BI Rate Rises, But Banks Can Still Keep Lending Rates Low

Jakarta, CNBC Indonesia - Governor of Bank Indonesia (BI) Perry Warjiyo stressed that banks in Indonesia can still keep their lending rates at low levels, even though the BI Board of Governors decided to raise the policy rate (BI Rate) by 50 basis points to 5.25%. He said banks can maintain lending rates at low levels because BI is guiding macroprudential policy to be lenient, as an incentive for banks to continue to extend credit vigorously. ‘The looser macroprudential policy provides incentives to banks that extend credit and keep lending rates low. Today we continue to push for credit growth,’ he said at a press conference on Wednesday, 20 May 2026.

The macroprudential policy includes loosening the Macroprudential Intermediation Ratio (RIM) through broader coverage and strengthening criteria for corporate securities and sukuk owned and issued by banks used as the basis for calculating the RIM, effective from 1 July 2026. ‘Banks have RIM requirements between 84%–94%; we are encouraging compliance with 84-94% here by broadening coverage, in terms of liabilities or funding not only traditional DPK but also issuances of securities, conventional or sharia-compliant securities,’ Perry asserted. ‘On the funding side, not only lending but also purchases of conventional and sharia-compliant securities by banks, so this broadens the scope and hence widens the push for credit growth,’ he said.

This policy is complemented by an increase in the Macroprudential Liquidity Incentive Policy (KLM) by providing an additional incentive of up to 0.5% of DPK for banks meeting the RIM value within the range set by Bank Indonesia but not yet using the maximum KLM incentive of 5.5%, effective 1 August 2026.

As of the first week of May 2026, KLM incentives had been obtained by banks totaling Rp 424.7 trillion, with Rp 361.0 trillion allocated to the lending channel and Rp 63.7 trillion to the interest rate channel. By bank group, KLM was disbursed to state-owned banks (BUMN) Rp 214.2 trillion, private banks (BUSN) Rp 171.1 trillion, regional development banks (BPD) Rp 30.6 trillion, and foreign bank branches (KCBA) Rp 8.2 trillion.

Sectorally, KLM has been directed to priority sectors, including Agriculture, Industry and Downstream, Services including the Creative Economy, Construction, Real Estate, and Housing, and the MSME, Cooperatives, Inclusion, and Sustainability sectors. ‘Going forward, KLM will continue to be strengthened by providing incentives for banks that increase financing and funding, including non-credit and non-DPK, and for banks that set lending/financing rates in line with BI policy,’ Perry said.

Perry noted that credit activity through April 2026 remained robust at 9.98% year-on-year, higher than March 2026’s 9.49%. Based on use, growth was supported by investment loans, working capital loans, and consumer credit, which in April 2026 grew by 19.48% YoY, 6.04% YoY, and 6.13% YoY respectively.

Bank Indonesia expects credit growth in 2026 to remain in the 8–12% range. This outlook is supported by the still-untapped lending facilities totalling Rp 2,551.42 trillion (22.57% of the available credit ceiling) and the adequacy of banks’ financing capacity reflected in the AL/DPK ratio at 25.39% and deposits still growing at 11.39% YoY in April 2026, Perry said. Funding cost efficiency could also improve, as the average lending rate stood at 8.73% and the 1-month deposit rate at 4.16% as of April 2026.

‘Going forward, Bank Indonesia will continue strengthening the implementation of accommodative macroprudential policy, including by strengthening RIM and KLM to keep supporting bank lending/financing,’ Perry said.