LPS Boss Reveals Reasons For Maintaining Savings Guarantee Interest Rate

Chairman of the LPS Board of Commissioners Purbaya Yudhi Sadivewa (ANTARA)

JAKARTA - The Board of Commissioners (RDK) Meeting of the Deposit Insurance Corporation (LPS) on May 22, 2023 decided to maintain the Guarantee Interest Rate (TBP) for deposits in Rupiah in commercial banks and BPR, as well as deposits in foreign currency (foreign currency) in commercial banks.

LPS maintains Rupiah deposits in commercial banks and BPRs of 4.25 percent each at commercial banks and 6.75 percent at the People's Economy Bank (BPR). And, for TBP foreign exchange deposits (foreign currency) at commercial banks of 2.25 percent. Furthermore, the TBP will be valid for the period for the period from June 1, 2023 to September 30, 2023.

Chairman of the LPS Board of Commissioners, Purbaya Yudhi Sadive, stated that the determination of deposit TBP was based on several things, among others, in order to maintain the momentum of sustainable economic recovery and efforts to maintain financial system stability, provide continued space for banks in liquidity management, as well as efforts to synergize cross-authorial policies and anticipate the risk of uncertainty from a global perspective that is still relatively high.

However, he continued, amid the high risk of uncertainty, Indonesia in the first quarter of 2023 recorded a growth of 5.03 percent (yoy) supported by consumption and export performance.

"The trend of economic recovery is believed to continue to be shown by the continued strengthening of indicators of production and consumption performance followed by the maintenance of the inflation rate," he told the media quoted on Saturday, May 27.

He also conveyed some of the latest positive developments, namely, the performance of the banking industry that is maintained, both in terms of capital, liquidity and intermediation function, as shown by the industrial capital ratio (KPMM) maintained at the level of 24.69 percent in the period March 2023.

Meanwhile, banking liquidity was also relatively maintained with an AL/DPK ratio of 26.58 percent in April 2023. Meanwhile, banking intermediation performance continued to improve. In April 2023, bank credit grew by 8.08 percent yoy, while Third Party Funds (DPK) grew by 6.82 percent yoy.

Furthermore, Purbaya also emphasized that LPS continues to monitor the movement of national banking deposit interest rates, both those with Rupiah and foreign currencies. The deposit market interest rate (SBP) for Rupiah deposits was observed to increase by a limited amount of 12 bps to 3.24 percent during the observation period from April 10 to May 15, 2023.

"This shows that banks are still in the transition stage of adjusting the direction of monetary policy in the midst of loose liquidity conditions and an increasing trend of credit demand," he explained.

Furthermore, the SBP of foreign exchange deposits in the same observation period was observed to increase by 3 bps to 1.61 percent compared to the period of determination of the Guarantee Interest Rate in February 2023.

The relatively limited increase in foreign exchange rates was influenced by improving domestic liquidity conditions despite the Fed's potential interest rate policy maintained higher for longer to suppress inflation, he added.

Furthermore, in order to protect customer funds and efforts to maintain the trust of depository customers, LPS also urges banks to continue to pay attention to the provisions of the Interest Rate of deposit guarantees in the context of raising funds.

"And in carrying out operations, banks are also expected to continue to comply with the arrangements and supervision by the Financial Services Authority as well as the provisions for liquidity management by Bank Indonesia," concluded Purbaya.