REPUBLIKA.CO.ID, JAKARTA -- Director of the Indonesian Banking Development Institute (LPPI) Krisna Wijaya warned of bank fraud amid economic slowdown.

The government has issued 12 deregulation measures to boost economic development and to increase state revenues, Krisna said.

The series of deregulation measures could allow the banking industry to maintain a positive growth and financial performance, he said.

"However, at the same time the policy could open way for banking crime known as fraud," he said here on Wednesday.

Last April a regional bank suffered a deadly blow with a loss of Rp19 billion in fictive credit under the program of people's business credit known as KUR, he cited.

In a bid to boost development of small enterprises, the government in one of its deregulation measures cut the interest rate on KUR to 9 percent and 7 percent next year.

"Well, the opportunities offered by the government must not backfire coming as a boomerang because we may become less prudent and selective in extending credits," he said.

There is also threat of fraud in banking service in payments with card, he said.

Based on police data in the past three years there were 5,500 skimming cases in the world and 1,549 of which were in Indonesia, he said. Skimming is an act of data stealing from magnetic stripe.

Another threat in credit card service is the regulation requiring banks to report credit card transaction to the Taxation Directorate General.

"This is a challenge for banks as it would result in a cut in the number of credit card holders," he said.

He said fraud could be committed also by the bank workers, themselves in cooperation with fraudulent clients.

Such frauds have often been committed despite anti fraud measures by the bank management, he said.

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