Financial Services Authority (OJK) chairman Wimboh Santoso speaks on BeritaSatu TV's Hot Economy program on Tuesday. (Photo courtesy of BeritaSatu TV)
Indonesian Banks Among Southeast Asia's Best, OJK Chief Says
BY :HERU ANDRIYANTO
SEPTEMBER 25, 2019
Jakarta. Indonesian banks are much stronger now than they were during the 1997-98 Asian financial crisis and are among the best in the region, the head of the country's financial regulator said.
Indonesian banks now have the highest average capital adequacy ratio in the world, Wimboh Santoso, chairman of the Financial Services Authority (OJK), said on BeritaSatu TV's Hot Economy program aired on Tuesday night.
"We have measured the strengths of our banks and we don't need to worry about capital. Our CAR is 23 percent, this is the highest CAR in the world," Wimboh said. "We can now compare them with [banks] in G-20 countries, not with those small countries that no longer serve as our benchmark."
CAR measures a bank's financial strengths by comparing its capital against assets, with higher CAR indicating a safer bank.
Wimboh said the authorities had been making tremendous effort to rebuild the banking system in the aftermath of the 1997-98 crisis and helped Indonesian banks grow at a faster pace.
"Our banks are very competitive at the Asean level and in the top three in the region," Wimboh said, referring to the 10-member Association of Southeast Asian Nations.
The former executive director of the International Monetary Fund emphasized the importance of a sound regulatory system to ensure a healthy environment for the banking sector and to prevent a recurrence of the crisis two decades ago.
"We have to do a lot more in the future. Our banking regulations are of a global standard, comparable to those of the G-20 countries. In terms of best practices and capital, we can compete with other countries," he said.
"There are some countries that allow loose regulations [on banks], but that's not our case. We apply a high standard now," he added.