Credit disbursements expanded by 7.87 percent as of December last year or within the lower range of the targeted 7 to 9 percent, even after the financial authorities lowered the target twice during the period.

The channeled loan amount expanded by 10.1 percent in 2015.

"Bank credit didn't grow as we expected," OJK chairman Muliaman D. Hadad said in a press briefing at the Finance Ministry in Jakarta on Friday.

(Read also: Banking industry to post triple double digit growth: OJK)

The banking industry saw a sluggish loan growth last year on the back of surging non-performing loans (NPL) – the ratio between bad debts and total loans – and weak demand due to slow economic situation.

The authority recorded a gross NPL of 2.93 percent last year, below the 5 percent limit, and net NPL of 1.2 percent.

Meanwhile, third party funds (DPK) grew by 9.6 percent last year, mainly supported by asset repatriation from the tax amnesty program.

However, Muliaman remains optimistic that credit growth will be better this year supported by better economic growth projection.

The government expects the country's economy to expand by 5.1 percent this year from the targeted 5 percent last year.

This year's loan growth target is set at between 10 and 12 percent. (bbn)

Popular

HSBC’s The Redefining Treasury Asia Pacific reveals shift toward real-time treasury

Citizenship without certainty

Northern Sumatra leaders raise white flag amid deadly floods