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.