ID :
44558
Fri, 02/06/2009 - 21:01
Auther :
Shortlink :
https://www.oananews.org//node/44558
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INTEREST RATES ON BANK DEPOSITS REMAIN HIGH : BANKER
Jakarta, Feb 6 (ANTARA) - Interest rates on bank deposits have remained high despite the Bank Indonesia or central bank's recent decision to lower its key interest rate by 50 basis points to 8.25 percent, a banker said.
"Interest rates on deposits at present are still high at about 12 percent. In normal conditions, interest on deposits usually stands at a rate not much different from the BI Rate and the Savings Guarantor Institution (LPS) rate which is now 9.5 percent," Kostaman Thoyib, retail banking director of Bank Mega, said here on Friday.
He said the interest rate on deposits drastically increased in 2008 when banks were running short of liquidity. This prompted a number of banks to raise their interest rates on deposits.
The move then prompted other banks to also raise their rates because they feared their customers would leave them. There was then an "interest-rate war" among banks.
"This was in spite of the fact that although BI Rate was at 9.5 percent, the interest rates on deposits remained within a range of 15 - 16 percent," Kostaman Thayib said. As a result, he said, banks were forced to adjust their interest rates on credits.
He said t this was regardless of the fact that banks usually set a margin of five percent between the interest rate on deposits and that on credits.
So, when the interest rate on deposits was set at 15 percent, the interest rate om credits was set at 20 percent.
"Usually, of the five percent margin, two percent was for cost, one to two percent for reserves and one percent for profit," he said.
At the beginning of 2009, banks' liquidity had begun to improve and their interest rates on deposits began to go down but this trend had not reached a normal level.
The interest rate on deposits was now about 12 percent which was far from the BI Rate at 8.25 percent, or of the LPS interest rate of 9.5 percent, he said.
"If the interest rates on deposits do not go down faster than the BI rate , interest rates on credits will remain high," the banking affairs observer said.
"Interest rates on deposits at present are still high at about 12 percent. In normal conditions, interest on deposits usually stands at a rate not much different from the BI Rate and the Savings Guarantor Institution (LPS) rate which is now 9.5 percent," Kostaman Thoyib, retail banking director of Bank Mega, said here on Friday.
He said the interest rate on deposits drastically increased in 2008 when banks were running short of liquidity. This prompted a number of banks to raise their interest rates on deposits.
The move then prompted other banks to also raise their rates because they feared their customers would leave them. There was then an "interest-rate war" among banks.
"This was in spite of the fact that although BI Rate was at 9.5 percent, the interest rates on deposits remained within a range of 15 - 16 percent," Kostaman Thayib said. As a result, he said, banks were forced to adjust their interest rates on credits.
He said t this was regardless of the fact that banks usually set a margin of five percent between the interest rate on deposits and that on credits.
So, when the interest rate on deposits was set at 15 percent, the interest rate om credits was set at 20 percent.
"Usually, of the five percent margin, two percent was for cost, one to two percent for reserves and one percent for profit," he said.
At the beginning of 2009, banks' liquidity had begun to improve and their interest rates on deposits began to go down but this trend had not reached a normal level.
The interest rate on deposits was now about 12 percent which was far from the BI Rate at 8.25 percent, or of the LPS interest rate of 9.5 percent, he said.
"If the interest rates on deposits do not go down faster than the BI rate , interest rates on credits will remain high," the banking affairs observer said.
