Darmin Nasution: Towards sustainable and inclusive growth -
challenges amidst the global turbulence
Speech by Dr Darmin Nasution, Governor of Bank Indonesia, at the Bankers' Dinner,
Jakarta, 23 November 2012.
* * *
Respectable Leaders and Members of Parliament,
Honorable Ministers and Heads of Institutions,
Prominent Bankers,
Distinguished Guests, Ladies and Gentlemen,
Assalamu'alaikum Wr. Wb,
Good evening and may God bless us all,
Commencing our respectable gathering this evening, I would like to invite all of you to join
me in extending praise and gratitude to God Almighty who has blessed us once again with
the opportunity to meet here for the Bankers' Dinner 2012.
In this very appropriate time, please allow me on behalf of Bank Indonesia's Board of
Governors to express our deepest gratitude and appreciation to the banking community as
well as the government, the parliament, businesspeople, academics, experts, press and
other stakeholders for supporting Bank Indonesia in performing its mandates.
Distinguished guests, ladies and gentlemen,
1. During last year's Bankers' Dinner on December 9, 2011, at this very same room, I
caught the glimpse of optimism surrounding all of us. We were optimistic that 2012
would be the year of hopes and opportunities for all of us to continue safeguarding
the economy with a strong and sustainable growth.
2. It was indeed not an overly sanguine expectation considering that 2011 had seen a
steady domestic expansion accompanied by impressive macro stability.
Furthermore, since early 2011 the US economy had shown signs of bottoming out
from its severe crisis in 2008.
3. However, by mid 2012 we came to realize that the global crisis has not subsided.
The multi dimensional crisis that depressed the European economy has brought a
global impact of great magnitude during 2012.
4. Up to this moment, the European region has been confronted by unavoidable debt
trap, tightened fiscal space, squeezed monetary room, mounting unemployment
level, fragile financial sector, and decaying market confidence. All of these combined
has manifested into a vicious circle that is weakening Europe's ability to escape
from the prolonged crisis.
5. As the global inter-linkages strengthened, the dynamics of emerging economies
cannot be entirely decoupled from what happens in the advanced economies. Since
mid-2012, we have seen some big developing countries, particularly China, began
to lose its endurance.
Distinguished guests, ladies and gentlemen,
6. The depth and scope of crisis originated from US sub-prime bubble burst coupled
with European debt problem have shifted backward the structural capacity of
advanced economies. In the following years, advanced economies will have to
accept a low-growth new equilibrium.
7. Economists have called this equilibrium "the new normal." It represents an era
resulted from significant post-bubble correction following "the great moderation"
spanning from 2000 to 2007. During this tranquil episode, global economy grew high
in a relatively long period of time, supported by rapid technological advancement,
low level of interest rate and inflation, but accompanied by the accumulation of
leverage in the household sector as well as excessive risk taking and engineering in
the financial sector. The bubble has finally burst at the end of 2008, culminated with
the episode of "Lehman Collapse."
Distinguished guests, ladies and gentlemen,
8. While the advanced countries started the opening decade of this new millennium
with the golden era of "great moderation" and closed it with the gloomy "new
normal", the exact opposite happened in Indonesia. We started in thorny path
resulted from the aftershock of economic stabilization program post the 1997/1998
crisis, and landed successfully inside a transition period of an economy categorized
as middle income country.
9. Indonesia's per capita income by the end of 2011 has reached approximately
USD 3,000, six-fold increase from the figure in the Asian crisis of 1997/1998. If our
economy continues to grow while the macroeconomic and financial stability can be
maintained, it is only a matter of time before Indonesia move into the upper middle
income countries category with per capita income reaching USD 4,000.
10. We also manage to close the early decade of the new millennium with phenomena
of an increasing group of society experiencing higher standard of living, the
so-called middle class. At present and in the future, this group will become an
important transitional strength to influence our entire aspects of life, be it politics,
economy, social as well as culture.
11. We have optimism that with the rapid increase in the productive-age population as a
demographic bonus within the population pyramid, the growing middle class will
continue to expand until at least the next 20 years.
Distinguished guests, ladies and gentlemen,
12. In the midst of prolonged sluggishness within the advanced economies, the
expanding middle-class population has strengthened and enriched the diversity of
base demand of goods and services in the domestic market, thereby steadfastly
supporting the economic expansion. In the last eight years, we manage to
successfully maintain a continuous economic growth of around 6.1-6.2% per year
(figure 5), one of the highest in the world.
