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View all search resultsBank Indonesia to add incentives amid slow lending
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The Bank Indonesia (BI) logo adorns the gate of the central bank's headquarters in Jakarta in this undated photo. (Antara/File)
B
ank Indonesia (BI) plans to roll out additional macroprudential liquidity incentives (KLM) on Dec. 1 through new disbursement schemes to boost sluggish credit growth and expedite the pass-through of central bank rate cuts to commercial banking rates.
BI macroprudential policy director Irman Robinson said the central bank would strengthen liquidity incentives for banks based on their commitments and performance in terms of lending to certain sectors and interest rate transmission, or passing on BI rate cuts.
“We are seeking to push for stronger credit growth. Banks certainly have their credit growth commitments and business plans for each quarter. We will disburse the incentives based on their commitments,” he explained at a media training session in Bukittinggi, West Sumatra, on Friday.
The forward-looking assessment scheme is to provide banks with upfront incentives, aiming to ensure sufficient liquidity to achieve the central bank’s target for average loan growth in the banking industry this year.
Lending growth has been sluggish so far in 2025, remaining below BI’s target range of 8 to 11 percent, though it has seen an uptick in September to 7.7 percent year-on-year (yoy), up from 7.56 percent recorded in the preceding month.
BI’s KLM refers to reduced statutory reserve requirements (GWM), or the funds banks need to keep at the central bank, for lenders that perform well in their lending to four priority sectors, with a reduction in the GWM from the normal rate of 9 percent of a bank’s third-party funds (DPK).
The reduction is set at 1.5 percentage points for lenders performing well in the agriculture, industry and downstream sectors, 0.6 percentage points for services, including the creative economy, 1.4 percentage points for those doing well in housing, as well as 1.5 percentage points for micro, small and medium enterprises (MSMEs), cooperatives and the inclusive and sustainable sectors.
