Printer Friendly

BANKS SMALLER IN NUMBER BUT HEALTHIER.

The crackdown on 16 unhealthy banks by the government early in November 1997 was aimed at redressing the national banking system to provide a panacea for the ailing economy. The government hopes to improve efficiency with the support of strong and sound banks to revive the economy.

The liquidation of the 16 banks would have little effect on the condition of the banking system in general considering the large number of 234 banks operating in the country. The competition among the banks would remain stiff and is a potential source of inefficiency in the banking system.

What is more visible by the drastic measure is its psychogical effects and that it would serve the purpose provided that the government is consistent in its policy regardless of who are involved. The determination shown by the government will serve as a warning to banks not to be indulged in seemingly lucrative but speculative ventures and abide by the call for restructuring and merger among weak banks. The number of banks could be reduced naturally without liquidation.

The government/monetary authorities have issued a series of regulations encouraging efforts to improve the condition of the banking system in the country starting with the February Policy Package in 1991 to December Policy Package in 1995, but the implementation has been too slow and ineffective.

For example, regulation on bank liquidation as contained in a banking law in 1992, implementation regulation issued in December 1996 through a Government Regulation No. 68 in 1996 and the merger plan for a number of government banks announced several time were never again heard now.

Based on data at Bank Indonesia by end of June 1997, the country had 237 banks with 6,411 branch offices. The number was reduced from 240 banks in 1995 . The decline was recorded among Indonesian private banks from 165 banks with 3,492 offices in 1995 to 160 banks with 4,309 offices in June 1997. On the contrary, the number of foreign/joint venture banks rose from 41 with 83 offices in 1995 to 43 with 89 offices in June 1997.

Table - 1 Number of banks and branch offices, 1992 - 1997
Group of bank 1992 1993 1994

General banks(**))
a. Incorporated
 - Number of banks 7 7 7
 - Number of bank offices 1,099 1,109 1,204
 - BRI unit offices 3,194 3,267 3,388

b. Regional government
 banks (BPD)
 - Number of bank 27 27 27
 - Number of bank offices 425 426 431
c. Indonesian private banks
 - Number of banks 144 161 166
 - Number of bank offices 2,884 3,068 3,234
d. Foreign/joint venture banks
 - Number of banks 30 39 40
 - Number of bank offices 56 75 83
 Sub total
 - Number of banks 208 234 240
 - Number of bank offices 4,464 4,678 4,952
People's Credit Banks (BPR)
a. Non village credit body
 - New BPR 848 1,045 1,219
 - Market/village banks 173 173 163
 - BKPD 217 217 217
b. Village credit body
 - Village banks 3,289 3,289 3,289
 - Village barns 2,056 2,056 2,056
c. LDKP 1,936 1,936 1,936
 Sub total
 - Number of banks 8,728 8,951 9,163
 - Number of bank offices 13,330 13,811

Group of bank 1995 1996 1997(*))

General banks(**))
a. Incorporated
 - Number of banks 7 7 7
 - Number of bank offices 1,334 1,385 1,469
 - BRI unit offices 3,512 3,595 3,633

b. Regional government
 banks (BPD)
 - Number of bank 27 27 27
 - Number of bank offices 446 490 518
c. Indonesian private banks
 - Number of banks 165 164 160
 - Number of bank offices 3,492 4,004 4,309
d. Foreign/joint venture banks
 - Number of banks 41 41 43
 - Number of bank offices 83 86 89
 Sub total
 - Number of banks 240 239 237
 - Number of bank offices 5,355 5,990 6,411
People's Credit Banks (BPR)
a. Non village credit body
 - New BPR 1,296 1,343 1,371
 - Market/village banks 161 153 153
 - BKPD 217 217 217
b. Village credit body
 - Village banks 3,289 3,289 3,289
 - Village barns 2,056 2,056 2,056
c. LDKP 1,936 1,936 1,936
 Sub total
 - Number of banks 9,238 9,276 9,302
 - Number of bank offices 14,286 14,956 15,402



(*)) End of June 1997

(**)) Including branches abroad

Source: Bank Indonesia

Java Accounts for 70% of Banks in Number

Java had 4,414 bank offices or 70% of a total of 6,337 offices in the country by June 1997. Jakarta alone had 186 banks with 2,046 offices or 32% of the total number of bank offices in the country. Most of them are Indonesian private banks. West Java and East Java comes second and third in the number of bank offices. West Java had 10 banks with 843 bank offices and East Java had 11 banks with 825 offices.

Meanwhile many other areas have very limited number of banks. Only large banks among private banks have branches in the regions. In East Timor there are only three state-owned banks and six BPDs, and one branch office of private bank. Similarly East Nusatengara and Central Kalimantan each has only 5 private banks. See the following table.

