Perbankan Berorientasi Sosial [Socially Oriented Banking]

Abstract

An opinion article by Dian Ediana Rae, Head of the Bandung Representative Office of Bank Indonesia, in the daily Kompas, which uses the deliberation in the DPR on amendments to Banking Law Number 10 of 1998 as a moment to reconsider the social role of banking. Reflecting on the confrontation between government and banks in the United Kingdom after the 2008 crisis (the period of bank bashing and the Project Merlin agreement) and on the United States financial crisis caused by excessive risk-taking, the author stresses that banks concern the public interest and must shift from the shareholder-value paradigm to community goals: growth, employment, social stability, and the environment. He criticizes Law 10/1998 as an emergency product of the 1997–1998 crisis that in fact removed the obligation to channel credit to MSMEs and exports, and then lists the issues that the new law must regulate: the direction of the national banking system, foreign ownership, the role of rural banks (BPR) and regional development banks (BPD), universal and offshore banking, derivatives, shadow banking, money laundering, consumer protection, and coordination with the Financial Services Authority (Otoritas Jasa Keuangan), as well as the challenges of bank governance.