Bank of Indonesia: Credit Card Businesses Shouldn't Go All-Out

TEMPO.CO, Bandung - Bank Indonesia urged banks not to go all-out in attracting transactions through credit card promotions.

"There's one that has a Rolls Royce as a prize, discounts up to 70 percent for purchasing certain products, they went all-out, other countries are not like us, because the cost is assured by the banks," said Eni V. Panggabean, Executive Director and Head of Bank Indonesia's Department of Payment System Policy last week.

Banks' revenue came from credit card interests that are included in fee-based income. Eni said that banks could suffer losses if the system is not managed carefully. In addition, fee based income can influence a bank's business performance, especially in relation to non-performing loan (NPL).

Eni revealed that there are 17.4 million credit card users in Indonesia. The number consists only nine percent of the total bank account owners that added up to 190 million bank accounts. Eni also underlined that there are a number of issues that can be developed in the credit card business.

At the same time, Eni also warned the public to restrain from engaging in a shopping spree using credit cards. The Central Bank also advised people not to own too many credit cards. "Don't [own] too many credit cards, since you can get carried away if you own too many, this is the dangerous part," Eni said.

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