Understanding The Duties Of Deposit Insurance Corporations

Illustration (Photo: Doc. Antara)

YOGYAKARTA The task of the Deposit Insurance Corporation (LPS) is to guarantee deposits of banking customers in Indonesia. The forms of bank customer deposits guaranteed by LPS include savings, deposits, deposits, deposit certificates, and other forms that are equalized with them.

In addition, LPS also pays deposits for sharia bank customers in the form of wadiah giro, wadiah savings, mudharabah savings, and mudharabah deposits.

The following is complete information regarding the Deposit Insurance Corporation or LPS, starting from its understanding, function, and duties.

The Deposit Insurance Corporation (LPS) is an independent institution established by the government through Law Number 24 of 2004 concerning Savings Guarantee Institutions.

The law explains that LPS functions to guarantee and protect deposits/contents of banking customers in Indonesia. When there is a conflict between customers and financial institutions, the LPS has the authority to mediate and decide the solution to the conflict.

The history of the establishment of LPS began when there was a 1998 monetary crisis in the Asian region, including Indonesia.

The banking crisis in the country occurs when there are 16 banks that are liquidated and result in a decrease in the level of public trust in the Indonesian banking system.

To overcome the crisis, the government issued several policies, including providing guarantees for all bank payment obligations, including public deposits (banket guarantees).

In practice, Guarantee blanks can indeed increase public confidence in the banking industry. However, too wide the scope of guarantees has led to the emergence of moral hazards both in terms of bank and public managers.

To provide a sense of security for storage customers and maintain the stability of the banking system, the government replaces the guarantee program, which has a very wide coverage with a limited guarantee system.

In the view of the Indonesian government, a simpnant guarantor institution and a bank resolution in Indonesia are needed.

Then, in 2004, the government issued Law Number 24 of 2004 concerning Deposit Insurance Corporations. This law is used as the legal basis for the formation of an independent institution, namely the Deposit Insurance Corporation. LPS was officially formed on September 22, 2005.

According to Article 4 of Law Number 24 of 2004, the function of LPS is as follows:

To carry out its function, the Deposit Insurance Corporation (LPS) is tasked with:

For information, the value of deposits guaranteed by LPS is the largest worth IDR 2 billion per customer per bank since October 13, 2008.

If a customer has several savings accounts in one bank, then to calculate guaranteed savings, the balance of all these accounts is added up.

The value of deposits guaranteed by LPS includes principal plus interest for conventional banks, or principally plus profit sharing which has become the right of customers for Islamic banks.

The deposits above Rp2 billion will be completed by the Liquidation Team based on the results of bank wealth liquidation.

This is information about the duties of the Deposit Insurance Corporation. Hopefully this article can add insight to the loyal readers of VOI.ID.