Lowering of interest rates

Lowering of interest rates

From Bisnis Indonesia

The endeavors toward the lowering of bank interest rates have
induced me to come up with suggestions which may be used as input
for decisionmakers.

I realize that the lowering of interest rates cannot be done
instantly. There are, however, things that could contribute
toward the aim.

First, eliminate all prize incentives for savings. Banks with
aggressive advertising to attract new customers should be
discouraged, especially if they make excessive promises. Clients
should rather be won by the extra value inherent in sophisticated
bank services.

Second, Bank Indonesia should hold an interview with each bank
on the occasion of the annual submittal of the budget plan of all
banks. The use of funds from third parties should be a subject of
discussion. Priority of discussion should not only be given to
the application of activities for the development of credit
portfolios. The stages of fund collection can be monitored by a
supervisory unit of Bank Indonesia so that any deviation from the
value of third-party funds must be justified.

Third, Bank Indonesia should monitor the principle of bank
effectiveness in the operation of a business, apart from an
increase in business capital.

I think bank interest rates can be lowered if the interest
rate of third-party funds is lowered.

SONNY S. SUAWAL

Jakarta