13. In addition to the expanding middle class population, the resilience of the domestic
economy is also sustained by the stable and conducive macro and financial
environment, therefore providing space for a broad-based economic expansion. In
my view, this achievement is inseparable from the solid and well-coordinated fiscal,
monetary, and banking policies that are built based on prudence and discipline.
14. The Economist, in its November 10, 2012 issue, presented an interesting analysis
describing the new era of Great Moderation in Asia. The magazine applauded
Indonesia for having the most stable economic growth within the last twenty quarters
in world economy.
15. The magazine also acknowledged Indonesia as a pioneer in implementing monetary
and macro prudential policy mix. Through an effective policy mix, Indonesia is
deemed capable of mitigating credit risks and preventing capital outflows without
having to raise interest rate.
16. The central bank's policy of preemptive easing, according to the magazine, has
significantly contributed to maintain economic growth stability. Since October 2011,
Bank Indonesia has become the first central bank in Asia to lower its policy rate.
17. In my view, this magazine's review has revealed a fresh reference on the fact that
macro management relying solely on prudence and discipline is insufficient. At the
end of the day, it remains true that the policy is more of an art rather than a science.
Distinguished ladies and gentlemen,
18. While growth can be maintained at a high level, the inflation rate in recent years has
in fact shown a downward trend towards the medium-term target of 4.0 percent.
Likewise, the rupiah in the past three years have also been moving in line with the
fundamental condition.
19. On the one hand, the achievement of a low inflation and stable exchange rate has
created conducive climate for the resilience of the banking industry. On the other
hand, the well-proven resilience of our banking industry is able to become a shock
absorber for the economy. This is supported by adequate capital strength to absorb
various risks, as well as effective regulation and supervision.
20. With improved resiliency, the banking intermediation is on the right track. This is
reflected in the relatively strong growth of productive loan, while keeping the
non-performing at a low level. The increase in credit expansion is also inseparable
from BI's policy a few years ago which linked the Minimum Reserve Requirement to
Loan-to-Deposit Ratio.
21. With the declining macro risks and the proven financial stability, the
saving-investment dynamic grow more robust and contributive to strengthen the
structural foundation of the economy. Investors begin to feel confident developing
their production capacity. This is reflected in an increased ratio of investment to
GDP, even surpassing the pre-crisis level of 1997/1998.
Distinguished guests, ladies and gentlemen,
22. Based on some notes I have underlined earlier, it is not an overstatement to say that
in the midst of the turbulent global economy and financial markets, we have
recorded numerous successes in 2012. Nevertheless, a series of concerns which
has bearing on economic and financial performance still needs to be addressed.
23. In my view, the biggest challenge today is on how best we can manage economic
resources and allocate them in the most efficient way possible and right on target. It
is also essentially important how we manage to improve the innovation capacity and
technology readiness.
24. At this point, I believe the speed in addressing the two challenges will affect our
ability to maintain the sustainability of our economic growth in a balanced manner. I
would define these equilibriums as internal balance, i.e. the balance of growth and
inflation, and external balance which include the balance of payment.
25. We can illustrate internal balance and external balance as two interconnected
containers. Imbalances of both or even one of the two could cause the economy to
quickly exhaust its power.
26. We experienced external imbalance in 2005 and 2008 because the domestic
demand was not supported by efficient and well-targeted allocation of resources. I
would like to relate this to the importance of re-composing fiscal expenditure to
make it better targeted, especially to address the infrastructure gap.
27. It is true that the structure of fiscal expenditure which prioritizes subsidy and routine
spending contributes to the resilience of domestic demand, such that economic
growth can remain equally stable across the whole regional territories. Nonetheless,
the resulting price distortion has encouraged excessive fuel price consumption,
leading to pressure on the balance of payment.
28. A valuable lesson learned has certainly been obtained from the mini crisis of 2005.
The sluggish response to the accumulated problem in the form of delays in adjusting
fuel prices had resulted in excessive policy implementation. This led to a steep rise
in inflation up to 17% and a sharp decline in purchasing power.
29. Therefore, in 2012 Bank Indonesia continues to endeavor for the balance of
payment to be well managed. Notwithstanding, maintaining proper balance of
payment is not a matter of interest rate, exchange rate, or macro prudential policy
per se.
