JAKARTA (TheInsiderStories) - The Deposit Insurance Corporation (DIC) lowering the deposit guarantee interest in Rupiah denominated by 50 basis points (bps) to 4.50 percent and foreign currencies by 25 bps to 1 percent, said the agency on Tuesday (11/24). This guarantee interest rate comes into effect Nov. 25, 2020 to Jan. 29, 2021.
Last time, the body lowered the deposit guarantee interest rate by 25 bps on local currency made by commercial and rural banks in 2019. The chairman, Halim Alamsyah, said the reduction was carried out followed the central bank decision on the seven days reserve repo rate at 3.75 percent.
“Because the future are still quite dynamic, we will continue to monitor the development of the deposit rates and at the same time evaluating and adjusting the guarantee interest rate policy,” he noted.
As reported, the government has promised to releases various policies to recover the domestic economy amid the COVID-19 pandemic, including financial sector. Its expect, massive government spending will be encouraged the domestic demand and businesses are moved to invest.
Recently, House of Representative proposed to Indonesian government to expanded the function of the Indonesian DIC. The scenario, the agency will be able to directly injects or other schemes to the failure banks.
Reportedly, the authority will soon to ratified the new policies by issues through the government lieu of law. It said, the Financial Services Agency (FSA) functions to determined the lender as an Intensive Supervision Bank to DIC and the regulator only focused on doing bank supervision
Budget committee chair in the parliament, Said Abdullah stated, the DIC funds could be used to save banks faster. For this reason, its necessary to change its function to run part of FSA jobs. Therefore, he suggested the government to issue a new government regulation which allows the agency to place funds in ‘problematic’ banks or with liquidity problems.
Based on the agency’ financial report on March 31, 2020, the total assets of the body reached Rp128.3 trillion (US$9.16 billion), obtained from the premium paid by the banks and investment. Since operated in 2005 until Feb. 29, 2020, DIC has completed the settlement of failed banks by liquidating 102 banks, which are 101 rural banks and one commercial bank. The body also handled bank failures by rescuing Century Bank in 2008.
in article 8 of the Government Regulation Number 23 of 2020 regarding Economic Recovery Program (ERP), its written that the capital injection is given in order to improve the capital structure of state firms (SOEs) and subsidiaries affected by COVID-19. The funds can also be given to increase the business capacity of SOEs and subsidiaries, including to carry out special assignments in the implementation of the program.
Finance minister, Sri Mulyani Indrawati has announced, the government prepared the ERP Funds around Rp641.12 trillion. In detail, part of the funds will used to support the consumption budget Rp172.1 trillion and an interest subsidy Rp34.15 trillion. The government also provided tax incentives with total amount Rp123.01 trillion, including stimulus reserves amounting to Rp26 trillion. The country also allocates Rp25.27 trillion for capital injection to the SOEs.
Moreover, guarantee of new working capital loans for micro, small, and medium enterprises (MSMEs) Rp6 trillion. She revealed, the government also provides a bailout fund for MSMEs working capital worth of IDR19.65 trillion and a placement of funds for loan restructuring Rp87.59 trillion.
Based on the decree, the economic recovery program can be carried out through the mechanism of placement of funds, guarantees, state capital injection, and government investment. At present, said the minister, the government has completed the design of two programs.
US$1: Rp14,100
Written by Staff Editor, Email: theinsiderstories@gmail.com
