).

"But, in principle, I'd like to ensure all depositors once
again that the government will fully repay all the bank's
financial obligations to them," Isa added.

The UP3 is a special unit under the Ministry of Finance which
has taken over the role of the Indonesian Bank Restructuring
Agency (IBRA) in implementing the blanket guarantee program -- a
move that requires the government to cover all the obligations of
a bank that has been closed down.

Earlier this month, the central bank closed the two ailing
banks, and as a result it has to repay around Rp 2.3 trillion to
bank depositors.

The ongoing payment will form the first in a series of payouts
to depositors with a maximum of Rp 2 million in savings.

The UP3 has picked Bank Negara Indonesia (BNI) to execute the
payments.

Meanwhile, Darmin Nasution, director general for financial
institutions at the Ministry of Finance, said that the owners of
the two banks had agreed to surrender more assets to add to the
Rp 1.2 trillion worth of assets that they had already
surrendered.