"I think banks must be more efficient so that they will cut their lending rates more quickly," Bank Indonesia Deputy Governor Halim Alamsyah said.Jakarta (ANTARA News) - Bank Indonesia (BI) Friday asked national banks to operate more efficiently to reduce overhead cost and lower lending rates following the central bank`s decision to cut its key rate by 50 basis points to 6 percent the day before.
"I think banks must be more efficient so that they will cut their lending rates more quickly," Bank Indonesia Deputy Governor Halim Alamsyah said.
Many banks had of late reduced their lending rates but the reduction was slower than expected and did not follow a decline in the central bank`s key rate which reached 75 basis points since October, he said.
He said BI was conducting a research of why the national banking industry was slow in reducing their lending rates. Data from the central bank showed since 2004 the overhead cost had not been increasing significantly while the national banks` profit had risen sharply.
"The banks` return on assets in 2001 averaged only 1.5 percent but now it has been increasing to more than 3 percent. We are still studying whether or not to pursue the high growth we need a large amount of overhead cost including for expansion, large equipment and good human resources," he said.
"We want the lending rates to go down more quickly and the margin between lending rate and interest rate not to be wider," he said.
Economist Ryan Kiryanto said national banks should follow up on the central bank`s decision to cut its key rate to 6 percent by lowering their lending rates and therefore, the impact of the European sovereign debt crisis on the domestic economic growth could be mitigated.
"The banking industry should respond to it immediately by adjusting their commercial interest rates so that the real sector will grow well," he said.(*)
Editor: Heru Purwanto
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