Govt to reimburse remaining depositors of 16 closed banks

JAKARTA (JP): After four months of uncertainty, customers of 16 banks closed by the government last year waiting to recover deposits can now rest assured that their money is safe.

Minister of Finance Mar'ie Muhammad announced yesterday at a working session with the House of Representatives Commission VIII on state budget and finance, research and technology that President Soeharto has decided the government would reimburse all depositors of the 16 closed banks in full.

"Our staffs are still working out the implementation (of the reimbursement). We hope people will be patient for several days more," Mar'ie said.

He said the main reason behind Soeharto's decision to reimburse the remaining funds due to depositors was his sense of justice.

"Based on formal, judicial considerations, the government has no responsibility (to reimburse depositors)... But we cannot live based on formal, judicial ways only. There must also be a sense of justice," Mar'ie said.

People attending the session, including some representatives of big depositors at the liquidated banks, applauded Mar'ie and said "Long live Mar'ie".

Mar'ie said his announcement was a show of the government's public accountability and transparency.

He said Bank Indonesia would provide bridging finances of some Rp 3.1 trillion to pay the depositors. The government would pay back the funds to Bank Indonesia over 10 years.

Bank Indonesia, the central bank, has so far disbursed Rp 1.7 trillion to reimburse depositors of the 16 closed banks up to a maximum of Rp 20 million (US$2,220) each.

Mar'ie said some of the Rp 1.7 trillion has been incorporated in the current state budget.

The government closed 16 insolvent banks Nov. 1 as part of the International Monetary Fund's reform package. At that time, the government pledged to reimburse up to Rp 20 million for each customer.

Big depositors and other creditors could only retrieve Rp 20 million of their deposits from the government at that time. The rest of their deposits were unprotected by the government. They were advised to wait until the banks liquidated their assets.

Following the closure of the 16 banks, public trust in private banks diminished significantly. Many customers withdrew savings from private banks and deposited them at state or foreign banks or changed their rupiah to U.S. dollars.

In a move to restore public confidence in the country's banking system, Soeharto issued a decree in late January guaranteeing all local bank deposits and debts.

The decree, however, was not retroactive and did not cover the unpaid depositors at the liquidated banks. Yesterday's government announcement covers those depositors. (08/rid)