The Financial Services Authority (OJK) continues to monitor banking\nliquidity conditions, both at an industry and individual level, through\nrisk-based supervision, specifically focusing on banks with relatively\nlimited liquidity buffers and liquidity ratios approaching regulatory\nthresholds.<\/p>\n
\u201cOJK is ensuring that these banks have adequate mitigation steps to\nmaintain sufficient liquidity and anticipate potential pressures,\u201d said\nOJK Executive Head of Banking Supervision, Dian Ediana Rae, in a written\nresponse in Jakarta on Monday.<\/p>\n
Furthermore, Dian added that OJK will continue to coordinate with\nBank Indonesia (BI), the Ministry of Finance, and the Indonesia Deposit\nInsurance Corporation (LPS) within the framework of the Financial System\nStability Committee (KSSK).<\/p>\n
In general, OJK reported that banking liquidity remains sufficiently\nample, with the Liquidity Coverage Ratio (LCR) as of July 2026 standing\nat 187.50 per cent, well above the 100 per cent requirement.\nAdditionally, the liquid assets to non-core deposits (AL\/NCD) ratio was\n102.45 per cent, and the liquid assets to third-party funds (AL\/DPK)\nratio was 23.10 per cent, both significantly above the threshold.<\/p>\n
The banking industry\u2019s Loan-to-Deposit Ratio (LDR) in July 2026 was\nrecorded at 88.38 per cent, an increase both monthly and annually. Dian\nexplained that this increase in LDR is in line with credit growth being\nhigher than the growth of third-party funds.<\/p>\n
However, she noted that the increase in LDR should be viewed\nproportionally as part of the banking industry\u2019s intermediation\nfunction, even though it simultaneously reflects a decrease in liquidity\nas a consequence of credit disbursement growing faster than funding\nsources.<\/p>\n
In recent months, Dian added, banking liquid assets have tended to\nflatten, particularly in banks with relatively high credit growth.\nNevertheless, industry-wide liquidity remains at an adequate level, as\nreflected by various key liquidity ratios that remain sufficient and\nabove minimum requirements.<\/p>\n
Consequently, Dian clarified, LDR movements cannot be used in\nisolation to conclude that liquidity tightening is occurring. She added\nthat LDR movements must be viewed alongside other liquidity indicators,\nwhile also considering the specific conditions of each bank, such as\nbusiness model characteristics, funding structures, and intermediation\nstrategies.<\/p>\n
From a macroprudential policy perspective, Bank Indonesia has once\nagain increased incentives under the Macroprudential Liquidity Incentive\nPolicy (KLM), effective from 1 September 2026. As a result, banks are\nexpected to have more room to manage their liquidity.<\/p>\n
OJK maintains that liquidity management must be conducted based on\nthe principles of good governance and risk management. Therefore, Dian\nstated that banks need to ensure that asset and liability management is\nconducted prudently through the implementation of adequate Asset and\nLiability Management (ALMA), the provision of high-quality liquid assets\nin accordance with regulations, the performance of regular stress\ntesting, and the preparation of effective contingency plans.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/ojk-monitors-banks-with-relatively-limited-liquidity-buffers-1789988598", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }