Indonesia central bank to give nearly $5 billion flexibility to banks to manage liquidity

JAKARTA: The Indonesian central bank’s policy to cut a secondary reserve requirement to 4% from 5% starting from June will provide banks with 78.45 trillion rupiah ($4.84 billion) of liquidity they can manage more flexibly, a senior official said on Monday.

The comments were made by Solikin M. Juhro, Bank Indonesia’s head of macroprudential policy, at a press conference.

The central bank announced the planned reduction last week, when it also delivered its third interest rate cut since September, intended to bolster growth in Southeast Asia’s biggest economy.

Indonesia central bank cuts rates, as expected

BI has also announced it would increase the maximum level of foreign funding local banks can take, to 35% of their capital from 30%, starting from June, a policy also meant to increase liquidity and support loan growth, Solikin said.