REPUBLIKA.CO.ID, JAKARTA -- Bank Mandiri, Indonesia's largest lender by assets, has reduced its deposit interest rate by 25 basis points to 6 percent in September 2014 from 6.25 percent a month earlier.

The decision was taken after the bank had attained a better liquidity level to support the growth of its credits and other productive assets according to the target set for this year, Bank Mandiri President Director Budi G. Sadikin stated on Wednesday.

"We will have a large interest burden if we maintain a high interest rate. In addition, the high interest rate will also increase competition and make it harder to raise banking funds," he pointed out.

He noted that the liquidity condition in the rupiah money market is better now as compared to what it was before the Id al-Fitr festivities this year.

"Competition among banks to raise liquidity funds in the lead-up to the Id al-Fitr festivities was very tight, with each bank trying to provide adequate liquidity funds for their customers," he affirmed.

As of June 30, 2014, deposits in the rupiah and foreign currencies contributed 36.11 percent of the total third-party funds deposited at the bank, which reached Rp501.34 trillion.

Hopefully, the reduction in the deposit interest rate will encourage a decline in the lending rate, thereby enabling the bank to lower its credit risks and strengthen its intermediary function to support national economic growth, he added.

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