Jakarta – The Deposit Insurance Corporation (LPS) announced on Tuesday a cut in its guaranteed interest rates for both rupiah and foreign currency-denominated savings and deposits following a cut in Bank Indonesia's benchmark rate last week.
LPS lowered the guaranteed rate for rupiah savings and deposits in commercial banks by 25 basis points (bps) to 6.5 percent, and by 25 bps to 9 percent for rupiah savings and deposits in Bank Perkreditan Rakyat (BPR) or secondary banks, while the guaranteed rate for foreign currency savings and deposits was lowered to 2 percent. The new rates will take affect from Sept. 26 to Jan. 24, 2020.
LPS chairman Halim Alamsyah said the cut was made to follow Bank Indonesia's decision to lower its 7-day reverse repo rate by 25 bps to 5.25 percent last week.
Halim said since August, 21, the average interest rate of rupiah savings and deposits at commercial banks had declined by 17 bps to 5.69 percent, while for foreign currency savings and deposits, the interest rate had dropped by 5 bps to 1.23 percent.
"BI has lowered its benchmark rate by 75 bps and the Fed [US Federal Reserve] by 50 bps since July. Since then, the interest rates of rupiah savings in local banks have also gradually declined, also affecting LPS' guaranteed interest rate," Halim added.
The maximum amount of savings or deposits insured by LPS is Rp 2 billion (US$142,857) per depositor per bank. Savings that carry an interest rate higher than LPS' guaranteed rates are not guaranteed. (hen)