Bank Indonesia Discourages Banks from Accumulating Bonds, Destry Outlines New Strategy

Bank Indonesia (BI) Governor Destry Damayanti has emphasised that Indonesian banks should no longer accumulate excessive amounts of bonds, including Government Securities (SBN) and Bank Indonesia Rupiah Securities (SRBI). She stated that the banking sector must return to its primary function as an intermediary, directing financing towards the real sector to accelerate Indonesia’s economic growth in a sustainable manner.

“We do not want banks to hold too much liquidity in the form of securities, because banks must return to their original function as intermediaries, channeling credit from the financial sector to the real sector,” Destry said during an online media briefing on Friday (31/07/202 ส).

Consequently, during the Board of Governors meeting held on 21-22 July 2026, BI decided to issue a new Macroprudential Liquidity Policy (KLM) designed to control securities ownership within the banking sector. This policy is known as the KLM Money Market Deepening (PPU).

The new KLM provides an incentive in the form of a reduction in the bank’s required reserve ratio (Giro Wajib Minimum) of up to 2% of third-party funds (DPK) for banks that do not exceed the specified limit for securities ownership, including SBN and SRBI. The KLM PPU is intended to replace the previous interest rate channel and financing-to-funding channel policies and will come into effect on 1 September 2026.

Technically, this policy will be applied to banks whose combined ownership of SRBI and SBN does not exceed a ratio of 19%. Banks with a securities ownership ratio exceeding this 19% threshold will be ineligible for the incentive. “We are optimising the role of banks as intermediary institutions, with the goal of better managing banks’ ownership of securities,” Destry explained.