30. Fundamentally, the balance of payment dynamic correlates more to how our
industries own competitive ability and become independent in developing innovative
capacity and technological readiness, as well as how economic resources are
allocated in an efficient and well-targeted manner.
31. In the middle of the currently expanding economy, the diverse challenges at the end
require our ability to direct the economy toward more productive activities and to
provide larger and more sustainable supporting capacity for the economy. Among
the needed abilities is to avoid the potential vulnerability in the economy such as
asset price bubble.
32. Our observation shows that since September 2011, mortgage and auto loan grew
faster than the average growth of aggregate credit. At that time, the mortgage loan
expanded up to 43% with motorcycle credit reaching 62%, while credit growth in
aggregate term only arrived at 24%. This potential risk of asset price bubble could
trigger financial instability if not mitigated immediately.
Distinguished ladies and gentlemen,
33. In addition to the above macro challenges, another significant test relates to how the
financial sector contributes to economic development through effective and efficient
financing. The Banking Act No.7 Year 1992 as amended by Act No.10 Year 1998
clearly stipulates the banking industry to play intermediary role for the economy in
an effective and efficient manner.
34. Since last year we have initiated a number of preliminary steps to improve banking
efficiency. We launched a policy requiring banks to publish their Prime Lending
Rate.
35. The result has been reflected in the gradually declining lending rate, although this
can be improved further. Some SMEs still have to deal with micro credit interest rate
of around 30%.
36. In my point of view, to improve banking efficiency, efforts needs to be conducted
comprehensively taking into account various constraints involved. As an illustration,
around 91% of our banking financing source relies heavily on third party funds which
concentrated in short term deposits.
37. From those third party funds, 44% is in the form of term deposits of which 50% is
beyond the deposit guarantee scheme. The sizable amount of third party funds
outside the guarantee scheme resulting from the unhealthy structure of the funding
market as price (interest rate) is greatly influenced by the oligopolistic power of
some big depositors.
38. This micro constraint has given rise to the rigidity of deposit rate within the banking
sector in responding to the downward central bank's policy rate.
39. In terms of fund management, only 4% of banks' asset is placed in the interbank
money market. With the number of banks currently reaching 120, segmentation of
the banking industry structure is evident as reflected in the small amount of
placement in the interbank money market.
40. Excess liquidity is heavily concentrated only in a few banks whereas other banks
must compete to obtain third party fund, leading to high deposit rate.
Distinguished ladies and gentlemen,
41. Segmentation in the area of banking capacity is also found. A great number of
banks are operating in contrast to their capacity, and even below their level of
economies of scale, hence creating inefficiency.
42. According to Bank Indonesia study, a bank must at least have Rp1 trillion of core
capital in order to start operate efficiently. Core capital requirement must increase to
at least Rp5 trillion to enable banks to operate at a level of optimal efficiency.
43. This explains why in general the level of our banking efficiency has not been
satisfactory. However, I welcome achievements in efficiency improvement as
reflected in the lowering of the operation expense to operation income ratio of the
industry, reaching 74% in September 2012. However, several banks are still
reporting efficiency ratio of above 90% and even some above 100%.
Distinguished ladies and gentlemen,
44. Various problems and challenges in the economy which I have just elaborated have
initiated Bank Indonesia to take a number of policy measures during 2012.
45. The formulation of monetary policy was made by strengthening the calibration of a
mix of monetary, exchange rate, and macroprudential policy with good dose
flexibility. Such blend is required as we must simultaneously respond to two
challenges. First, we must prevent the effect of global slowdown to the economy
through counter-cyclical policy measures. Second, we must preserve
macroeconomic and financial stability through carefully calibrated combination of
instruments.
46. Entering the year of 2012, our monetary policy was confronted with deteriorating
global economic outlook due to the escalation of the European crisis. On February
9, 2012, we decided to lower the BI rate by 25 basis points to 5.75%.
47. However, the continuity of the counter-cyclical policy response was faced with the
challenge of stronger inflation expectation in the midst of the uncertainty of the fuel
price adjustment.
48. On that background, since March 2012, the BI rate was maintained at the level of
5.75%. As policy maneuver, we have made a number of adjustments to the
overnight interest rate corridor. Strengthening the monetary operation framework for
liquidity management was also implemented by optimalizing the
reverse-repo-government securities transactions.
