Home | China | World | Business Indonesian Banks Asked to Raise Mininum Capital Adequacy Ratio WED, FEB 20, 2002     Indonesian central bank, Bank Indonesia, will raise the minimum capital adequacy ratio (CAR) for banks to 12 percent this year from the current eight percent level. "The target of Bank Indonesia for 2002 is 12 percent, "The Indonesian Bank Restructuring Agency (IBRA) Deputy Chairman Soebowo Musa was quoted by the Jakarta Post Wednesday as saying. The CAR is the ratio between a bank's capital and its risk-weighted assets. The higher the CAR, the healthier the bank is. The 1998 banking crisis had sent the CAR level of many of the country's banks into the negative territory,forcing the government to either close the banks or recapitalize them using tax payer money. The central bank required all banks to meet a minimum CAR level of eight percent by the end of last year or risk closure or a merger with stronger banks. But the eight percent CAR is still below the international standard of at least 12 percent. Bank Indonesia officials have previously indicated that banks must have a minimum CAR of 12 percent by the end of this year. The new minimum CAR requirement would force banks with a CAR below 12 percent to seek fresh cash to increase their capital level or seek a stronger partner for a merger. Editor:casey Source:Xinhua Recommend to your friend email:    China Central Television,All Rights Reserved