"The Bank Indonesia (BI)`s benchmark and the interest rate of the Deposit Insurance Agency (LPS) are reference rates but the interest rates will be determined by the market and the market cannot be controlled," Gatot said.
Jakarta (ANTARA News) - Banking interest rates would be determined by the market which could not be controlled, director of state-owned Bank BNI, Gatot M Suwondo said.

"The Bank Indonesia (BI)`s benchmark and the interest rate of the Deposit Insurance Agency (LPS) are reference rates but the interest rates will be determined by the market and the market cannot be controlled," Gatot said on Wednesday.

Earlier, BI (the central bank) lowered its key rate (BI benchmark rate) by 25 basis points from six per cent to 5.75 per cent and on Monday the LPS lowered the interest rate for public funds guaranteed by the government from 6.5 per cent to 6 per cent.

Gatot suggested that the reference rates had better be eliminated.

"I think the reference rates should be eliminated. It does not mean that we do not think about lowering interest rates, but what happens now is that industry is being hampered by logistics costs because of unfavourable infrastructure. It is this that needs to be improved," he said.

He said that interest rates were not the only factor that encouraged debtors to borrow money from banks.

"What is needed now is credit accessibility for business players. They need clarity regarding the flow of credit not only the interest rates. After all, banks` `merchandize` is service. Service quality is also a factor for customers to make a decision," Gatot said.(*)

Editor: Heru Purwanto
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