Distinguished ladies and gentlemen,
49. The increasing challenge in formulating monetary policy in 2012 arises from the
increasing pressure on the Rupiah. In the vulnerable global financial markets as of
today, we perceive exchange rate stability as the first line of defense in maintaining
macroeconomic and financial stability as a whole. For that reason, it is critically
important to maintain the exchange rate stability.
50. In keeping exchange rate volatility in check, we continue to thrive for balance
between supply and demand in the foreign exchange market. To strengthen the
supply structure, since June 2012, Bank Indonesia regularly conducts the USD term
deposit auction.
51. The opening of the USD term deposit auction is expected to address scarcity of
instrument in the domestic interbank money market, and to optimize foreign
exchange received from export proceeds.
52. To strengthen the supply structure for reserves emanating from Export Proceed
Reserves, including oil EPRs, Bank Indonesia will release trustee regulation shortly.
This regulation is intended to provide solid legal grounds for trustee activities for
banks managing reserves and assets under custody.
Distinguished ladies and gentlemen,
53. As we retain the policy rate to maintain its consistency with inflation target and
mitigate the adverse impact of weakening global economy, we optimize the use of
macro prudential instruments, in particular a maximum loan to value ratio and a
minimum loan down payment effective March 2012.
54. In general, we observe that calibration of our macro prudential and monetary
policies have started to produce positive outcome in our economy. Our economy
growth, despite slightly slowing down due to global factor, stays strong sustained by
solid domestic growth. At the same time, inflation stays controllable at low level.
Distinguished ladies and gentlemen,
55. Driven by various problematic issues surrounding financial and banking systems as I
have previously explained, in 2012 Bank Indonesia formulates conventional and
Islamic-based banking policy frameworks within 3 complimentary corridors. These
corridors are (i) safeguarding macro economy and financial system stability,
(ii) bolstering resiliency and competitiveness of banks, and (3) bolstering
intermediation.
56. Our policy responses in the first corridor, safeguarding macro and financial stability,
are manifested by macro prudential regulation. As I have explained earlier, as part
of our policy mix, we have made effective Housing Loan to Value Auto Loan Down
Payment regulations applied for conventional banks.
57. The LTV is intended to mitigate financial system instability emanating from rapid
credit growth in consumptive sectors, particularly in housing and automotive. To
mitigate regulatory arbitrage, in near future we will release LTV and DP applied for
Islamic banks and Islamic unit of conventional banks.
58. To anticipate the impact of the global economic issues that could destabilize the
financial system and the banking sector, Bank Indonesia will soon revise regulation
on Minimum Capital Adequacy Requirements of Commercial Banks, offering an
approach to a more comprehensive risks-based capital calculation.
59. In essence, banks will be required to provide the minimum capital in compliance with
their risk profile ranging from 8% to 14%. This amount can be set higher if based on
Bank Indonesia existing minimum capital requirement, the amount is not adequate
to anticipate risks.
60. The statute applies similarly for foreign bank branches operating in Indonesia.
Within the framework of the financial system stability, foreign bank branches
operating in Indonesia are required to maintain Capital Equivalency Maintained
Assets (CEMA). CEMA serves as compulsory capital allocation fund in the form of
business capital deposited in certain amount of financial assets that should also
meet certain requirements. CEMA will help foreign bank branches bank to
immediately anticipate and mitigate the risks. Therefore, risks on financial system
can be properly maintained.
61. To safeguard financial stability, Bank Indonesia has enhanced the crisis
management protocol related to exchange rates and banking, including integration
with the national crisis management protocol and improvement of short-term funding
facilities. To make crisis management effective for systemic crisis prevention, this
MoU needs to be sheltered under the protection of upcoming Financial Sector
Safety Net Act.
Distinguished ladies and gentlemen,
62. In the second corridor, strengthening resiliency and competitiveness of banks, Bank
Indonesia implements policies to structure bank ownership and regulate activities
and bank network expansion on the basis of capital (the so-called multi-licensing
regime).
63. Structuring bank ownership, of which regulation was issued under Bank Indonesia
regulation number 14/8/PBI/2012, has spirit and philosophy to enhance good
governance and bank soundness ratings. Therefore, banks whose soundness
ratings and governance are deemed to be strong will be exempted from this
regulation as long as they successfully maintain strong governance and ratings.
64. In the meantime, regulations on bank operational activities and network expansion
are very important in endeavours to foster competitiveness of banks. Therefore,
Bank Indonesia will soon release regulation concerning "Banking Activities and
Network Expansion based on Capital."
