BANKS' INTEREST RATES ON CREDITS DOWN 38 BASIS POINTS

Jakarta, May 29 (ANTARA) - The Bank of Indonesia (BI) said interest rates on bank credits have dropped around 38 basis points in the period December 2008 - April 2009.

"Private banks' response (to recent cuts in the BI benchmark interest rate) is not yet maximal. The drop in interest rates on credits charged by foreign and mixed banks from December 2008 to April 2009 only reached just 38 basis points," the central bank's acting governor Miranda S Goeltom said here on Thursday at a meeting with House Commission XI.

Miranda said the largest drop was recorded in the interest of credits for working capital which reached around 40 basis points while the interest of consumer credits even rose eight basis points.

With regard to deposit interest she said it had dropped 171 points or 1.71 percent during the period. She admitted that it was not quite significant yet because the bencmark rate had dropped 225 basis points.

"From December 2008 to April 2009 the BI Rate dropped 225 basis points to 7.25 percent," she said.

She said his side had already taken various efforts to encourage banks to reduce their interest rate.

"We keep lobbying the banks even one by one with 14 biggest bankers in Indonesia," she said.

The efforts include simplifying procedures for opening a bank, adjusting the risk-based weighted assets and others.

Regarding conditions of banks Miranda said that BI had always carried out stress tests on them.

"In view of risks such as risks in interest, liquidity, credits, state bonds and others the banking industry is right now strong and sound," she said.