- The Deposit Insurance Corporation (Lembaga Penjamin Simpanan – “LPS”) recently announced a cut in its guaranteed interest rates of 50 basis points for rupiah currency denominated deposits. In order to encourage prospects of a national economic recovery, the guaranteed interest rate has now been lowered to 4.5% for commercial banks and 7.0% for rural banks (Bank Perkreditan Rakyat/BPR).
- The Chairman of the LPS Board of Commissioner, Purbaya Yudhi Sadewa, has stated that the aforementioned guaranteed interest rates will be applicable during the 25 November 2020 to 29 January 2021 period.
- The guaranteed interest rate for foreign currency denominated deposits in commercial banks has also now been lowered by 25 basis points from 1.25 % to 1.00%.
- Mr. Sadewa further stated that the LPS took a number of indicators into consideration prior to making its decision to cut the guaranteed interest rates, specifically: 1) The downward trend of deposit interest rates in banks; 2) Stable conditions and prospects for banking liquidity, indicated by the growth of third-party funds (Dana Pihak Ketiga/DPK), which grew at an annual rate that reached 12.88% in September 2020; 3) The maintenance of financial system stability; and 4) The fact that liquidity pressures on small banks, as well as liquidity competition between banks, have also been flattened. (ANT)
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