BI TO DISCUSS INTEREST CUT WITH GOVT, BANKS

Jakarta, Aug 14 (ANTARA) - Bank Indonesia (the central bank/BI) will soon hold talks with the government and banks as part of efforts to cut lending rates, an official said.

"We will soon invite them (national banks) and the government to sit together to seek a wayout," Bank Indonesia Senior Deputy Governor Darmin Nasution said here on Friday.

He was responding to banks' reluctance to cut their lending rates despite the fact that the central bank had lowered its benchmark interest rate or BI Rate by 300 basis points since December 2008. The BI Rate now stands at 6.5 percent.

House of Representatives (DPR) Speaker Agung Laksono in his address to the House's first sitting for 2009-2010 at the parliament building earlier in the day criticized domestic banks for being slow in lowering their lending rates despite a string of cuts in the benchmark rate.

Therefore, he asked the monetary authorities to encourage banks to respond to the declining BI Rate by lowering their lending rates to spur the real sector's growth.

"By doing so, BI Rate will really become a reference and have market strength," he said.

Chief of the Indonesian Chamber of Commerce and Industry (Kadin) MS Hidayat meanwhile asked Bank Indonesia to take immediate action.

"If (the declining) BI Rate is not followed by a cut in lending rates BI will lose integrity. That is what happens now. Therefore, I ask Pak Darmin to conduct coordination so that the banking industry can be controlled," he said.