65. On the basis of this regulation, commercial banks will be categorized into four
buckets depending upon their Tier 1 size. In other words, the bigger the Tier 1, the
wider the scope of the activities and network outreach of the banks. Each bucket will
have clear definition of scope of activities as well as network outreach. Lower
buckets will permit banks to have basic banking services, whereas higher buckets
will permit banks to have wider scope and more complex activities.
66. Banks will be stimulated to foster inclusive finance to support economy development
in the region currently underserved. Therefore, regulation on bank activities will be
linked to regulation on the mechanism for opening bank office networks.
67. This regulation provides incentive and disincentive mechanisms for banks to expand
their activities and branch office networks depending upon their allocation of Tier 1,
regionalization, and level of efficiency. Incentives and disincentives are provided
through allocation of core capital (Tier 1) required differently for different types of
branch networks to be opened by banks (full branch, sub branch, and cash payment
points) depending upon the zone considering efficiency level of the bank. Under this
regime, core capital required for banks opening office networks in zone with high
bank density will be higher than those with lower density.
68. Enhanced regulatory regime for banking activities and distribution expansion will be
launched in the same package with amendment of Single Presence Policy (SPP).
69. The amendment will be undertaken by reopening the option to establish holding
company. With this option, strategic investors currently holding positions as
controlling shareholders in a particular bank will be permitted to become controlling
shareholders in other banks without obligations to exercise merger and
consolidation of banks under their controls.
70. In the third corridor, we will strive to ensure that bank intermediation is on the right
track. Therefore, each bank will be mandated to meet target of productive lending
determined for each operational bucket. To stimulate inclusive economy growth,
inclusive in the productive lending target is micro, small, and medium enterprises
lending at minimum of 20%. The regulation on this productive lending target will be
made public shortly.
Distinguished ladies and gentlemen,
71. Safe, robust, and efficient payment systems are vital conduits supporting
sustainable economy expansion and efficient transactions in the banking sector.
During the course of 2012, Bank Indonesia has collaborated with banking industry to
develop the payment system.
72. Key steps completed in 2012 include standardizing chips for ATM and debit cards,
fostering synergies amongst ATM networks, and developing electronic credit
transfer system for rural bank customers embedded in the National Clearing
System.
73. Besides, to mitigate default risk in the credit card segment, in the beginning of 2012
Bank Indonesia released regulation concerning limitation of the number of credit
card issuer that is commensurate to financial capacity of customer.
Distinguished ladies and gentlemen,
74. Before we focus on the policy outlook that Bank Indonesia will pursue, allow me to
shed some lights on the forthcoming challenges in wider perspective.
75. In 2013, global economy will step into the new normal. In this stance, we need to
remain vigilant over two substantial risks, which unless well-mitigated, will amplify
complexities in managing our macroeconomic policies.
76. First, risk from the continued uncertainty surrounding the European crisis, and
second, risk from the US fiscal cliff, inevitable tax increase and the automatic budget
cut in the US, in early 2013.
77. In its October 2012 publication, the IMF warned that failure to address the dual
global risk combination will drag developed economies into a whirlwind of recession
and the global economy will only grow by 2.0%, far from the baseline scenario of
3.6%.
78. With such bleak portrait, we can obviously see the daunting challenge we face in the
future. On that note, backed by supportive demographic structure as our capital
base, we are challenged to immediately take a number of structural adjustments.
79. We have been called upon to immediately make efficient every aspect of the
economy in order to be more competitive. The development of a more efficient and
reliable domestic connectivity, improvement in the ease of doing business,
harmonization of regulation and reforms of bureaucracy are important aspects which
we must address.
80. I feel troubled if we continue to dally while we still have time; we will remain trapped
in the current natural resources-based economic model. By the year 2020, our
demographic bonuses we now enjoy will start to diminish.
81. However, if we succeed, I believe we would be able to bring changes in our
economic models, from resource-driven growth to efficiency-based growth.
82. In spite of this, we cannot simply rely on efficiency alone. In the future, the Asian
region is expected to enter a new era as pioneer of global growth. Asia will grow as
basis for consumption, production, and technological progress.
83. Asia's position as technology-intensive production base is increasingly taken into
iPhone,
account. For example, the mobile gadget labelled as "Made in USA," in fact
has its major components supplied by Asian countries.
