New bank regulations welcomed
New bank regulations welcomed
JAKARTA (JP): Analysts and a legislator yesterday hailed Bank Indonesia's new regulations but warned it not to be over-zealous in screening the shareholders and management of banks.
Laksamana Sukardi, a noted banking analyst, said that the central bank's regulations, requiring banks to provide the central bank with annual operational programs, was an appropriate step towards increasing professionalism in the banking sector.
Under the regulations announced on Monday, the annual programs should include projections on the amount of funds to be raised, and on the channeling of funds as loans, fee-based services and product development.
"The ruling is timely, given the fact that many banks still do not have any firm plans," said Laksamana, a former banking executive who is now the treasurer of the Indonesian Democratic Party.
Riyanto Sastroatmojo, another banking analyst, said that the requirement on the provision of an annual program might curb unfair competition because all banks will have to adhere to their own plans.
"Banks will operate more cautiously and that is good for all the banks in the country," he said of the new regulations, which were issued to support the implementation of the new banking law.
"The requirement to submit an annual program is in line with the central bank's prudent banking policy," he said.
The central bank's new regulations also provided a definition of those barred from becoming shareholders or members of the executive boards of banks. This includes former shareholders and executives who have been involved in bank fraud as well as people who have defaulted on large loans.
Concern
Laksamana, however, expressed concern about the central bank's loose definition of those to be blacklisted, saying it could lead to "decisions based on personal like and dislike."
"The spirit of the regulations is good but care must be taken in enforcing it," said Laksamana, a former executive of Lippobank.
Civil rights
Barring people with a criminal record from bank management might amount to a violation of civil rights, he said.
He said that a former banker who had served a jail term should be allowed to get involved in bank management, especially if the conviction was not related to fraud or manipulation.
Riyanto also questioned the ability of the central bank to apply the regulations fairly, arguing that the broad definition of those barred from the sector could result in the exercise of partiality.
"I don't think the central bank has the courage to kick out influential bankers," he said.
Another question, Riyanto said, is how to assess a person's morality and how to decide when a person is harmful to a bank.
Sjaiful Anwar Hussein, a member of the House of Representatives, said that the loose definition could be used by the central bank to exclude only those it does not like.
"It is very normative and should be reviewed if partiality is to be avoided," Sjaiful said.
Laksamana, Riyanto and Sjaiful also welcomed the central bank's new restrictions on the sharing of information between banks as important for protecting the privacy of bank clients.
One of the regulations issued on Monday provides that information that may be exchanged on active debtors is limited to their present debts.
Information on commercial banks can only be obtained through the central bank.
Hendrobudiyanto, Bank Indonesia's director for supervision, said that banks violating the regulations may be deemed to have broken the banking law, which carries severe penalties in the form of both fines and jail terms.
Speaking at a press conference marking the issuance of the regulations on Monday, he said that third parties, such as the press, who leak inter-bank information could face similar penalties.
Laksamana, Riyanto and Syaiful all felt that such an application of the regulation might discourage the press and also others, such as legislators, from exercising their social functions.
"Reviewing the new regulations is not sufficient. It is the banking law that should be amended," Laksamana said. He added that the article on banking secrecy in the banking law gives stronger protection to debtors than it does to the public. (hdj/hen)