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Indonesia central bank relaxes short-term liquidity loan rules for banks

[JAKARTA] Indonesia's central bank has relaxed rules for commercial banks offering short-term liquidity loans as the coronavirus pandemic takes its toll on the economy, it said in a statement on Wednesday.

Bank Indonesia (BI) has set the interest rate for such loans at its lending facility rate, currently 4.75 per cent, plus 100 basis points.

It also widened the criteria for assets that banks can use for collateral for such loans.

The measures were aimed at "strengthening BI's function as lender of the last resort" while also maintaining good corporate governance, the central bank said.

BI has cut interest rates four times by a total 100 basic points this year, bought government bonds and trimmed required reserves in response to the pandemic.


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