84. The reduction of various impediments to every policy aspects will move us from a
resource-driven growth economy to an efficiency-based growth economy. However,
relying solely on efficiency is not enough since going forward the Asian region is
projected to become the new growth frontier as the basis of production,
consumption, and technological advancement.
85. The establishment of these three bases are supported by growing intra-regional
trade. In this regard, we are faced with both challenges as well as opportunities:
"Will Indonesia reap the enormous potential benefit from Asia by becoming a part of
the regional production chain, or will Indonesia stand still and continue as a
resource-based economy and only become the market of other countries?"
86. To become an acknowledged player in the Asian production chain, we must become
an innovation-driven economy. For that matter, the strengthening of scientific and
technological infrastructure as well as human capital to support technological
readiness and increase private innovation capacity are considered as strategical
aspects which must simultaneously be the focus of our attention.
87. If we are able to bring our economy to become more efficient and innovative, based
on technology and human capital, it is without a doubt that Indonesia in time will
become an excellent production hub in Asia. That is where we must be heading,
with the spirit, commitment, and courage for self-reform. Measures of reforms which
we must take to reach this destination will equip our economy with extra energy,
independence, and flexibility to face the challenges of globalization.
Distinguished ladies and gentlemen,
88. In our effort to develop an efficient and innovative economy with sustainable growth,
we must not neglect the need for equal access of opportunities for every layer of the
society (inclusiveness). Based on such economic and objective rationale, inclusive
growth is more sustainable and optimal for the economy.
89. However, the transition of our society into a middle class category has some
transitional impact to economic gap. Looking deeper into the problem, the transition
will result in human capital productivity gap in our domestic economy.
90. The two pillars of productivity will make total economic productivity less optimal and
the economy will lose its economic thrust. Ceteris paribus, such economy will be
more prone to external as well as internal shocks, and this condition will negatively
affect our ability to preserve macroeconomic and financial stability. This will in turn
put our effort to eradicate poverty and reach better income distribution at risk.
91. For that matter, an inclusive growth is not just merely an empty term. In reality, more
than half Indonesian population still do not have access to the formal financial
channel (2010 World Bank Survey).
92. This fact also shows that the market is still largely open to banking industry.
Furthermore, data shows that the ratio of credit to GDP is still around 31%. It is with
respect to this inclusive growth that Bank Indonesia views the significance of
"inclusive financial program."
Distinguished ladies and gentlemen,
93. Based on this line of thinking, it is in my view that the future economic policy
direction is to answer to the challenge of achieving a sustainable and inclusive
growth of the Indonesian economy.
94. If we are able to address the number of structural impediments which have been
previously identified, we can hope that the economy will be able to grow on a higher
path, and at the same time benefits can be inclusively reaped by every layer of the
society.
95. Taking into consideration that macroeconomic management going forward will still
be exposed to global risk and the wide complexity of the domestic problems, Bank
Indonesia will continue to calibrate a policy mix composed of interest rate, exchange
rate, and macroprudential aspects.
96. To support exchange rate, market interest rate, and overall financial stability, the
monetary policy implementation will continue to be enhanced with a more integrated
operational framework, with the emphasis in using government securities in
monetary operation. In my view, however, this form of stability should not encourage
moral hazard behaviour of economic players and the market in general which may
expect the authority to constantly intervene to maintain stability at all costs. Such
form of stability should in fact give room for the process of financial market
deepening.
97. A deep financial sector will extremely help in making effective monetary policy
transmission, providing a more variety of instruments for risk mitigation (hedging)
and facilitating effective and efficient economic financing, including those provided
by our banking industry.
Distinguished ladies and gentlemen,
98. In my view, our banking industry must continue to be encouraged to improve
resilience, efficiency and its role in intermediation. Broadening of the public's access
to an affordable banking service through the financial inclusive program is included
as part of strengthening intermediation function.
99. Going forward, the financial inclusion program must be implemented through the
supply and the demand sides. From the supply side, broadening of an affordable
banking services access, and making available banking products meeting the need
of the lower income society must be carried out.
100. In this regard, going forward, we plan to broaden banking service access by way of
a non-conventional measure through the use of information technology,
telecommunication, and agent cooperation or familiarly known as branchless
banking or mobile payment. Through this strategy, banking services will reach every
layer of the society without having to physically present the bank office.
Distinguished ladies