Bank Indonesia (BI) has decided to postpone the implementation of a new policy that will allow lenders to expand their sources of deposits to improve their liquidity. BI deputy governor Halim Alamsyah said the central bank expected the policy to be implemented sometime in the first half of this year rather than at the beginning of this year, as earlier scheduled.
The central bank needed more time for in-depth reviews regarding a major change in the definition of "deposit" in the lenders’ financial reports, he said. "We need time before we implement the new policy because it is not easy to change a definition in financial reports. It will take around three or four months to change the reporting system and accustom banks to the new habit," Halim said on Monday.
In November last year, the central bank introduced a new policy that would allow banks to broaden their sources of deposits to incorporate not just customers but also funds generated from the capital market, which can improve their liquidity and in turn their intermediary function for customers. Halim said previously that medium-term notes and mortgage-backed securities were among the securities that banks can issue to raise funding.
Currently, only customer savings, time deposits and demand deposits are categorized as components of deposits. The three, compared with the total amount of loans distributed by banks, make up the loan-to-deposit ratio (LDR). Banking statistics show that the nationwide LDR stood at 88.9 percent in September, reflecting an ease in liquidity pressure since the beginning of the year from 92.2 percent in July. "The plan to shift LDR to a loan-to-funding ratio (LTF) is a positive step because it will offer banks alternative sources of funding. The policy will also benefit the capital market broadly," Bank Danamon finance director Vera Eve Lim said told The Jakarta Post.
Meanwhile, OCBC NISP president director Parwati Surjaudaja said the delay had not affected the bank’s exact calculation of its current LDR, as the central bank had yet to review the redefinition.
Source: The Jakarta Post, 08 January 2015