Indonesia's banking capitalization is healthy. Financial Services Authority statistics on domestic banking performance show a Capital Adequacy Ratio (CAR) above the mandated 8 percent.
Data from July 2016 shows that the group of banks with the lowest CAR value was Conventional Regional Development Banks (BPD) at 19 percent, while the highest was Conventional Foreign Banks at 47 percent.
A high CAR value is necessary to ensure that banks can absorb losses arising from their activities. This ratio is an approach to banking risk management.
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