The Indonesian Deposit Insurance Corporation decided not to collect the guarantee premium from banks in the second semester, to help the industry manages its cash flow in the midst of COVID-19, said the chairman on Monday (05/11) - Photo by TheInsiderStories

JAKARTA (TheInsiderStories) – The Indonesian Deposit Insurance Corporation decided not to collect the guarantee premium from banks in the second semester, to help the industry manages its cash flow in the midst of COVID-19, said the chairman on Monday (05/11). The relief is in the form of eliminating fines for those who have late paid premiums.

“To give a room for bank moves, we decided to loosen the guarantee premium in the second semester. With this easing policy, banks, for an example, will not be fined for the next six months,” Halim Alamsyah told reporters after a coordination meeting of the Financial System Stability Committee today.

Based on Financial Services Authority Regulation Number 11 of 2020, the regulator has urged the banks to restructure debtors was affected by the epidemic. While, the saving interest rate will drops significantly from currently at 5.74 percent and will continue to fall at the current condition and will disturb the bank’ liquidity.

In addition, at the end of the first quarter of this year the Rupiah deposits rate fell by an average of 28 basis points to 5.50 percent. Alamsyah said, the same thing was also seen in foreign exchange rates which also fell to 1.01 percent.

In April, he noted, the current account growth slowed by 9.77 percent compared to last year. Nevertheless, he continued, there are still other components that continue to experience growth, namely the savings component.

“Savings grew 10.2 percent year on year compared to 9.5 percent in March and 8.11 percent in April,” said Alamsjah.

In general, he revealed, public confidence is still high in entrusting their funds to be deposited in the national banks. His agency, he adds, continuing to monitor the situation of deposits, the downward trend in interest rates, and liquidity in the banking system.

The chairman admitted, the national third party fund experienced a slowdown due to slowing economic activity during the epidemic. Based on the latest data, the savings growth lower to 7.98 percent compared to March of 9.66 percent.

To help bank’ liquidity, the central bank has poured Rp503.8 trillion (US$33.58 billion) through a quantitative easing policy. The regulators also prepared anchor bank and a number of schemes to overcome the liquidity problems in the Indonesian financial industry amid he COVID-19 pandemic.

The chairman, Wimboh Santoso explained, the government will provides a liquidity assistances through a placement of deposit to the anchor bank, can be a government bank or a private major bank.

Written by Staff Editor, Email: theinsiderstories@gmail.com