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BANK AND FINANCIAL INTITUTIONS

COMERCIAL BANK

By:Group 2
Members : Jussara Riska Amelya (17053019)
Fitria Rahmona (17053092)
Hanifah (17053132)

ECONOMIC EDUCATION
ECONOMIC FACULTY
UNIVERSITAS NEGRI PADANG
2019
FOREWORD

Praise the presence of Allah S.W.T who has given His grace and gifts, so that we can
finish this paper entitled "Commercial Bank" properly.This paper is made in order to fulfill the
duties of the Bank Course and non-bank financial institutions. And we thank our lecturer, Prof.
Dr. Bustari Muchtar and Ibuk Menik Kurnia Siwi S.Pd M.pd who provided guidance,
suggestions, ideas and opportunities for us to dig deeper information about the economy in
Indonesia. We hope that with this paper, we can add knowledge and hopefully this task can be
useful for us all.
We realize that our paper is not perfect. For that we need constructive criticism and
suggestions from friends and also Mr. and Ibuk as lecturers of Bank Subjects and Non-Bank
Financial Institutions.
Finally, we express our gratitude and hope that this paper can provide information and
be useful for the development of science for all of us.

Padang, 05 September2019

Author
CHAPTER 1

FORMULATION OF THE PROBLEM


1. Explain the Definition and History of the Bank
2. Identifying the Types and Functions of the Bank
3. What are the Bank's Activities
4. What are the factors that affect interest rates
5. Explain Bank Development in Indonesia
6. What is classified in Bank Secrets
7. What Is Intended With Banks As Intermediaries And Supervisors
8. Explain Bank Architecture in Indonesia

WRITING PURPOSE
1. To Know the Definition and History of the Bank
2. To Know the Types and Functions of Banks
3. To Know the Bank's Activities
4. Can Understand Any Factors That Affect Interest Rates
5. To Be Able To Know Bank Developments in Indonesia
6. Can Know What Are Classified In Bank Secrets
7. To Be Able To Know Banks As Intermediaries And Supervisors
8. Can Understand Bank Architecture in Indonesia
CHAPTER II

DISCUSSION

1. Definition and History of the Bank

a. Bank Definition

Understanding Banks - According to Law No. 10 of 1998 (Amendment of Law


Number 7 of 1992 concerning Banking), banks are defined as business entities that
collect funds from the public in the form of deposits and distribute them to the public
in the form of credit and other forms in order to improve the lives of many people. This
definition has a high philosophical content. A more technical understanding can be
found in Financial Accounting Standards (PSAK) No.31 (1999: 31), a Bank is a
financial institution that acts as a financial intermediary between parties who have
excess funds and those who need funds, as well as as an institution whose function is
to facilitate payment traffic.

