BI to periodically evaluate 19 percent SSB ratio threshold in KLM PPU

Bank Indonesia (BI) has confirmed that the threshold for the securities ownership ratio (SSB) set at 19 percent under the Macroprudential Liquidity Incentive Policy (KLM) for Money Market Deepening (PPU) will be evaluated periodically in line with current conditions.

“This will certainly be evaluated continuously, whether the assumptions we used in the model at the time will hold. Otherwise, we will review the 19 percent figure again,” said Alexander Lubis, Director of BI’s Macroprudential Policy Department, during a media briefing in Jakarta on Friday.

Starting 1 September 2026, BI will implement the KLM PPU, which applies to conventional commercial banks, Islamic commercial banks, and Islamic business units.

Under this KLM, banks will receive a maximum incentive of 2 percent, or 200 basis points, of third-party funds if they maintain the ratio of non-repo holdings of government securities and Bank Indonesia Rupiah Securities to total funding below 19 percent.

Alex explained that the 19 percent figure was derived from calculations carried out by the central bank. According to him, BI has considered all factors, both from the macro and micro sides for individual banks, including the liquidity coverage ratio and a number of other indicators.

In addition, BI will also conduct regular stress tests on the banking sector. If there are changes to the assumptions used as benchmarks, including if volatility occurs in the market, the 19 percent level may be adjusted.

“We have a set of assumptions including the LCR for the micro side, and so on. Once again, those assumptions have been incorporated and are being met. So far, we have not seen any banks behaving differently from the 19 percent level. Unless there are other shocks later, which we will certainly take into account,” Alex explained.