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