OJK will revise deposits regulations

JAKARTA. OJK or Financial Service Authority (FSA) is planning to reduce the gaps of deposits interest rate capping between Commercial Banks Group of Business Activities IV (BUKU IV) and BUKU III.

Member of OJK’s Board of Commissioners for Banking Affairs Nelson Tampubolon said, the institution is assessing to reduce the capping’s gap among the major banks. To date, the capping’s gap among the major banks stand at the level of 25 bps. Nelson said, in the future the gap will be reduced to the range of 10 bps-15 bps.

To date, the capping of BUKU IV’s deposits interest rate is maximum at 75 bps above 7 days repo rate (7DRR) of BI (the Central Bank), which is pegged at 4.75%. In other words, the maximum deposits interest rate of Commercial Banks Group of Business Activities IV (BUKU IV) will be 5.5%

Meanwhile, the capping of Commercial Banks Group of Business Activities III or BUKU III stands at 100 bps above BI 7DRR or at maximum of 5.57%. Nelson said, each group of bank can avoid the ‘deposits interest rate war’, as long as the capping remains in place and the banks can maintain the liquidity.

However, OJK has not yet determined the time frame to implement the new capping of deposits interest rate. In this case, OJK still needs to consider other factors, such as the effects of tax amnesty revenues and the increase in The Fed’s rate.

Apparently, Commercial Banks Group of Business Activities III (BUKU III) will be less attractive for the customers, on the grounds that the banks cannot offer higher deposits interest rate.

President Director of PT Bank Pan Indonesia Tbk (Panin) Herwidayatmo said, four major banks under the category of BUKU IV can obtain much cheap funds. “In this case, BUKU III have to compete to obtain third party funds,” he said.

President Director of PT Bank Bukopin Tbk Glen Glenardi said, OJK has to maintain the healthy competition between BUKU III and BUKU IV.

President Director of Maybank Indonesia Taswin Zakaria said, the capping alteration will not drive the funds competition, as long as the liquidity is solid. “So far, the liquidity remains sufficient,” said President Director of OCBC NISP Parwati Surjaudaja. (Muhammad Farid/Translator)