The soaring inflation have caused Indonesian bankers some major headache. The reason is that per December 2010 the yearly inflation have reached 6.96 percent while the current time deposit rate average in most of Indonesian banks are 7 percent which is if deducted the 20 percent income tax will actually resulted in negative balance for customers.
According to the Central Bank data, at November 2010 total third party funds in the banks were close to USD 223 billion with composition of 46.42 percent is time deposit accounts, 30.44 percent is saving accounts and 23.14 percent is checking account.
The most threatened is the banks which have collected a large percentage of time deposit accounts because the current structure will create a mass withdrawal due to unsatisfactory returns on this accounts. “If something like this happen, the bank liquidity will be in danger” says Mochammad Doddy Arifianto, Senior Economist at the state owned Mandiri Bank.
Doddy also said that this problematic situation will encourage troubled banks to commit illegal transactions which are forbidden by the Savings Guarantee Body such as giving cash back or other incentive to keep customers from taking their money away from the said bank.
At the moment, Mandiri third party funds compositions are largely savings and checking accounts with time deposit account about 43 percent of the total funds.
Bank Mega Retail Director Kostaman Thayib agrees that inflation is a real threat for customers right now. However, customers can still use on call deposit accounts which allows greater flexibility. “Supposed you have idle funds for only two weeks, you can put it directly into on call deposit accounts. Even though the interest is less than 6.5 percent, it can still provide a decent real interest rate” he said.
Kostaman says that the majority of his customers which has a moderate or conservative risk profile are still keeping their money in time deposit account. At the moment around 45 percent of third party funds at bank Mega are in time deposit account.