Bank Fees Are Still Expensive, Deputy Minister Of Finance Suahasil: If Efficient, Loan Interest Can Be Lower

Deputy Minister of Finance Suahasil Nazara (center) with echelon I officials of the Ministry of Finance (Photo: Doc. Ministry of Finance)

JAKARTA – Deputy Minister of Finance (Wamenkeu) Suahasil Nazara revealed that the banking sector is currently still struggling with classical structural problems that result in inefficiency.

According to him, this can be seen from the data on overhead costs and net interest margin (NIM) of Indonesian banks, which are still high compared to countries in the Southeast Asian region.

This condition leads to higher interest rates on loans which in turn causes a high-cost economy.

"In fact, if this cost is lower or more efficient, it could have an impact on lower bank lending rates," he said while attending a working meeting with the Legislative Body of the House of Representatives regarding the discussion of the Draft Law on Development and Strengthening of the Financial Sector (P2SK) quoted Friday, August 19.

The Deputy Minister of Finance added that currently the average domestic banking interest rate is at the level of 8.5 percent. This figure is the largest compared to Vietnam at 7.8 percent, Malaysia 5.4 percent and Thailand 3.4 percent.

Just so you know, the current average bank loan interest rate of 8.5 percent has been supported by Bank Indonesia's policy of setting the lowest benchmark interest rate in history, which is 3.5 percent. Thus, if the central bank decides to raise the BI rate, it is certain that the bank's interest rate will be even higher.

For this reason, the Deputy Minister of Finance as a representative of the government continues to encourage fundamental regulatory reforms so that the performance of the national financial industry can be optimal.

"We think the financial sector (banks) has a very important role as an intermediation system (liaison) in order to support economic growth," he said.

For information, the banking sector still dominates the national financial industry with a portion in the range of 80 percent. The rest, the financial business is supported by insurance, capital markets, to the management of pension funds.