Banks for the State or the State for Banks?

When the government “invites” the banking sector to support priority programmes—from housing to food—the public response is immediately divided. Some view it as a strategic step to accelerate development. Others grow uneasy: will bank funds—essentially public funds—become an extension of the state’s hand? The Financial Services Authority (OJK) statement attempts to calm: there is no obligation, no coercion. Banks continue to adhere to prudential principles. However, behind those reassuring words, something far larger is occurring: a shift in the direction of Indonesia’s banking system. Not a noisy change. Rather, a quiet one. But its impact could be systemic. For a long time, banks have been positioned as intermediary institutions: collecting public funds, channeling credit based on risk and profit calculations. The principle is clear: the market determines the direction of credit. But now, slowly, that direction is beginning to be “guided”. Through adjustments to the Bank Business Plan (RBB), the OJK is encouraging banks to incorporate financing for government programmes into their planning. This is where the change begins. Banks are no longer merely business entities but are starting to function as instruments of economic policy. Credit no longer speaks only of profitability but also of national priorities: people’s housing, food security, MSMEs. The polite term: alignment. The honest term: credit direction. Why is this happening now? The answer is simple but crucial: limited fiscal capacity, growing development needs. The 3 million houses programme, food strengthening, MSME financing—all require funds on a massive scale. Meanwhile, the state budget cannot continuously be the sole source of financing. This is where banking comes in. The state is no longer relying only on taxes and debt but is beginning to mobilise banking liquidity as a source of development financing. Banks become a kind of “shadow fiscal”—not formally, but functionally. This is not new in the world. South Korea, Japan, even China, have done it during their development phases. But the question is: is Indonesia heading in the same direction?