Due to Special Interest Rates, 30% of Customer Deposits Are Not Guaranteed by LPS

Jakarta, CNBC Indonesia – The Deposit Insurance Corporation (LPS) has revealed that around 30% of customer deposits in the banking sector currently earn interest above the guaranteed interest rate (Tingkat Bunga Penjaminan, or TBP). As a consequence, funds earning interest above the TBP fall outside the scope of LPS coverage.

LPS Commissioner Doddy Zulverdi said the condition is a consequence of banks’ strategy of offering special rates to attract customer funds.

“The 30% portion concerns deposits that are fully guaranteed. Some 30% of funds receive an interest rate above the TBP,” Doddy said in an interview with CNBC Indonesia after the Lampung Financial Festival 2026, quoted on Monday (7 September 2026).

Doddy explained that a special rate is essentially a deposit interest rate offered by a bank above the TBP set by the LPS. Banks may offer such rates as part of their fundraising strategy, particularly when they need liquidity or are expanding credit.

“A special rate, by definition, is the difference between the interest rate given by the bank and the TBP,” he explained.

However, customers need to understand the consequences of choosing deposit products with rates above the TBP.

“Customers are free to deposit at banks offering interest above the TBP, meaning they receive a special rate. As long as they are aware and understand that this means the deposit is not guaranteed,” Doddy said.

According to Doddy, the sizeable share of funds earning special rates is one reason the LPS must continue monitoring developments in banking interest rates.

This is because if the average deposit rate across the banking industry rises while the TBP is not adjusted accordingly, the gap between the rates banks offer and the TBP will widen. That could enlarge the portion of funds outside guarantee coverage.

“If the banking average rises, we need to adjust the TBP upward as well so the gap doesn’t widen. Because if the gap widens, the portion receiving special rates grows larger,” he said.

Doddy said the LPS has a mandate to ensure that at least 90% of customer accounts remain fully guaranteed.

“The implication is that the number of guaranteed accounts could decline, because customers earning interest above the TBP are automatically not covered. If there are too many, the guaranteed share will gradually fall,” he said.

At present, he confirmed that the share of fully guaranteed accounts remains above 99%, both at commercial banks and rural credit banks (BPR).

High Rates Can Backfire

Doddy explained that the TBP is set to reflect interest rates considered reasonable in the banking industry. The aim is to prevent banks from competing to offer excessively high rates merely to attract deposits.

The higher the deposit rate offered, the more expensive the cost of funds the bank must bear. If those funds cannot be channelled back into income-generating credit, the bank’s financial condition could come under pressure.

“If a bank dares to offer higher interest, it must be able to deploy those funds into loans at sufficiently positive rates so it can cover its funding costs. If it cannot, it is effectively committing suicide,” Doddy asserted.

In his view, banks offering high rates must be capable of generating income from those funds. Otherwise, a fundraising strategy based on high interest rates can become a problem for the bank itself.

“If a bank raises its interest rate but cannot channel credit, that is the same as creating problems for itself — its financial condition will deteriorate,” he continued.