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Almost 10 million bank accounts closed in three months JAKARTA - Around 9.7 million bank accounts have been closed or emptied in the last three months according to the National Development Agenc (Bappenas). This raises alarm bells in the country's banking sector and the entire economy. The data, which was compiled by the Deposit Insurance Agency (LPS), referred mosty to accounts with deposits of less than Rp 100 million (8,333 euro).

Bappenas director for financial institutions and monetary analysis, Sidgy Lego Pangestu, said that they were still investigating the cause of this phenomenon and whether it would have an impact on the economy. "There are several possibilities," he said at an economics seminar in Bandung earlier this week. "It could mean that people with savings of under Rp 100 million are getting poorer because their savings are being spent on their everyday needs, or it could be because they have no jobs or regular income, or because of a disaster, or the stagnant situation in the real sector."

Sidgy admitted that Bappenas didn't have data on whether a phenomenon like this had ccurred before or how much money was drawn from the closed accounts.However senior official of LPS, Firdaus Djaelani dismissed worries, saying that the closed accounts were mostly held at Bank Rakyat Indonesia (BRI). BRI reported that they closed a large number of inactive accounts according to him. "Many of the accounts were probably opened just as formal prerequisites to obtain loans from the bank," Firdaus said. "I think it would be too hasty to jump to any conclusions that it is related to lower purchasing power on behalf of the public."

Sidgy however, pointed at a report from Central Statistics Agency (BPS) showing that 1.7 percent of all bank accounts in Indonesia accounted for 80 percent of the entire amount of deposits. A finding that has been backed up by the LPS. According to Sidgy, this reflects the huge disparity in the economy and could represent a time bomb for the banking sector if problems in the industry and the economy creates a run on funds.

Another looming problem for the banking industry was the significant amount of non-performing loans, which had rien to Rp 179 trillion now from Rp 160 trillion at the end of last year, or 20 percent of total lending. "Policies should, therefore, be more pro-business in terms of tax incentives, regulations, and the time needed to obtain business permits," Sidqy suggested.



Posted in Economy @ 24 March 2007 14:21 CET by Jeroen · 'Blog' RSS feed · permalink






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