 According to Kasmir (2008: 25) Banks are financial institutions whose main activities
are accepting deposits, savings and deposits. Then the bank is also known as a place to
borrow money (credit) for people who need it.
 Understanding of the bank from the opinion of Setiyaningrum and Farah (2011) in his
journal stated that the Bank is a trust institution that functions as an intermediary
institution, helps smooth the payment system, and no less important is as an institution
that is a means of implementing government policy, namely monetary policy.
Based on a number of understanding of the above banks, it can be concluded
that the bank is a financial institution whose activities are raising funds and channeling
funds from and to the public that has the function of facilitating payment traffic. In
other words, a bank is a financial institution whose principal business is providing credit
and services in payment traffic and money supply.
b. Bank History
History records the familiar origins of banking activities in the days of the old
empire in mainland Europe. Then this banking business developed into West Asia by
traders. The development of banking in Asia, Africa and America was brought by
Europeans when they colonized their colonies in Asia, Africa and the American
continent. If traced the history of banking activities known from the money exchange
service. So in the history of banking, the meaning of the bank is known as a table where
you can exchange money. In the course of the kingdom's past history, it was possible
to exchange money between one kingdom and another. This money exchange activity
is now known as a money changer.
Then in the history of the bank further banking operations developed into a place
for depositing money or what is now called savings activities. Next, banking activity is
increased with money loan activity. Money saved from the public by banks is lent back
to the people who need it. Other bank services follow in accordance with the times and
the increasingly diverse needs of the community. As a result of the community's need
for financial services has increased and varied, the role of the banking world is
increasingly needed by all levels of society both in developed and developing countries.
Even today the development of the banking world is increasingly rapid and modern,
banking increasingly dominates the economic and business development of a country.
Even the activities and the existence of banks determine the progress of a country.
Along with the development of world trade, the development of the banking
industry is also increasingly rapid because the development of the banking world cannot
be separated from the development of trade. The development of trade initially only in
mainland Europe and eventually spread to West Asia. Banks that were already famous
at that time on the European Continent were the Venetian Bank in 1171, then followed
the Bank of Genoa and the Bank of Barcelona in 1320. Conversely the development of
banking in mainland England only began in the 16th century. However, because Britain
was so active in searching for trade areas which were later colonized, banking
developments were also brought to its colony. When he returned to the Unitary State of
the Republic of Indonesia (NKRI) on August 17, 1950, the structure of the Indonesian
economy was still dominated by the colonial structure. Although at that time the
Indonesian banking structure was arguably a component of monetary facilities that did
not play a large role in banking operations, this condition created a strong desire from
the public to include more national elements in the Indonesian economic structure.
Bank Indonesia was born after the enactment of the Central Bank Act (Law) on
July 1, 1953. In accordance with the Act, BI as the central bank is tasked with
overseeing banks. However, the rules for implementing the supervision provisions have
only been stipulated in Government Regulation (PP) No. 1/1955 which states that BI,
on behalf of the Monetary Board, carries out bank supervision of all banks operating in
Indonesia, in the interests of the solvency and liquidity of the credit agencies and the
provision of sound credit based on principles of appropriate bank policy. From BI
supervision and examination, various unfair practices were revealed, such as fictitious
capital deposits or even the practice of banks in banks. To overcome this banking
condition, Monetary Board Decree No. 25/1957 which prohibits banks from carrying
out activities outside banking activities.
In November 1957, the National Development Conference (MUNAP) was held
which among others decided to take over Dutch-owned companies, including banks.
The initial step for the nationalization of the Dutch banks was initiated by the KSAD
as the military authority which stipulated that supervision of the administration of
Dutch banks was entrusted to the Central Dutch Bank Supervisory Agency. The
supervisory body was established in every region of the Netherlands owned branch
bank with the name of the Supervisory Board of Regional Banks with the aim of
preventing the run at Dutch banks in connection with the nationalization of the
government. Supervision of the Dutch banks is carried out directly by placing a
supervisory team at each bank. The role of Bank Indonesia in this supervision is very
important because only Bank Indonesia has personnel who have mastered bank
supervision and inspection techniques.
Government policies to nationalize Dutch companies are stipulated in Law No.
86/1958 which retroactively applied until 3 December 1957. The nationalization of the
Dutch banks which were foreign exchange banks was carried out based on the principle
of prudence so that there was no loss of state reserves. For this reason, the Central Bank
Supervisory Agency maintains the old bank's supervised directors. Some of the Dutch
banks nationalized at the time were Nationale Handelsbank which in 1959 became a
State Commercial Bank (BUNEG), Escomptobank in 1960 was changed to State Trade
Bank (BDN), and Nederlandsch Handel Maatschappij N.V. (Factorij) which in 1957
was incorporated into the Farmers and Fishermen Cooperative Bank (BKTN) which
was the result of the merger of Bank Rakyat Indonesia (BRI) with the Farmers and
Fishermen Bank (BTN).
If the banks owned by the Netherlands were nationalized by the government,
then it was different with foreign banks that were not owned by the Dutch. With the
principle of self-reliance and the spirit of nationalism that continues to surge, in the
1950s the government declared the closure of several foreign (non-Dutch) banks,
namely the Overseas Chinese Banking Corporation, the Bank of China, and Hong Kong
and Shanghai Banking Corp. based on Government Regulation No. 2/1959. The history
of the next bank, especially in Indonesia will be shared in a special article on this blog.

