Increase Overseas Banking Funding, BI Reveals New Policies

Bank Indonesia (photo: Antara)

JAKARTA - Bank Indonesia (BI) has released a new macroprudential policy, namely the Bank Overseas Funding Ratio (RPLN) related to banking funding from abroad.

BI Governor Perry Warjiyo said that Bank Indonesia continues to strengthen the mix of monetary, macroprudential, and payment systems to maintain stability and support sustainable economic growth amid the high uncertainty of the global financial market.

"The improvement of the macroprudential contradictical policy of the Bank Overseas Funding Ratio (RPLN) to strengthen bank foreign funding management according to economic needs, is valid since August 1, 2024," Perry said at a press conference, quoted on Friday, June 21.

Perry conveyed that the RPLN policy arrangement is regarding the definition and coverage of foreign funding for the calculation of the bank's short-term maximum foreign funding limit (threshold RPLN).

Furthermore, the short-term maximum limit setting of foreign funding for bank capital (threshold RPLN) is 30 percent with a contradictive parameter of 0 percent or plus minus 5 percent set based on BI forward looking assessment of financial cycles, external risks, and the risk of financial system stability (SSK).

Perry added and the current determination of the RPLN is 30 percent with a contradictical parameter of 0 percent, which will then be reviewed regularly every 6 months or at any time if necessary.

Perry added that the implementation of the RPLN by banks needs to pay attention to the precautionary principle, which includes, among other things, credit risk management, market and capital risks, in accordance with applicable regulations.

Furthermore, Perry said that Bank Indonesia continues to strengthen policy coordination with the Government to mitigate the impact of global uncertainty. Policy coordination with the Government (Center and Region) was pursued through the National Food Inflation Control Movement (GNPIP) program in various regions in the Central and Regional Inflation Control Team (TPIP and TPID).

Perry conveyed that the coordination of monetary and fiscal policies was also strengthened to maintain macroeconomic stability and the momentum of economic growth.

"Bank Indonesia continues to strengthen policy synergies with the Financial System Stability Committee (KSSK) to maintain financial system stability and encourage credit/financing to the business world," he explained.