Table - 2 Number of banks and offices by provinces, June 1997
Province Incorporated Regional Dev'
 bank
 Bank Office Bank Office

Aceh - 32 1 15
North Sumatera - 73 1 17
West Sumatera - 30 1 27
Riau - 40 1 11
Jambi - 16 1 6
South Sumatera - 47 1 19
Bengkulu - 13 1 8
Lampung 25 1 9
Jakarta 7 319 1 26
West Java - 185 1 55
Central Java - 131 1 111
Yogyakarta - 34 1 7
East Java - 144 1 34
Bali - 28 1 14
West Nusa Tenggara - 17 1 13
East Nusa Tenggara - 27 1 10
East Timor - 3 1 6
West Kalimantan - 23 1 26
Central Kalimantan - 16 1 11
South Kalimantan - 29 1 9
East Kalimantan - 34 1 13
North Sulawesi - 30 1 12
Central Sulawesi - 19 1 3
South Sulawesi - 78 1 24
Southeast Sulawesi - 11 1 5
Maluku - 18 1 12
Irian Jaya - 29 1 15

Total 7 1,463 27 518

Province Private national Foreign joint
 bank venture
 Bank Office Bank Office

Aceh - 17 - -
North Sumatera - 215 - 6
West Sumatera - 31 - -
Riau - 69 - 2
Jambi - 9 - -
South Sumatera - 77 - -
Bengkulu - 9 - -
Lampung - 63 - -
Jakarta 135 1,650 43 51
West Java 9 592 - 11
Central Java 1 365 - 2
Yogyakarta - 50 - -
East Java 10 631 - 16
Bali 3 175 - -
West Nusa Tenggara - 23 - -
East Nusa Tenggara - 5 - -
East Timor - 1 - -
West Kalimantan - 34 - -
Central Kalimantan - 5 - -
South Kalimantan - 19 - -
East Kalimantan - 47 - -
North Sulawesi 1 40 - -
Central Sulawesi - 12 - -
South Sulawesi - 97 - 1
Southeast Sulawesi - 9 - -
Maluku - 11 - -
Irian Jaya - 11 - -

Total 160 4,267 43 89

Province Total

 Bank Office

Aceh 1 64
North Sumatera 2 311
West Sumatera 1 91
Riau 1 131
Jambi 1 31
South Sumatera 1 143
Bengkulu 1 30
Lampung 1 97
Jakarta 186 2,046
West Java 10 843
Central Java 2 609
Yogyakarta 1 91
East Java 11 825
Bali 4 217
West Nusa Tenggara 1 53
East Nusa Tenggara 1 42
East Timor 1 10
West Kalimantan 1 83
Central Kalimantan 1 32
South Kalimantan 1 57
East Kalimantan 1 94
North Sulawesi 2 82
Central Sulawesi 1 34
South Sulawesi 1 200
Southeast Sulawesi 2 25
Maluku 1 41
Irian Jaya 1 55

Total 237 6,337



(*)) Including branches abroad

Source: Bank Indonesia

Java Accounts for 87% Bank Credits

About 87% or Rp 295 trillion of the total amount of Rp 316 trillion of credits were issued by banks in the 5 provinces of Java by June 1997. This means the other 22 provinces shared only 13% or Rp 45 trillion of the credits.

Jakarta alone with 2,046 bank offices accounted for Rp 233 trillion or 68% of the total amount of bank credits. East Java and West Java came second and third respectively accounting for 7.3% or Rp 24.7 trillion and 6.6% or Rp 22.6 trillion of the total amount of bank credits.

Imbalance is also recorded in the amount of public fund collected and that of credits extended by banks. In most provinces the amount of public fund collected by banks is much larger than the amount of credits extended by banks. In each of 15 provinces out of the country's 27 provinces, public fund collected by banks was Rp 8.5 trillion larger than the total amount of bank credits. It was, however, the contrary in Jakarta where credits were Rp 28 trillion larger than the amount of public fund collected. In other provinces in Java the amount of public fund still exceeded the amount of credits.

This shows that the flow of the public fund is not proportional and some areas drew fund from other areas.

Table - 3 Number of banks, credits and public fund by regions, June 1997
 (Rp billion)
Province Total Credit Public
 Bank Office fund

Aceh 1 64 1,286 1,485
North Sumatera 2 311 10,050 10,966
West Sumatera 1 91 2,051 2,016
Riau 1 131 4,088 3,389
Jambi 1 31 1,155 1,027
South Sumatera 1 143 3,459 4,174
Bengkulu 1 30 479 388
Lampung 1 97 3,682 1,826
Jakarta 186 2,046 233,053 204,678
West Java 10 843 22,561 24,142
Central Java 2 609 13,320 12,594
Yogyakarta 1 91 1,454 2,440
East Java 11 825 24,712 26,201
Bali 4 217 3,169 3,606
West Nusa Tenggara 1 53 786 725
East Nusa Tenggara 1 42 370 723
East Timor 1 10 142 324
West Kalimantan 1 83 2,408 2,004
Central Kalimantan 1 32 565 684
South Kalimantan 1 57 1,540 1,456
East Kalimantan 1 94 2,023 3,030
North Sulawesi 2 82 1,355 1,244
Central Sulawesi 1 34 522 595
South Sulawesi 1 200 3,435 3,774
Southeast Sulawesi 2 25 338 363
Maluku 1 41 997 939
Irian Jaya 1 55 1,028 1,211

Total 237 6,337 340,028 316,004



(*)) Including branches abroad

Source: Bank Indonesia3
COPYRIGHT 1997 P.T. Data Consult, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1997 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Comment:BANKS SMALLER IN NUMBER BUT HEALTHIER.
Publication:Indonesian Commercial Newsletter
Geographic Code:9INDO
Date:Nov 24, 1997
Words:1721
Previous Article:2. AUTOMOTIVE MARKET FINDS IT DIFFICULT TO AVOID IMPACT OF MONETARY TURBULENCE; TIMOR CONDUCTS MANAGEMENT RESTRUCTURING.
Next Article:DESPITE SHRINKAGE IN SHARE PRICE LISTED CIGARETTE COMPANIES DEMONSTRATE GOOD PERFORMANCE.
Topics:

Terms of use | Privacy policy | Copyright © 2020 Farlex, Inc. | Feedback | For webmasters