Continue The Trend Of Low Interest Rates, LPS Cut Guarantee Interest 25 Bps

Illustration. (Photo: Doc. Antara)

JAKARTA - The Deposit Insurance Corporation (LPS) decreases the guarantee interest rate of 25 basis points (bps) for rupiah deposits at commercial banks and rural banks (BPR). Not only that, LPS also implemented the same policy for deposits in foreign currency (foreign currency) with a decrease of 25 bps.

Through this decree, the amount of guarantee interest on deposits in commercial banks will be 4 percent, BPRs to 6.5 percent, and foreign currency to 0.5 percent.

"Effective from 29 May 2021 to 29 September 2021," said Chairman of the Board of Commissioners of the LPS Purbaya Yudhi Sadewa in an official statement on Friday, May 28.

According to Purbaya, the rate cut step is in line with the trend of low interest rates in the banking industry and has the potential to continue to slope for some time to come.

This projection is also based on loose liquidity conditions in banking institutions thanks to Bank Indonesia's fairly accommodative monetary policy.

"LPS will keep a close watch on the downward trend in deposit interest rates, although among banks the decline is still not quite evenly distributed," he said.

Furthermore, LPS considered that the abundance of banking liquidity could not be separated from the growth of third party funds (DPK) and also the intermediary function (credit) which was still on hold.

Previously, Bank Indonesia (BI) as the monetary authority decided to maintain the BI 7-Day Reverse Repo Rate (BI7DRR) at 3.50 percent.

BI also chose not to change the deposit facility interest rate, which was 2.75 percent, and the lending facility rate at 4.25 percent.