Banks to be Required to Announce Prime Lending Rates

Bandung, West Java, The Indonesian central bank will implement a policy whereby banks must announce their prime lending rates as of January 1, 2011, Governor Darmin Nasution said.

"The prime lending rate policy will be made known in the next two weeks. It will become effective as of January 1," he said after signing a cooperation agreement with the National Statistics Agency here on Friday.

Central bank deputy governor Mulyaman D Hadad meanwhile said the prime lending rate policy would be made ready before the end of December for transparency sake.

"We hope there will be unified guidelines for determining the base line for the lending rate. Certainly banks have to announce it," he said.

Mulyaman said with the policy it did not mean that Bank Indonesia would limit credits, adding the policy was aimed at creating transparency in general bank supervision.

The policy is expected to be able to encourage banks to reduce their lending rates due to competition resulting from rate offering which is now transparently made known to the public, he said.