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View all search resultsOJK warns local banks to tighten risk controls amid govt injection
Finance Minister Purbaya Yudhi Sadewa has unveiled plans to transfer an additional Rp 70 trillion to local banks, including regional lenders such as Bank Jakarta and Bank Jatim.
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A woman walks past the Papua office of the Financial Services Authority (OJK) in Jayapura on Oct. 27. The OJK has opened branch offices across the country to speed up its services to the public. (Antara/Indrayadi TH)
T
he Financial Services Authority (OJK) has said government liquidity injections into local banks could boost funding capacity and pave the way for lower lending rates. However, it cautioned recipient banks, particularly regional development banks (BPD) with already ample liquidity, to tighten risk management when channeling the additional funds.
Finance Minister Purbaya Yudhi Sadewa earlier announced that the government had shifted around Rp 200 trillion (US$12.05 billion) from its account at Bank Indonesia to five state-owned lenders. On Tuesday, he unveiled plans to transfer an additional Rp 70 trillion, sourced from surplus budget balances (SAL) from previous fiscal years, to local banks, including regional lenders such as Bank Jakarta and Bank Jatim.
“I’m looking for [banks] with strong financial backing. Bank Jakarta is solid, with a large budget, and East Java’s Bank Jatim is similarly well-capitalized. So if I channel several trillion rupiah to them, there’s no harm risk,” Purbaya said, as quoted by Kontan.
The OJK’s head of banking supervision, Dian Ediana Rae, acknowledged that the government’s liquidity injection may enable banks to lower their lending rates, though such adjustments typically occur with a time lag.
“The OJK sees room for further rate cuts, but this largely depends on each bank’s cost structure, particularly their cost of funds [COF],” Dian said during a press briefing on Thursday.
He also welcomed the government’s plan to place funds in BPD to boost local economies.
“The placement of government funds in BPD is positive, it will enhance liquidity and can be optimized to drive regional economic growth,” he said.
