GOVT INSTRUCTS STATE BANKS TO LOWER LENDING RATES

Jakarta, May 6 (ANTARA) - The government on Wednesday instructed state-owned banks which had efficient and good balance sheets to lower their interest rates of their credits.

After attending a meeting at the presidential office here on Wednesday, Acting Coordinating Minister for Economic Affairs Sri Mulyani Indrawati said banks which had been operating efficiently should lower their lending rates because Bank Indonesia (BI) had cut its benchmark rate.

"We emphasize that state banks whose balance sheets are good and efficient should lower the interest rates of their credits," the minister said.

She said that there was no difference between state banks and commercial banks which were expected to lower their interest after the central bank cut its key rate on Tuesday.

Mulyani said that with BI cutting its benchmark by 0.25 basis points to 7.25 percent, banks which had been efficient should also lower the interest rate of their credits.

She said that if economic risks were not too bad, banks did not need to set too much reserves so that they would have enough room to lower the interest rate of their credits.

In the meantime, interest rate reference is now at the 13.79 percent level or a difference spread of 600 basis points of the BI benchmark rate.***2***