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View all search resultsBank lending slows further on stricter standards, weak demand
Bank Indonesia (BI) has flagged declining loan growth in the country’s banking industry amid stricter lending standards and weak demand, emphasizing the need to boost credit disbursement to push national economic growth.
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A man walks past the Bank Indonesia (BI) headquarters in Jakarta on Sept. 2, 2024. (Reuters/Ajeng Dinar Ulfiana)
B
ank Indonesia (BI) has flagged declining loan growth in the country’s banking industry amid stricter lending standards and weak demand, emphasizing the need to boost credit disbursement to push national economic growth.
Nationwide bank credit issuance in July was up just 7.03 percent year-on-year (yoy), marking a slowdown from growth of 7.77 percent yoy in June, according to data presented on Wednesday by BI Governor Perry Warjiyo.
Perry said that, despite BI’s moves to push down interest rates, support liquidity and provide macroprudential incentives, banks remained cautious in their credit disbursement, which was reflected in their tightening lending standards.
“Banks prefer to place their excess liquidity in securities. The ample banking liquidity is also supported by the growth in third-party funds (DPK) in July 2025, which increased 7 percent amid the government’s fiscal expansion,” Perry told a press conference following the central bank’s monthly monetary policy meeting.
On the demand side, he explained, loan growth was primarily driven by export-oriented industries, particularly in mining and plantations, as well as industrial transportation and social services.
Read also: BI urges banks to boost lending amid slowing growth
“Generally, the slow credit growth reflects weak demand from business players, which tend to use internal financing for their businesses,” he explained.
