Finance Minister Fuad Bawazier said the moves, to take immediate effect, "represent significant steps by IBRA (Indonesian Bank Restructuring Agency) in its programme of reforms for the Indonesian banking system.

"They form a vital part of the government's overall strategy towards economic recovery and a return to much needed normality for the rupiah exchange rate," he said. Seven of the banks are listed on the Jakarta Stock Exchange.

Two are partly controlled by one of Indonesia's richest men, Sudwikatmono, who is a cousin of President Suharto. Two other banks are controlled by wealthy businessman Hashim Djojohadikusumo, whose brother is married to one of Suharto's daughters. All four had their licenses frozen.

Another bank, placed under IBRA management, is controlled by timber tycoon andnewly-appointed Industry and Trade Minister Mohamad "Bob" Hassan, also a close associate of the president. The collapse of the rupiah since last July has forced Indonesia to turn to the International Monetary Fund. Jakarta pledged to undertake sweeping economic reforms in return for a bail-out of more than $40 billion.

The country's top economics Minister Ginandjar Kartasasmitatold reporters on Saturday there should be no doubt about the government's commitment to the IMF reform package. An IMF team is putting the final touches to a review of thereform process and fresh economic figures and targets expected to be announced around the middle of the coming week.

The government closed down 16 ailing banks last November 1 and has been encouraging mergers between banks to strengthen the financial system. Finance Minister Bawazier said 54 banks had come under the surveillance of the IBRA, an independent body set up by presidential decree in January with the role of returning the banking sector to health andenforcing internationally-accepted banking standards. It reports to the Finance Ministry.

Asked if there were standby funds to cope with any run on the banks by the public, the Minister said: "The government has done all its calculations properly." He declined to comment further. Bawazier listed the banks with their licenses frozen on Saturday as Bank Surya, Bank Kredit Asia, Centris International Bank, Deka Bank, Bank Subentra, Bank Pelita and Hokindo Bank.

Banks placed under IBRA management were Bank Dagang Nasional Indonesia, Bank Danamon, Bank Umum Nasional, Bank Tiara Asia, Bank PDFCI, Modern Bank and the state Bank Ekspor-Impor Indonesia.

Bank Surya is controlled by Suharto's cousin Sudwikatmono,while he is also known to control the unlisted Bank Subentra. Djojohadikusumo controls Bank Kredit Asia and Bank Pelita.