BI Rate Rises: How State-Owned Banks Are Safeguarding Lending

Indonesia’s central bank, Bank Indonesia (BI), raised the policy rate, the BI Rate, by 50 basis points to 5.25 percent at the Board of Governors meeting on 19-20 May 2026. The move is aimed at safeguarding rupiah stability and containing inflation amid global macroeconomic dynamics. Domestic banks have begun to respond by keeping lending stable, particularly for the housing sector and MSMEs, to support domestic economic activity despite global headwinds and potentially higher funding costs.

Corporate Secretary Bank Mandiri Adhika Vista said BI’s decision could strengthen the national economy’s fundamentals in the medium term. ‘Bank Mandiri welcomes BI’s decision as it reinforces the macroeconomic foundations of the national economy in the medium term,’ he stated in a press release on Thursday, 21 May 2026. He added that adjustments to lending and deposit rates would be carried out in a measured manner, while maintaining a balance between customer interests, business growth, and risk management.

Wisnu Sunandar, Corporate Secretary of Bank Syariah Indonesia (BSI), likewise said that the BI Rate rise is important for maintaining financial system stability amid global uncertainty. He noted that liquidity conditions in Shariah-compliant banks remain robust. As of March 2026, BSI’s third-party funds (DPP) totalled Rp376.8 trillion, up 18 percent year on year, with low-cost funds or CASA amounting to Rp236.2 trillion. ‘Demand for financing from the productive sector and domestic consumption remains strong, so the national economy’s footing remains solid,’ Wisnu said. BSI continues to channel financing selectively, with asset quality maintained. By March 2026, BSI’s financing reached Rp329 trillion, up 14.39 percent year on year, with a gross non-performing financing (NPF) ratio of 1.8 percent.

Meanwhile, Bank Tabungan Negara (BTN) is focusing on strengthening low-cost funding or current account saving accounts (CASA) to maintain funding cost efficiency. Corporate Secretary BTN Ramon Armando said the bank has prepared various scenarios to face changes in monetary policy. ‘BTN will continue to maintain its funding structure to stay efficient through strengthening low-cost funds,’ he said.

Bank Rakyat Indonesia (BRI) also affirmed that financing for MSMEs and the productive sector would continue amid global pressures. Corporate Secretary BRI Dhanny said the group remains balanced between credit growth, asset quality, and liquidity. ‘BRI will ensure intermediation functions continue, particularly in extending credit to MSMEs and the productive sector,’ Dhanny said.

BI Governor Perry Warjiyo said the rate rise was implemented to maintain rupiah stability from global volatility, including pressures stemming from the conflict in the Middle East. ‘The rate increase is a step to stabilise the rupiah against high global volatility arising from the Middle East conflict, and to keep inflation under control in 2026 and 2027,’ Perry said.