2. Types and Functions of Banks

a) Types of Banks

- Types of Banks Based on Function

1) Commercial Bank

According to RI Law No.10 of 1998 concerning Banking states "Commercial banks are
banks that carry out conventional business activities and or based on sharia principles in
their activities to provide services in payment traffic". Bank's activities include:

 collect funds from the public in the form of deposits in the form of demand deposits,
time deposits, certificates of deposit, savings.
 give credit.
 issue a debt acknowledgment.
 buy, sell, guarantee their own risks and interests and at the behest of their customers.
 move money both for own interests and the interests of customers.

2) Rural Credit Banks (BPR)

According to RI Law No. 10 of 1998 Bank Perkreditan Rakyat (BPR) is a bank that
conducts business activities conventionally and or based on sharia principles in which its
activities do not provide services in payment traffic.

-Types of Banks Based on Ownership

According to Kasmir (2008, 36-37) the types of banks based on their ownership
are divided into two namely state-owned banks and private-owned banks.

a. Government-Owned Bank
Is a bank whose entire capital is partly or partially and its establishment
certificate is established by the government.
b. Private-Owned Bank
Is a bank whose entire or partial capital and certificate of incorporation is
established by the private sector.
- Types of Banks Based on Status

Types of banks based on status can be divided into two, namely foreign
exchange banks and non-foreign exchange banks (2008 b: 39-40).

i. Foreign Exchange Bank


Foreign exchange banks are banks that carry out business activities
conventionally and or based on sharia principles that can provide payment traffic
services at home and abroad and have obtained a license from Bank Indonesia.
ii. Non-Foreign Exchange Bank
Non-foreign exchange banks are banks that have not received permission from
Bank Indonesia to provide payment traffic services at home and abroad such as foreign
exchange banks.
- Types of Banks Based on How to Determine Prices
a) Banks Based on Conventional Principles
Banks that based on conventional principles set interest as prices and charge
fees in nominal terms or a certain percentage (fee base) in obtaining profits and
determining the price of bank products.
b) Banks Based on Sharia Principles
Banks based on sharia principles use the rules of agreement according to Islamic
law in financing based on the profit sharing principle (mudharabah), financing based
on the principle of equity participation (musharakah), the principle of buying and
selling goods for profit (murabaha), financing of capital goods based on pure rent
without choice (ijarah ) or with the option of transferring ownership of goods leased
from a bank by another party (ijarah wa iqtina).

b) bank functions

Specifically, there are three bank functions, namely as agent of trust, agent of
development, and agent of service (Sigit Triandaru & Totok Budi Santoso, 2006: 9).

a. Agent of Trust
As a trust institution, banks have a financial intermediary function, namely
collecting funds from people who are excess funds (depositors of funds or creditors)
and channeling it to those who need funds (borrowers of funds or debtors). This
financial intermediary function will run smoothly if there is an element of trust. In this
case the community will save their funds if it is based on an element of trust and the
bank itself will place and distribute funds to the debtor or the public if it is based on the
element of trust as well.
b. Agent of Development
The monetary sector and the real sector cannot be separated in the economic
activities of the people. The two sectors interact with one another to influence one
another. The real sector will not work well if the monetary sector does not work well.
The function of the bank as a collector and distributor of funds is indispensable for the
smooth running of activities aimed at community economic development, such as
production, distribution, investment and consumption of goods and services.
c. Agent of Services
The function of the bank in this case offers a variety of services in addition to
conducting collection and distribution of funds, the bank also offers other banking
services to the public. Services offered by banks such as money transfers, collections,
letters of credit, automated teller machines, money markets, capital markets, and others.
The services offered are closely related to the smooth economic activities of society in
general.

3. BANK ACTIVITIES

a. Collecting Funds (Funding)


Collecting funds means collecting funds by buying from the wider community
in the form of demand deposits, savings (saving deposits) and time deposits. The bank
is looking for effective strategies to stimulate the public to be interested and willing to
invest their funds through bank financial institutions. The bank's strategy in raising
funds is by giving attractive and profitable rewards. The rewards for services can be in
the form of interest rates, rewards, and attractive services. The more attractive and
profitable the rewards are, the greater the community's interest in depositing funds in
the bank.
b. Lending Funds
Distributing funds means throwing back funds that have been collected through
current accounts, savings and deposits to the public in the form of loans (credit). High
and low interest rates on loans depends on the high and low interest rates on deposits.
The higher the deposit interest rate, the higher the loan interest rate and vice versa.
c. Providing Services (Service)
Bank services are supporting activities to support the smooth activities in
collecting and distributing funds and to provide services to its customers. These services
have been arranged so that customers feel safe and comfortable. Current forms of bank
services include Money Transfer, Leter of Credits, Bank Guarantees, Clearing and
Collection, Plastic Cards, Money Changer, Traveler's Check, Telebanking, Custodian,
Trustee, Standing Order, and Safe Deposit Box.

