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View all search resultsGovt extends liquidity injection in bid to revive loan growth
The OJK as well as industry observers have welcomed the Finance Minister's move to extend the liquidity injection policy for another six months in a bid to generate higher loan growth, while suggesting that a subsequent extension could be on the books when the current period ends in March.
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High-rise office buildings belonging to banking institutions, including the Menara Mandiri twin towers (left), loom above the verdant perimeter of the Gelora Bung Karno sports complex along Jl. Sudirman in South Jakarta as the sun begins to set on Aug. 27, 2021. (AFP/Bay Ismoyo)
T
he banking industry is expected to see higher loan growth after a sluggish performance last year, as Finance Minister Purbaya Yudhi Sadewa has decided to extend the state liquidity injection for another six months.
A Financial Services Authority (OJK) executive has welcomed the move, reasoning that the initial six-month placement of state funds in commercial banks was “not enough” to boost lending, especially in the micro, small and medium enterprise (MSME) segment.
“I certainly hope that it can be extended as long as possible, even for years, but the government has its own fiscal strategy, and the SAL [surplus government funds previously held at Bank Indonesia] can be withdrawn at any time,” Dian Ediana Rae, the OJK’s banking supervision chief executive, told reporters in Jakarta on Thursday.
Dian said the extended liquidity injection would ease competition to secure funding, thereby limiting the need for banks to offer high-level “special rates” to attract new deposits.
“If credit becomes more affordable, we hope it will boost [lending] to MSMEs this year,” he added.
MSME loan issuance was down 0.5 percent year-on-year (yoy) in January, continuing a contraction pattern recorded in the segment since October 2025, according to data from Bank Indonesia (BI).
Dian attributed the sluggish growth in MSME lending to banks’ efforts to clean up their balance sheets and curb bad loans while expressing hope that performance in the segment would “bounce back” this year, and that banks would “come up with better targets”.
