OJK monitors banks with relatively limited liquidity buffers
The Financial Services Authority (OJK) continues to monitor banking liquidity conditions, both at an industry and individual level, through risk-based supervision, specifically focusing on banks with relatively limited liquidity buffers and liquidity ratios approaching regulatory thresholds.
“OJK is ensuring that these banks have adequate mitigation steps to maintain sufficient liquidity and anticipate potential pressures,” said OJK Executive Head of Banking Supervision, Dian Ediana Rae, in a written response in Jakarta on Monday.
Furthermore, Dian added that OJK will continue to coordinate with Bank Indonesia (BI), the Ministry of Finance, and the Indonesia Deposit Insurance Corporation (LPS) within the framework of the Financial System Stability Committee (KSSK).
In general, OJK reported that banking liquidity remains sufficiently ample, with the Liquidity Coverage Ratio (LCR) as of July 2026 standing at 187.50 per cent, well above the 100 per cent requirement. Additionally, the liquid assets to non-core deposits (AL/NCD) ratio was 102.45 per cent, and the liquid assets to third-party funds (AL/DPK) ratio was 23.10 per cent, both significantly above the threshold.
The banking industry’s Loan-to-Deposit Ratio (LDR) in July 2026 was recorded at 88.38 per cent, an increase both monthly and annually. Dian explained that this increase in LDR is in line with credit growth being higher than the growth of third-party funds.
However, she noted that the increase in LDR should be viewed proportionally as part of the banking industry’s intermediation function, even though it simultaneously reflects a decrease in liquidity as a consequence of credit disbursement growing faster than funding sources.
In recent months, Dian added, banking liquid assets have tended to flatten, particularly in banks with relatively high credit growth. Nevertheless, industry-wide liquidity remains at an adequate level, as reflected by various key liquidity ratios that remain sufficient and above minimum requirements.
Consequently, Dian clarified, LDR movements cannot be used in isolation to conclude that liquidity tightening is occurring. She added that LDR movements must be viewed alongside other liquidity indicators, while also considering the specific conditions of each bank, such as business model characteristics, funding structures, and intermediation strategies.
From a macroprudential policy perspective, Bank Indonesia has once again increased incentives under the Macroprudential Liquidity Incentive Policy (KLM), effective from 1 September 2026. As a result, banks are expected to have more room to manage their liquidity.
OJK maintains that liquidity management must be conducted based on the principles of good governance and risk management. Therefore, Dian stated that banks need to ensure that asset and liability management is conducted prudently through the implementation of adequate Asset and Liability Management (ALMA), the provision of high-quality liquid assets in accordance with regulations, the performance of regular stress testing, and the preparation of effective contingency plans.