Indonesian capital-short banks urged to tap foreign funding to boost liquidity

JAKARTA, July 28 (Xinhua) -- Governor of Bank Indonesia, Perry Warjiyo, on Monday encouraged banks with insufficient capital to diversify their funding sources, such as seeking funding from overseas to strengthen liquidity, instead of relying solely on domestic deposit-taking.

The central banker highlighted that Bank Indonesia has taken steps to support this by raising the foreign funding ratio facility from 30 percent to 35 percent, effective since June 1.

"We provide the foreign funding ratio so that banks do not solely depend on domestic third-party funds," Warjiyo explained, emphasizing the importance of adhering to prudential principles. "This facility allows eligible banks to obtain or seek funding from abroad."

With this initiative in place, coupled with Bank Indonesia's recent 25-basis-point cut in the benchmark interest rate to 5.25 percent, Warjiyo expressed optimism that bank lending could grow by 11 percent this year. Enditem