JAKARTA, Oct 13 — Indonesian stocks dropped, with the benchmark index heading for the steepest retreat in nearly three weeks, as banking shares fell following a report that regulators plan to impose capital surcharges on major lenders.

The Jakarta Composite Index fell 2.3 per cent to 4,523.91 at 10:36am local time, the biggest decline among Asian indexes.

PT Bank Rakyat Indonesia slid 4.6 per cent, PT Bank Negara Indonesia lost 2.8 per cent, while PT Bank Central Asia and PT Bank Mandiri decreased by at least 1.4 per cent. The Jakarta Finance Index fell 2.4 per cent, the most among nine industry groups in the benchmark gauge.

Indonesia’s financial services authority, known as OJK, is working on a regulation to impose impose a capital surcharge on banks categorized as “domestic systemically important,” the agency said in a draft document posted on its website.

“The news is creating a negative perception on the banking industry, while in reality I don’t think the impact of such rules on major banks would be significant,” Syaiful Adrian, analyst at PT Ciptadana Sekuritas, said by phone from Jakarta.

“Profit-taking might be playing a more significant role in today’s decline.”

The Jakarta gauge gained 20 per cent in dollar terms in the six days through yesterday, making it the world’s best performer over the period, as weak US job data renewed investor appetite emerging-market assets.

The Indonesian rupiah fell the most in two months after advancing 9.1 per cent last week, its biggest gain since 2001. — Bloomberg