How OJK Mitigates Credit Risk in Government Programmes
The Financial Services Authority (OJK) is encouraging commercial banks to channel credit to government priority programmes through revisions to the bank business plan (RBB) regulations. Nevertheless, banks are urged to maintain proper risk management.
“OJK consistently encourages the active role of banking in supporting government programmes, while still paying attention to risk management and good governance,” said OJK’s Executive Head of Banking Supervision, Dian Ediana Rae, to Tempo on Friday, 17 April 2026.
Although the point on financing for priority programmes is specifically included in the RBB revision, its distribution still refers to the provisions in POJK No. 42/POJK.03/2017 on the Obligation to Prepare and Implement Credit or Financing Policies for Commercial Banks. These provisions require banks to prepare and implement internal policies that cover credit approval policies, monitoring of credit quality, and resolution of problematic credits.
According to Dian, credit distribution must also be adjusted to each bank’s risk appetite, business strategy, and liquidity adequacy. In the credit approval process, banks must have confidence in the debtor’s eligibility based on analysis, accompanied by the formation of provisions in accordance with applicable financial accounting standards.
Dian also assured that OJK conducts periodic supervision, both offsite through banks’ financial performance reports and onsite regarding the implementation of banking credit distribution.
OJK’s plan to revise regulations to support priority programmes has been criticised by Nailul Huda, Director of the Digital Economy at the Center of Economic and Law Studies (Celios). “This is a step backwards for OJK in protecting the banking industry climate from government intervention,” he told Tempo on Thursday, 16 April 2026.
He assessed that banking is an economic sector that must be far from government intervention. The banking sector must act according to economic conditions or company conditions in distributing financing. Because the funds managed by banks are public funds that must be protected to avoid massive losses.
If massive losses occur, the foundation of the economy will collapse, causing a financial crisis. According to Huda, OJK’s steps must be cautious considering that government programmes like the Red White Village Cooperative and MBG have non-low risk levels. “Systemic default risk could occur, impacting public funds. If so, trust in banking will decline.”
In addition, credit distribution to government programmes will cause significant market distortions. According to Huda, banking behaviour that must follow market principles such as being efficient and effective must face the obligation to serve government programmes. He assessed that OJK should be more cautious.
The adjustment of RBB regulations for government priority programmes was previously revealed by OJK Commissioner Chairman Friderica Widyasari Dewi. “We are designing an RPOJK (Draft Financial Services Authority Regulation) for adjustments to RBB provisions. In it, how we support banks to enter more into government priority programmes such as MBG (free nutritious meals), 3 Million Houses, Kopdes, and others,” said Friderica at Bank Mega Tower on Tuesday, 7 April 2026, as quoted from Antara.