REPUBLIKA.CO.ID, JAKARTA -- A number of banks have said they would comply with a new policy of the Financial Service Authority adopting "Net Stable Funding Ratio" (NSFR) and to widen implementation of "Liquidity Coverage Ratio" to forestall liquidity problem. It is necessary to monitor the liquidity of banks to see their credit supplying capacity, President Director of state lender PT. Bank Rakyat Indonesia (BRI) Asmawi Syam said here on Saturday.

OJK predicted that bank credits would grow by around 9-12 percent after a sluggish growth of around 1 percent in 2016.  "We see the impact was still positive. Indeed capital and liquidity need to be strengthened to help boost economic growth in 2017," Asmawi said.

Net Stable Funding Ratio (NSFR) is a ratio of stable fund available in bank to stable fund needed. Based on Basel III of Basel Committee on Banking Supervision (BCBS), NSFR is at least 100 percent. Banks, therefore, are required to maintain the stable fund ratio to minimize the liquidity risk and risk of bank failure that could trigger systemic problem. 

Chief Commissioner of OJK Muliaman Hadad, NSFR would be applied only to banks of categories III and IV and foreign banks in 2017.  Banks of category III are ones with capital of Rp5 trillion to Rp30 trillion and banks of category IV are ones with capital of more than Rp20 trillion. 

Liquidity coverage ratio (LCR) is an important part of the Basel Accords, as they define how much liquid assets have to be held by financial institutions. Because banks are required to hold a certain level of highly liquid assets, they are less able to lend out short-term debt. The indicator used to gauge LCR of bank is High Quality Liquid Asset of the bank to enable the bank to survive crisis in 30 days. 

Muliaman gave no details about the plan beyond saying that in a right time LCR would be applied to all banks not only banks of categories III and IV and foreign banks. OJK also already has regulation on LCR, but it has been applied only to banks of categories III and IV and foreign banks. LCR application is also based on Basel III and BCBS.

Chief Country Officer of Deutsche Bank Kunardy Lie said the tenacity of banks would increase if the Basel III scheme is applied this year mainly in forestalling capital flights. "Indeed, banks have to be more liquid to remain healthy and strong in the event of big fund withdrawals," Kunardy said.

He predicted that the liquidity pressure would continue to shadow the banking industry in 2017 as banks which set high credit growths could trigger unhealthy competition in attracting public funds. In addition, the U.S. central bank has signaled that ti would raised its fund rate twice in 2017 that could trigger capital; flight including from Indonesia.

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