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Development of Banking in Indonesia

Beginning in 1980 - an amount of private banks is growing rapidly, bringing Indonesia's growing economy. The banking sector is instrumental in mobilizing public funds for various purposes has increased very big. Previously, the banking sector is nothing more than a facilitator of government activities and some large companies, and has now turned into a very influential sector of the economy Rapid growth was not followed by the application of precautionary principle equal attention, even those terms sound unfamiliar to the general public even though a banker. Where it is a major cause of problems at the end of 1990 - an From a bad experience, the question arose. Is the strategy of development of the banking sector in Indonesia for in it is correct? Is the existing legislation so far has been able to organize and direct the banking sector toward efficient banking with a reasonable risk? The question is also addressed to another party bank management, employees, Bank Indonesia, as well as the Government BIS (Bank for International Settlements) have long sought out practices practices that are deemed banking creates an efficient and effective in its role as an intermediary financial. Recognizing the principles - principles that have been formulated in the BIS and the need to redesign Indonesia banking sector in the long term, the monetary authorities are trying to make the Indonesian Banking Architecture (API). With the API, BI gradually willing to implement practices international best practices covered in 25 Principal Basel Principles for Effective Banking Supervision (Basel Core Principles for Effective Banking Supervision), so that within the next five years is expected to Indonesia has been aligned with the countries - other countries are more used to applying the principles - principles Under the supervision of BI, the banking sector refining management and monitoring system, as well as continue to improve standardization and operational health. In addition, the banking sector also focused professionalism of management and prioritizing increased efficiency. For example, commission, procedural costs, and non-interest income rose an average of about 5.9 percent. Another factor, the banking industry has always revolved around the development of the national economy, so the support to national development also brings considerable profits. For example, banks support the development of infrastructure such as electricity, traffic, irrigation and telecomunication, and give credit to a very large number. Another key factor is the pro-SME loans. The banking sector followed a strategy of channeling capital to SMEs, thus creating more jobs and helping the government address unemployment and poverty.

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