FSA will evaluate deposit interest capping

JAKARTA. Financial Service Agency (FSA) plans to adopt new policy in the capping of deposit interest of the major banks. The new policy will be announced before the end of 2016.

Commissioner of Banking Department at FSA Nelson Tampubolon said that the FSA will evaluate the implementation of capping in an immediate time. The regulator considers several things, including the banking liquidity that receives positive impacts from the repatriation funds as part of tax amnesty.

According to FSA estimation, the repatriation funds that have been flowing to the banking amounted to Rp 143 trillion. The funds have stifled the ‘war’ on deposit interest rates between the banks to secure their liquidity.

“Therefore, we would like to evaluate the direction of deposit rates capping by allowing market to determine the deposit interest rates in 2017,” said Nelson, Tuesday (6/12).

FSA hopes to allow market mechanism to determine the deposit interest rates if the banks have avoided the competition on deposit interest rates. Therefore, FSA will allow market mechanism to determine the deposit interest rate in 2017.

Conversely, if the banks continue the competition, FSA will undo the plan. The bankers assessed that the deposit interest rates will move significantly if the FSA allow the market mechanism to determine deposit interest rates..

Still necessary
 

President Director of PT Bank OCBC NISP Tbk Parwati Surjaudaja said, the bank sees that the regulation on the capping is still necessary to control the deposit interest rate. “Our concern is that the interest rate can increase like before the implementation of the regulation,” Parwati said.

Vice President Director of PT Bank Mandiri Tbk Sulaiman Arief said that if the regulation on the capping of deposit rates is revoked, the banks have to find strategies to maintain the one-digit credit interest rate. “The one-digit credit rate has to be maintained. Hence the banks can apply the efficiency and find the cheap funds,” Sulaiman said.

As information, the capping of deposit rates is aiming at controlling the domestic banks to not provide excessive deposit interest rates to obtain liquidity. The capping is valid for the major banks, which drive the market. (Muhammad Farid/Translator)