LPS cuts guarantee interest rate 25 bps to 5%

ILLUSTRATION. LPS cuts guarantee interest rate 25 bps to 5%

Reporter: Fencing Septiadi | Editor: Khomarul Hidayat

KONTAN.CO.ID – JAKARTA. A meeting of the Board of Commissioners of the Deposit Insurance Corporation (LPS), Monday (28/9), decided to lower the guarantee interest rate by 25 bps for rupiah deposits to 5%, and foreign currency deposits to 1.25% at commercial banks. Meanwhile, the guarantee interest in rural banks (BPR) is 7.50%.

The guarantee interest rate is valid from October 1, 2020 to January 29, 2021.

Chairman of the Board of Commissioners of LPS Purbaya Yudhi Sadewa said that the policy to reduce the deposit insurance interest rate was taken based on several considerations.

Among other things, the direction of the bank deposit interest rate, which continued to show a downward trend. Then, relatively stable conditions and prospects for liquidity as well as the latest developments in the stability of the financial system and economy.

Also Read: Jokowi appointed the LPS Board of Commissioners and appointed Purbaya as chairman

Bank deposit interest rates were observed to decline 47 bps and 8 bps respectively for rupiah and foreign currency during the observation period September 2020 compared to the previous month’s observation period.

This decline was supported by adequate liquidity conditions. On the other hand, this downward move also takes into account the relatively stable condition of the financial system stability (SSK) amid the increased risk of a decline in economic performance as a result of the pandemic.

Taking into account developments in the direction of deposit interest rates, the dynamics of economic factors, financial system stability and the prospects for banking liquidity, the LPS is open to readjusting the guarantee interest rate. Adjustments to the guarantee interest rate policy are intended to maintain depositors’ confidence in the banking system.

In addition, LPS also urges banks to notify customers regarding the adjustment of the applicable deposit insurance interest rate by placing the information in a place that is easily known by depositors. If the customer receives an interest yield that exceeds the LPS guarantee interest rate, the customer deposit does not meet the LPS guarantee criteria.

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