remained within target. this gives us confidence that we will be maintaining the growth in money so that there is sufficient liquidity to satisfy the needs of the real economy, without risking a run - up in inflation. ladies and gentlemen, i would now like to turn to the banking sector. supported by improved macro - monetary conditions, banking sector shows stronger condition. this was reflected in a stronger capital structure, improved npls, stronger profitability and recovery in bank intermediation. all banks are now in compliance with the mandatory capital adequacy ratio of 8 %. this has allowed the banking sector ’ s net income to grow as new credits extended have increased in the first half of the year and non - performing loans continue to remain under control with net npls reaching only 1. 02 % in june. given the improved financial condition of the banking sector, the government is in position to privatize banks to be owned other than by the government. among our major accomplishments in this area, have been the sales of bca, and bank niaga, the privatization of bank danamon, and the initial public offering of 20 % of bank mandiri. the government will press forward with the divestment of the remaining ibra banks with plans to sell majority stakes in bank lippo and bank internasionel indonesia by november of this year, and bank permata by february 2004. the government also plans to sell 20 % stake in the state - owned bank rakyat indonesia in september of this year. ladies and gentlemen, despite all these encouraging development in the area of monetary and financial stability, issues, challenges or even problem remains. these problems will remain with us for some time to come. the issues on the monetary front is on the mechanics and the cost of maintaining stability. in the banking front, reluctant intermediation process and maintaining financial stability in the new environment are the most pressing issues that need to be addressed. on a wider circumstances, we are facing credibility issues in light of the upcoming separation from the imf program. in the monetary front, the challenge is rooted in the slow recovery of bank intermediation function. bank lending is still limited because of high level of risks and uncertainty and the large number of companies still undergoing restructuring. credit crunch phenomenon has been evidenced and the response of bank loan rates to the sbi policy interest rate is relatively slow and lagging. with slacking real sector and bank lending, the transmission mechanism of monetary policy to the real economy and

promoted by bank indonesia is the financial identity number ( fin ). 8. fin is a unique, inherent, lifetime, simple, transparent, and interoperable number provided to the community, including unbanked people. the aim is to reduce asymmetric information & risk premium, facilitate and increase financial access of the community, and facilitate financial institutions to obtain world bank report “ global financial inclusion index “. bis central bankers ’ speeches information on customer candidates / customers. for bank indonesia, fin is very useful to produce more structured database and information on people receiving services from formal financial institutions. however, more importantly, fin will become one of the main data sources to make profiles ( rating ) of accurate individual or household finance to facilitate banks in extending cheap but quality credit package without any collateral. 9. bi has been developing fin since 2012 by collecting information through a baseline survey using secondary data and comprehensive survey by direct interviews with respondents. bi is consistently improving fin business model, among others through information system development and database expansion by formulating digital questionnaire concept, which, at the initial phase, will be tried through digital financial services agents. in this relation, the nin ( e - resident ’ s identity card ) database will be used to establish fin data to allow acceleration of data capturing process and avoid fin data duplication, thereby ensuring fin data singularity of each person. ladies and gentlemen, 10. we are pleased that bank indonesia ’ s policies and work programs to increase public welfare, among others through electronification and financial inclusion, may synergize with the program for population data, national identity numbers, and electronic resident ’ s identity cards by the ministry of home affairs, to give greater benefits for the financial system in particular and indonesian people in general. 11. we believe this cooperation agreement signing is the first step for both institutions, and further technical steps are definitely necessary to realize the expected benefits. 12. to conclude, we would like to extend our highest appreciation and gratitude to the ministry of home affairs and all parties supporting the realization of this cooperation agreement. may god the almighty bless our sincere intention and steps and bestow us with smooth implementation thereof. thank you. wassalamualaikum wr. wb. bis central bankers ’ speeches