OJK Reveals Small Banks Planning to Upgrade to KBMI 2 Status

The Financial Services Authority (OJK) has revealed that several small banks are currently planning to ‘upgrade’ their status. The OJK’s Chief Executive of Banking Supervision, Dian Ediana Rae, stated that a number of banks in the Core Capital Bank Group (KBMI) 1 are planning to increase their capital to reach KBMI 2. ‘To date, there have been several banks planning to consolidate and increase their business scale,’ Dian said in a statement on Thursday (25/6/2026). He conveyed that the strengthening of fundamentals and consolidation of KBMI 1 banks, which have core capital of Rp3 trillion to Rp6 trillion, is currently a recommendation and will be evaluated periodically to assess its success rate. The OJK therefore stressed that this policy direction is not a rushed policy, but rather a gradual and measured strengthening process, prioritising dialogue with the industry and oriented towards creating a banking sector that is stronger, more efficient, innovative, and capable of providing better services to the public while maintaining financial system stability and customer protection. Dian stated that the OJK leaves the consolidation decision to the shareholders of each bank based on business considerations and corporate strategy. Meanwhile, the OJK issued a recommendation for the Strengthening of Fundamentals and Consolidation to banks in the KBMI 1 category in October 2025. The OJK urged each KBMI 1 bank to conduct a thorough and continuous evaluation of business performance, capital, asset quality, governance, business models, and long-term prospects, including identifying capital strengthening options and consolidation opportunities suited to each bank’s characteristics. ‘An inorganic approach through consolidation is necessary to provide a boost to the performance of banks considered to be experiencing stagnation,’ Dian said. He explained that the OJK’s approach is to encourage consolidation and/or corporate actions naturally and voluntarily based on sound business assessments. Each strengthening plan will be assessed on a case-by-case basis to ensure compliance with regulations, prudential principles, and customer protection aspects. ‘The OJK views the strengthening of KBMI 1 banks as a step that needs to be taken in a directed and prudent manner to strengthen the structure and resilience of national banking, increase the economies of scale of the banking industry to drive national economic growth, considering the dynamics of information technology developments, the acceleration of banking digitalisation, global economic uncertainty, and the increasing risk of cyber attacks,’ Dian explained. According to him, the new Financial Sector Development and Strengthening Law (UU P2SK) also mandates the OJK to realise concrete steps to achieve the consolidation of commercial banks.