Indonesia cbank to issue new bank norms linking services to capital

JAKARTA, Sept 17 Mon Sep 17, 2012 6:31am EDT

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JAKARTA, Sept 17 (Reuters) - Indonesia's central bank plans to roll out new banking regulations in October or November that will link the kind of services lenders can provide to the strength of their capital, a move that could force some smaller banks to raise capital or seek mergers.

Governor Darmin Nasution said on Monday the new 'multi-license' regulations will improve the efficiency of banks. The changes come after new bank ownership norms were issued earlier this year.

The multi-licenses will replace the single licenses that now allow banks to engage in multiple businesses, and under the new rules, only banks with a large amount of core capital will be able to conduct more than one business.

The new norms could drive consolidation in the nation's banking sector by making it mandatory for banks who wish to expand services such as ATMs and branches to meet the new central bank capital requirements. Small banks would thus have to add capital or sell out to bigger banks.

"We met with bankers this morning and we're going to finalise the regulation at end of October or early November," Nasution told reporters.

He gave no further details but said Bank Indonesia welcomes input from bankers before the regulation comes into effect. (Reporting by Rieka Rahadiana; Editing by Matthew Bigg and Muralikumar Anantharaman)

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