4. Factors That Affect Interest Rates

So that the benefits of banks can be maximized, the bank management must be clever
in determining the size of the interest rate component. This is because if one determines the
size of the components of the interest rate, it will be detrimental to the bank itself. The factors
that influence interest rate determination are:

a. Fund Requirements
The fund requirement factor is specific to the deposit fund, that is, how much
the desired funding needs. If the bank is short of funds, while the loan application
increases, what the bank does so that this can be quickly fulfilled is by increasing the
deposit interest rate. But an increase in deposit rates will also increase lending rates.
Conversely, if there are a lot of funds in savings in the bank, while the loan application
is small, the deposit interest will go down.
b. Desired Target Profits
This factor is specific to loan interest. This is due to the profit target is one
component in determining the size of the loan interest rate. If the desired profit is large,
the loan interest is also large and vice versa. But to deal with competitors the target
profit can be reduced to a minimum.
c. Quality Guarantee
Quality assurance is also intended for interest. The more liquid the collateral
(easy to be disbursed) is provided, the lower the loan interest charge and vice versa.
d. Government Policy
In determining deposit and loan interest, banks cannot exceed the limits set by
the government. This means that there is a maximum limit and there is a minimum
limit. The aim is for banks to be healthy.
e. Duration
For both deposit and loan interest, the time factor is crucial. The longer the term
of the loan, the higher the interest. This is due to the large possible risk of traffic jams
in the future. Vice versa if the loan is short term, then the interest is relatively low.
However, for the deposit interest applies vice versa, the longer the period of time the
lower the interest savings and vice versa.
f. Company reputation
The company's reputation also determines interest rates, especially for loan
interest. The bona fide of a company that will obtain credit will determine the level of
interest rates that will be charged later, because usually bona fide companies the
possibility of bad credit risk in the future is relatively small and vice versa companies
that are less bona fide factors of bad credit risk is quite large.
g. Competitive Products
Competitive products determine the size of the loan. Competitive means that
the product being financed is very popular in the market. For competitive products, the
loan interest rate is relatively low when compared to less competitive products. This is
due to competitive products having high product turnover rates so that payments are
expected smoothly.
h. Good Relationship
Loan interest is usually associated with factors of trust in a person or institution.
In practice, banks classify their customers between uatam (primary) and ordinary
(secondary) customers.
i. Competition
In an unstable condition and the bank is temporarily short of funds, the level of
competition in fighting over deposit funds is quite tight, so banks must compete closely
with other banks.

