TEMPO.CO, Jakarta - The National Banks Association (Perbanas) chairman Sigit Pramono is confident that the deposit interest rate ceiling set by the Financial Service Authority (OJK) will lower the interest rate for loan.

“The regulation aims at lowering interest rates for loans,” Sigit told Tempo on Friday, October 3, 2014.

Private banks, according to Sigit, would not challenge the regulation because the high deposit interest rate was offered to anticipate tight market liquidity.

OJK’s deputy commissioner for non-bank industry supervision, Dumoly Freddy Pardede echoed Sigit’s opinion, saying that lowering deposit interest rates would decrease interest rates for loans and improve the economy.

Stiff competition in deposit interest rate has caused Indonesia to have the highest interest rate among the neighboring countries. The average interest rate for deposits offered in Malaysia, Singapore and Thailand is somewhere between 2 to 4 percent, while that for loans are set at around 3 to 7 percent. Indonesia, on the other hands, charges interest rate of 11.25 to 13.3 percent for corporate loans and 16 to 23 percent for micro businesses.

Therefore, the OJK set the maximum interest rate for deposit at 7.75 percent for Rp2-billion (US$166,667) deposit. Meanwhile, banks under BUKU IV category with a capital above Rp30 trillion (US$2.5 billion) are allowed to offer interest rate as high as 9.75 percent.

DINI PRAMITA | AISHA SHAIDRA | MAYA NAWANGWULAN | FAIZ NASHRILLAH