Small Banks May Collapse on Low Interest Rate

VIVAnews - Banking and economic analyst at the Indonesian National Commercial Banks Association (Perbanas), Raden Pardede, said if Bank Indonesia forces cut in interest rates, small banks may collapse. 

"Each bank is unique. Should the policy be issued, I fear that small banks will fall," said Pardede on Wednesday, Dec 12.

There are banks that will be crippled if they have to cut interest rates, for the competition with huge banks is not possible.   

"If they cut the lending rates, they will have flatter margin," said Pardede. 

Small banks with less profit, he said, will not take the preference to cut their interest rates. 

The central bank and the government in this matter have to create the balance with regard to the issued policy.