5. Development of Banks in Indonesia

a. Early Development Before the Dutch Colonialism


The life of banking and financial / financial institutions began when the VOC
operated in the archipelago, besides having its main function as a trading institution, it
also carried out the function of its own financial institution. Many of its functions later
developed into functions carried out by commercial / commercial banks or banks
specifically financing plantations. In its development, the VOC went bankrupt and then
the Dutch East Indies government took over, during the validity of the market
mechanism system, the period of the forced cultivation system, as well as the foreign
investment policy.
During the period of the forced cultivation system as well as before where
farmers worked freely on the basis of a forced mechanism, the financing element was
not very visible and difficult to develop. Before the mid-19th century, banking in the
Dutch East Indies was largely carried out by De Javasche Bank (JB) and Nederlansche
Handel Maatschappij (NHM), which were official banks that gave advance loans to
government contractors.
The development of export of plantation products requires financing, then
Escompto Bank, Rotterdamsche Bank (RB) and Internatio, as well as several private
banks and two British bank branches. Since the beginning of the 20th century, JB began
to withdraw from general trading and began to specialize in becoming "The Banker’s
Bank", the bank of other banks. In order for Jb to specialize in managing economic
conditions, maintaining the stability of the rupiah and so on, it is best for this bank to
specialize as a central bank. So that JB was taken over by the Dutch East Indies
government. Our economy has always been based on small business units. To develop
small businesses, since the mid-19th century and early 20th century, the Algemene
Volkrediet Bank (AVB) was established or a People's Bank that was different from the
Pawnshop Bureau which generally provided credit for consumptive purposes and to
eliminate loan sharks. The aim of AVB is to help advance productive small business
activities.
BANKING AGENCIES AND CREDITING PERIODS 1960-1966
At the beginning of independence, financial and banking institutions still
inherited the colonial era which was dominated by private banks owned by the
Netherlands and several other foreign banks. After that, the banks were nationalized.
Only one bank which was not the result of nationalization, namely BNI 1946 and had
become a circulation bank during the occupation. JB became Bank Indonesia as the
central bank of NHM becoming the People's Bank of Indonesia Escompto becoming
the MONETARY AND BANKING NATIONAL BANK
Credit policies and structures that are part of economic and development
policies are developing. This can be divided into three periods:

a.First period (from 1950-1959)


During the first period, economic and development policies were mostly liberal in
nature, accompanied by efforts to strengthen indigenous national economic activities which
generally were weak economic groups.

b. The second period (since 1959-1965)

The second period was marked by etatism which was reflected in the period of
Indonesian socialism, characterized by numerous direct regulations and interference by the
state in the fields of production and distribution including credit. Interventions in the economy,
including credit and monetary, cause fraud and abuse

c. The third period (since 1966-present)

The New Order government since 1966 began to rationalize the banking function and
economic and development policies, relying on market mechanisms and promoting efficiency.
Then the monetary, banking and credit system restructuring will be carried out. The interest
rates on deposits and loans that were determined to be very low and irrational were raised
dramatically in mid-1968. This monetary action was also part of the anti-inflation program
launched at that time. The policy to determine the size of the Bank Indonesia liquidity credit
portion will henceforth be the core of credit and banking policies.

6. Bank Secrets According to Law

In the times, bank institutions are institutions that are increasingly trusted and needed
by the public both in managing funds owned by the community and institutions as providers of
funds for people in need. Here I will briefly discuss bank secrecy according to the laws in force
in Indonesia. Bank secrecy is everything related to finance and other matters of bank customers
which, according to the banking world, must be kept confidential. The bank secrecy covers
customers, creditors, and debtor customers as regulated in Act Number 7 of 1992 concerning
banking.

In its development, the notion of bank secrecy has been amended by the enactment of
law Number 10 of 1998 that bank secrecy is anything related to information regarding
depositors and deposits.

As for what must be confidential regarding customers according to Law Number 10 of


1998, namely:

a. Tax officials for tax purposes


b. Accounts receivable and auction agency officials / State receivables affairs committee
(BUPLN / PUPN) for the settlement of bank loans that have been submitted to BUPLN / PUPN

c. Police officers, prosecutors or the judiciary benefit the interests of the judiciary in criminal
cases

d. Judges who handle civil cases between banks and customers

e. Banking circles who need information on the financial condition of bank customers in the
context of exchanging information between banks

f. Other parties appointed by the depositing customer upon request, approval or power of
attorney of the depositing customer

g. The legal heirs of the depositing customer in the case of the depositing customer has died.

7. Banks as Intermediary and Supervisory Institutions

The function of financial institutions is as a financial intermediary that connects surplus


units with deficit units. This means that financial institutions allow the flow of funds (liquidity
flows) from lenders or depositors or surplus units to borrowers or entrepreneurs or borrowers
or deposit units. Different positions between lenders and borrowers cause the information held
by each party is not the same as the condition of asymmetric information.

Asymmetric information opens up opportunities for those who have more information
to not disclose the information properly. The opportunity not to disclose this information is
interesting because such actions can have beneficial monetary consequences. The implication
of asymmetric information in the form of choices to convey information is not good in order
to obtain monetary benefits called moral hazard which means the risk of delivering information
that is not in accordance with reality by the borrower to the lender in order to obtain monetary
benefits. This moral hazard is a real problem that occurs between the relationship of the
borrower and the lender, which opens up opportunities for inefficiencies in the money market
due to asymmetrical information.

