OJK Still Reviewing Plan to Abolish KBMI 1 Category

The Financial Services Authority (OJK) is still reviewing the plan to abolish the KBMI 1 (Bank Group Based on Core Capital) category to encourage consolidation and strengthen the capitalisation of the national banking industry. It has not yet been confirmed whether this policy will be implemented this year or in a subsequent period.

OJK Executive Head of Banking Supervision, Dian Ediana Rae, stated that strengthening KBMI 1 banks is a strategic agenda to fortify the banking industry structure and maintain financial sector resilience amidst global economic dynamics. “OJK views the strengthening of KBMI 1 banks as part of a strategic agenda that must be pursued in a directed and prudent manner to strengthen the structure and resilience of national banking and support sustainable economic growth,” Dian said in a statement on Sunday (17/05/2026).

According to Dian, this step is increasingly relevant given the acceleration of banking digitalisation, developments in information technology, global economic uncertainty, and the rising risk of cyberattacks, all of which demand that banks possess larger business scales and stronger capital.

OJK assesses that KBMI 1 banks still have room to strengthen their capital and increase their business scale, through both organic growth and inorganic measures such as consolidation. OJK previously issued an appeal to KBMI 1 banks in October 2025 to conduct a thorough evaluation of business performance, asset quality, governance, business models, and long-term prospects.

“An inorganic approach through consolidation is necessary to provide a boost to the performance of banks deemed to be experiencing stagnation. This certainly requires honesty and a visionary attitude from controlling shareholders and bank management to assess future performance prospects in relation to their current capital position,” said Dian.

Following this appeal, since December 2025, OJK has invited KBMI 1 banks to focus group discussions to draft a roadmap for industry strengthening. Periodic evaluations will be conducted to assess the effectiveness of the efforts to strengthen fundamentals and consolidation, which currently remain advisory in nature.

Dian emphasised that OJK is also preparing an appropriate policy framework and mechanism to ensure that capital strengthening occurs in a prudent, measurable, and sustainable manner, while considering financial system stability, customer protection, and the continuity of the intermediation function. “Therefore, its implementation will not be rushed and will remain in line with the capacity of each bank,” she added.

Previously, Dian revealed that OJK is encouraging KBMI 1 banks to explore merger options as a step to strengthen economies of scale. She even mentioned the plan to abolish the KBMI 1 category within a certain timeframe. “I am currently encouraging KBMI 1 banks to start discussing the possibility of mergers among themselves. Because in a time that may not be too far in the future, I will abolish KBMI 1,” Dian said after attending the 2025 Annual Sharia Banking Meeting in Surabaya.

KBMI is a classification of banks based on the amount of core capital, serving as the primary buffer for absorbing risk and determining a bank’s business expansion capacity. Based on OJK Regulation Number 12/POJK.03/2021 concerning Commercial Banks, the KBMI category consists of four groups: KBMI 1 with core capital up to IDR 6 trillion, KBMI 2 from IDR 6 trillion to IDR 14 trillion, KBMI 3 from IDR 14 trillion to IDR 70 trillion, and KBMI 4 above IDR 70 trillion.

If the abolition of KBMI 1 is realised, the bank classification structure will be simplified into three groups. KBMI 2 would become KBMI 1, KBMI 3 would become KBMI 2, and KBMI 4 would become KBMI 3. “So there will only be KBMI 1, 2, and 3, and no KBMI 4. To be honest, in a country as large as ours, regarding economies of scale and other matters, it is impossible not to do this. Therefore, mergers must be carried out,” said Dian.

This step is expected to increase the competitiveness of the national banking industry and expand economic financing capacity amidst the demands for efficiency and digital transformation in the financial sector.