The Straits Times
Published on Dec 05, 2012

Indonesia imposes higher capital adequacy for some banks


JAKARTA (REUTERS) - Indonesia's central bank has imposed higher capital adequacy requirements for some commercial banks, in its latest policy effort to increase the stability of the financial system in Southeast Asia's largest economy.

The new rule, issued on Nov. 28 and coming into force in March 2013, requires banks to maintain a capital adequacy ratio of between 8 and 14 per cent depending on their risk profile, from a current flat requirement of 8 per cent, Bank Indonesia said in a statement.

"Bank Indonesia is authorised to set higher minimum capital from the range set, in circumstances where Bank Indonesia considers the calculation of minimum capital is not adequate to anticipate risk," it said.

Banks with the highest risk profile will need a capital adequacy ratio of between 11 to 14 per cent, while banks with the lowest risk profile will still need a capital adequacy ratio of only 8 per cent. Medium risk profiles require 9-11 per cent.