Bankers doubt Indonesia's liquidity rules will have desired effect

Jakarta

LOOSER liquidity rules for banks in Indonesia are unlikely to have the intended effect of boosting lending growth as a simultaneous rise in interest rates at a time when the economy is slowing down will curb credit demand.

The central bank last week said it will count bonds and securities issued by banks, alongside deposits, as part of a lender's loan-to-deposit ratio (LDR), which helps investors assess if a bank is overstretching itself.