Chairman Board of Commissioners Halim Alamsyah (M), Chief Executive Fauzi Ichsan (R), and Corporate Secretary of IDI Samsu Adi Nugroho - Photo by IDI

JAKARTA (TheInsiderStories) – Board of Commissioners of Indonesia’s Deposit Insurance Agency (DIA) decided to raise the interest rate guarantee for deposits denominated in rupiah and foreign exchange in commercial banks and rural banks.

For Rupiah deposits in commercial banks and rural banks for the period of Sept. 13, 2018 until Jan. 12, 2019, it is increased by 25 basis points (bps). As for the foreign currency at commercial banks at 50 bps.

The interest rate on Rupiah deposits in commercial banks at 6.50 percent and by 2.00 percent in foreign currencies. Then the interest rate on deposits of Rupiah in rural bank at 9.00 percent.

“The Interest Rate Deposit Guarantee is decided based on considerations, such as the Interest Rate of banks’ savings still show rising trend and it has the potential to continue as a form of response to the increase in the monetary policy rate,” said Chairman of the Board of Commissioners (DIA) Halim Alam on Wednesday (12/09).

The other consideration, he said, is the condition and liquidity risk remains relatively stable but there is a tendency to rise amid rising trend in deposit rates and improving credit.

“We see the stability of the financial system is maintained in spite of the pressure from the decline in the exchange rate and the volatility in financial markets,” said Halim.

Referring to the DIA Regulation Number 2 of Year 2014, the agency guarantees set interest rates three times in a year that is in the second week in January, May, and September, unless there is a change in economic condition and a significant banking.

He said that by taking into account the dynamics of the financial markets is still quite high and the trend of rising interest rates on deposits are still underway then, DIA will continue to monitor and evaluate policy related Interest Rate Guarantee.

In this case the DIA will continue to make adjustments to the Guaranteed Interest Rate policy in accordance with the development of banking deposit interest rate data and an evaluation of the development of economic conditions as well as the stability of the financial system.

In line with the aim to protect customers and expand the scope of the guarantee, DIA urged more attention to the provision of banking deposit insurance interest rates in order to fund. In conducting its business, the bank should consider liquidity conditions ahead.

Thus, banks are expected to comply with the provisions of the management of liquidity in the economy by Bank Indonesia, as well as banking regulation and supervision by the Financial Services Authority