"The main factors in the high lending rate in Indonesia is the high level of interest rates on deposits as well as overhead costs," said Bank Indonesia (BI) Governor Darmin Nasution.Jakarta (ANTARA News) - Indonesian bank interest rates on deposits or savings are at the highest level in the ASEAN region and need to be reviewed to improve the banking industry`s efficiency, the country`s central bank chief said.
"The main factors in the high lending rate in Indonesia is the high level of interest rates on deposits as well as overhead costs," said Bank Indonesia (BI) Governor Darmin Nasution at a discussion titled Financial Lecture: Post-Investment Grade at the Ritz Carlton Hotel here Wednesday.
Darmin said the interest rate on deposits in Indonesia was higher than in other ASEAN countries such as Malaysia, Thailand and the Philippines.
"Malaysian and Thai banks are more efficient. When we compare efficiency in Indonesia and in the Philippines, we will see the situations are almost similar. Interest on deposits in the Philippines is 3 percent but inflation is 4.5 percent," he said.
Darmin said the Indonesian government, the finance ministry, state-owned enterprises and private companies should have more investment instruments for interest on deposits to be lower than the inflation rate.
"Those institutions should not raise interest on deposits. That is why we have to coordinate with the Indonesia Deposit Insurance Agency (LPS) to know whether the lending rate is below or above the Bank Indonesia rate," he said.
Darmin said a higher efficiency in lending rates and interest on deposits would lead to an improvement in the overall efficiency of the banking industry and thus create balance in prices.(*)
Editor: Heru Purwanto
Copyright © ANTARA 2012
