OJK deputy commissioner for banking supervision Irwan Lubis said that one way to work together with the BPD was by acquiring some of their shares.

"The state-owned banks do not have to acquire a lot of the BPD's shares. Around 20 to 30 percent [of] shares is enough," Irwan said in Jakarta on Wednesday, as quoted by kompas.com.

Through the acquisition, he said that state-run banks could also disseminate education and information to the BPD on how to better manage their funds and minimize the effects of local political issues.

"It will be a good collaboration and the BPD will learn some lessons from the state-owned banks," he said.

Such collaboration would help strengthen Indonesian banking system, hence making the country more competitive and ready to face the launch of the much-anticipated ASEAN Economic Community (AEC) in 2015.

Separately, state-run lender PT Bank Negara Indonesia (BNI) president director Gatot M. Suwondo said that some of the BPD had a lot of money but did not yet have competent human capital to run the business.

"Thus, sometimes we are working with them to provide businesses with a syndicated loan. Hopefully this way will help them grow," Gatot said. (nfo)

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