Banks Welcome New BI Primary Reserve Policy

The banking industry has welcomed Bank Indonesia’s (BI) newly issued policy that eases the average primary reserve requirement (GWM), the minimum amount of a bank’s liquidity that is housed at the central bank, believing that it will boost liquidity.

Under the new policy, which will be effective for conventional banks on July 16 and October 1 for Islamic banks, the banks can keep an average 2 percent of its third-party funds in rupiah for a two-week period.

The requirement is higher than the average 1.5 percent for two weeks as regulated in the previous policy.

Rico Rizal Budidarmo, treasury and international banking director at state-owned lender Bank Negara Indonesia (BNI), said the bank would utilize the greater flexibility allowed under the new rule.

“BNI will surely utilize the flexibility [granted] in the average GWM rule, particularly if it needs liquidity at a time when the liquidity supply in the market is inadequate. The average GWM rule will also help banks to minimize the liquidity cost,” Rico said via text message on Friday.

Citibank Indonesia CEO Batara Sianturi also welcomed the new policy, which would be expanded to include a provision for foreign denominations, saying that the policy would help to deepen interbank activities and provide banks with further flexibility to manage their liquidity.

“We believe a more active and deeper interbank [relationship] will help improve monetary transmission and the banks’ credit funding capabilities,” he said.

Courtesy : ThejakartaPost
Photo : MAGIpost

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