Indonesia’s Banking Transformation: 120 Banks Closed, LPS Manages Deposits Worth Rp 1.89 Trillion


PROGRES.ID– Since 2005 until September 2023, the Deposit Insurance Corporation (Lembaga Penjamin Simpanan or LPS) has liquidated 120 banks in Indonesia. Among these, one was a commercial bank, while the remaining 119 were rural economic banks or Islamic rural economic banks (BPR/BPRS).

According to Didik Madiyono, a member of the LPS Board of Commissioners responsible for Guarantee and Bank Resolution, LPS has been making guarantee payments since its establishment. To date, 120 banks have undergone liquidation, with two rural economic banks (BPR) being liquidated this year up to September.

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Didik Madiyono explained that most of the banks were not closed due to the country’s economic conditions but rather due to fraudulent activities or integrity violations committed by the owners, shareholders, or bank management.

Regarding the number of accounts, there were 294,713 accounts considered eligible for payment (LB), representing 93.91% of the total depositor accounts. On the other hand, only about 19,101 accounts (6.09%) were deemed ineligible for payment (TLB) because they did not meet the 3T criteria set by LPS.

The 3T criteria include requirements such as being properly recorded in the bank’s books, receiving interest rates on deposits not exceeding the LPS guarantee interest rate, and not engaging in fraudulent banking activities.

Didik Madiyono also revealed that the total deposits in the liquidated banks amounted to Rp 2.26 trillion. The majority of these deposits, approximately Rp 1.89 trillion or 83.52%, were declared eligible for payment (LB), while the remaining Rp 373 billion (16.48%) were considered ineligible for payment (TLB).

The latest data shows that over the past five years, from 2019 to September 2023, the percentage of ineligible deposits due to not meeting the 3T criteria has been decreasing. Over the last three years, the percentage of eligible deposits has remained above 90%.



Source: CNBC Indonesia

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