LPS Chief Reveals Reasons Why Banks Still Offer High Interest Rates Lavishly
JAKARTA - The Chairman of the Board of Commissioners of the Indonesia Deposit Insurance Corporation (LPS), Anggito Abimanyu, has explained the reasons why banks continue to offer high deposit interest rates, even though they exceed the guarantee interest rate (TBP).
Anggito stated that this situation is driven by fierce competition in mobilising funds. Banks are competing for customer deposits by offering higher interest rates.
Banks even employ an auction mechanism. Banks needing funds set special interest rates or special rates to attract inflows.
“They call it an auction. In an auction, you get whatever the bid yields,” he said when met at BSI Tower, Jakarta, on Tuesday (14/4/2026).
“Moreover, the competition for funds is quite intense,” he added.
Anggito admitted he does not yet know the details of why deposit interest rates remain high above the TBP. He assessed that this condition needs to be addressed.
He viewed the main issue as not just the deposit interest rates. Credit demand is considered not yet strong enough.
Current banking liquidity is deemed adequate. Supply of funds is not an obstacle.
“In my view, the important thing may not be above the TBP, but the demand, the request for funds, must be strong,” he emphasised.
The reduction in TBP has not been followed by adjustments in deposit interest rates. Since June 2025, the TBP for rupiah deposits has fallen by 75 basis points.
As of January 2026, the LPS TBP for rupiah deposits in commercial banks stands at 3.5 percent. Foreign currency deposits are at 2 percent. For Rural Credit Banks (BPR), it is at 6 percent.
The high deposit interest rates impact banks’ cost of funds. The cost of funds becomes expensive and holds back declines in lending rates.
“This is one of the reasons why lending rates cannot fall. Because 33 percent of the deposit portion is considered above the guarantee interest rate. In other words, it obtains a special rate,” he explained during a working meeting with Commission XI in Jakarta on Thursday (9/4/2026).