To reduce or minimize the negative impact of this asymmetric information means that
certain actions must be taken. The problem of formulating certain actions so that those who
have more information do not abuse the advantage of access to information is called the
problem of incentives (incentive problems) which then becomes a problem that must be solved
in the relationship of borrowers and lenders.

If there is no monitoring or intermediation, it is feared that two possibilities will emerge.


In the condition of the community that allows information as private goods (private), then the
supervision activities will be carried out by all parties individually or duplication of supervision
occurs. This duplication of supervision activities causes supervision activities to become very
expensive individually for the community as a whole. On the other hand, in the condition of
society that allows information as a public good, there is likely to be no oversight at all. Because
without the intervention of the monetary authority, the information resulting from the
supervision will become the common property or the information will be enjoyed by many
illegal passengers (free-riders), so that individuals will feel disadvantaged when conducting
surveillance activities. Individuals are not encouraged to carry out surveillance activities
because supervision activities require the sacrifice of resources or costs, and on the other hand
who enjoy it are all people, so individuals who will conduct surveillance will feel
disadvantaged. Supervision activities in such conditions, will only be effective if carried out
by the monetary authority, in this case the same as the supervisory delegation.

It is important to realize that the actions of the supervisory delegation incur substantial
costs to achieve a goal. The goal is to get a certain rate of return from the distribution of funds.
Theoretically, this problem can be modeled in the form of minimizing the cost of supervisory
delegation and / or expected rate of return for entrepreneurs with certain rate of return
constraints for borrowers.

8. Indonesian Banking Architecture

The Indonesian Banking Architecture (API) is a basic framework of the Indonesian


banking system that is comprehensive and provides direction, form and order the banking
industry for the next five to ten years. The future direction of the development of the banking
industry as formulated in the API is based on the vision of achieving a healthy, strong and
efficient banking system in order to create a stable financial system in order to help foster
national economic growth.
Based on the need for a national banking blueprint and as a continuation of the banking
restructuring program that has been running since 1998, Bank Indonesia on January 9, 2004
has launched API as a comprehensive framework for policy directions for the development of
the Indonesian banking industry going forward. The launching of the API cannot be separated
from the efforts of the government and Bank Indonesia to rebuild the Indonesian economy.

Starting from the desire to have stronger banking fundamentals and by taking into
account the input obtained in implementing the API for the past two years, Bank Indonesia felt
the need to perfect the program activities listed in the API.

To realize the achievement of the API vision, the following six pillars of the API are
determined:

a. Creating a healthy domestic banking structure that is able to meet the needs of the community
and encourage sustainable national economic development.

b. Create an effective bank regulation and supervision system and refer to international
standards.

c. Creating a banking industry that is strong and has high competitiveness and has a resistance
to risk.

d. Creating good corporate governance in order to strengthen the internal conditions of the
national banking system.

e. Create a complete infrastructure to support the creation of a healthy banking industry.

f. Realizing the empowerment and protection of consumers of banking services.

Financial services is one of the industries that is experiencing the fastest change and
growth in many countries. Something that is considered ideal at one time can be quickly change
at a later time. The challenges in the banking world also always change along with the changes
that occur in the financial services industry in general. Among the many challenges that are
currently most felt in the banking world is the challenge to manage risk as well as possible. For
the banking system in Indonesia, good risk management is still a new thing.
The challenges facing the banking world today are as follows:

a. Banking credit growth is still low


API's vision shows that good banking conditions are ultimately aimed at
achieving high economic growth, which requires large credit growth. Meanwhile, the
capability of the Indonesian banking capital at this time indicates that the relatively high
credit growth is difficult to achieve if the national banks do not improve their capital
conditions. Credit disbursement is also hampered in part by the reluctance of some
banks to extend credit because the ability of risk management and basic banking
expertise is still relatively weak, and the operational costs are relatively high. This is a
challenge.
b. Banking structure that is not yet optimal
The development of the number of banks and the banking structure of Indonesia
since the 1980s was not based on a large scheme to create an ideal banking structure.
The structure that developed at that time tended to be caused by natural reactions to
regulatory changes in the economic climate. This has resulted in the emergence of a
banking structure that is not an ideal structure for the application of the principle of
prudence and fulfillment of the intermediary function.
c. Meeting the needs of banking services that are still lacking
The still weak fulfillment of public needs for banking services is characterized
by frequent complaints from the public about the lack of access to credit and high
lending rates and the large number of informal financial service delivery practices. In
line with social and political changes in society, given the financial user community,
especially banking, increasingly demands the quality of services and banking access
that is higher and higher quality. Quality of service does not only concern the economic
benefits of financial services but also anticipating side effects from increasing the role
of the banking sector, such as crime and fraud.
d. Bank supervision that still needs to be improved
Bank supervision is an area that requires improvement and improvement. This
is due to the fact that there are still some prudential principles that have not been
implemented properly, the coordination of supervision that still needs to be improved,
human resource capabilities are not yet optimal, and the weakness of consolidated
supervision let alone internationally.
e. Banking capability is still weak
Corporate governance and core banking skills is a measure that can be used as
a guideline to state that banking capabilities are still weak. The importance of the
principle of prudence, including risk management, increasingly demonstrates the
importance of creating a quality and appropriate internal control system.
f. Profitability and efficiency of banks that are unable to survive
The economy always fluctuates. The business cycle is not only felt in investing
in the real sector but also very closely related to the financial sector. The level of
profitability and operational efficiency achieved by banks in general is not a
profitability and efficiency that is not sustainable. Continuous profitability and
efficiency enables banks to survive and even thrive in the face of the business cycle.
g. Customer protection that still needs to be improved
The basis of banking business activities, as well as financial institution services
in general, is trust. Without trust the intermediary function by the bank will not run
smoothly. In relation to creating trust, protecting customers is a banking challenge that
directly affects a large portion of our society. It is a very big challenge for banks and
Bank Indonesia and the wider community to jointly create clear standards in the form
of customer complaint mechanisms and transparency of banking product information.
h. The development of information technology
The risk of managing financial institutions is increasingly varied with the advent
of information technology. This has contributed to the challenges faced by banks. The
development of information technology has led to the rapid development of types and
complexity of bank products and services so that the risks that arise become larger and
more varied. With the existence of information technology, competition in the banking
industry which tends to be global also causes interbank competition to become tighter
so that both national banks and smaller scale banks must also be able to operate more
efficiently.
On September 3, 2019, the second group made observations at the BRI branch office on Jalan
Khatib Sulaiman Padang. From the results of the interviews conducted, we obtained some
information relating to the sub-topics of the Bank and Non-Bank Financial Institutions
including;

1. What are BRI's bank activities to serve and provide a good service for the community?

Bank BRI carries out services to the community in the form of sub-sectors in crediting,
operational and operational techniques. From the operational bidag section, it prioritizes
services on salary deduction and salary addition, making checks.

2. What factors have influenced the interest rates at BRI banks that have increased?

The level of interest is influenced by the policies of the government and Indonesian banks

The updated interest rate is currently 2019 at the BRI bank Khatib Sulaiman branch

• 1 month deposit 4.75%

• 3-month deposit 5.5%

• 6 months 5% deposit

• 1 year deposit of 5%

3. What is the secret of the BRI bank?

The BRI Bank itself may not provide information directly about the balance to the public
because it is the privacy of a customer of the BRI bank, does not divulge or explain customer
transactions, and say the customer's address.
4. The organizational structure of the BRI branch of khatib sulaiman
5. Khatib branch BRI bank architecture

In BRI's own bank the architectural model that is made is to arrange the same spatial
arrangement through chairs, tables and so on. There is something more unique where in every
corner of the room or on the table be it a teller or the other BRI bank itself provides live interest
and provide a beautiful layout both from the entrance or the upper part for the bank employees
themselves.
6. Bank BRI as an intermediary and supervisory institution

BRI as an intermediary institution means here the same as the goal of the bank to collect funds
from the public and will be used by the community. Whereas as a supervisor is overseeing the
running of financial transactions, for example there are suspicious transactions such as money
laundering that must be reported by BRI banks.

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