Perbanas Launches UMKM Centre Amid Weakening SME Lending

The National Banks Association (Perbanas) officially launched its UMKM Centre on Thursday (18/6/2026) as part of efforts to strengthen the small and medium enterprise sector. The launch coincided with the presentation of preliminary research findings on the current developments and challenges facing UMKM. The research employed a mixed qualitative and quantitative methodology, incorporating focus group discussions (FGD) that brought together financial service industry associations, business actors, UMKM communities, academics, and relevant regulators. Perbanas Chairman Hery Gunardi stated that the inauguration and research presentation reflect the association’s commitment to advancing Indonesia’s UMKM industry, emphasising that as the backbone of the economy, the sector must be reinforced to increase its national economic contribution. Chief Economist Winang Budoyo presented findings showing that UMKM credit growth has been weakening since late 2022 and entered negative territory by the end of 2025, with a year-on-year contraction of approximately -0.47% recorded as of February 2026. This trend diverges from the broader banking credit landscape, where working capital, investment, and consumer loans continue to grow positively, indicating a fundamental issue within the UMKM segment. The research suggests the credit slowdown is primarily demand-driven, with nearly 90% of formal and informal UMKM actors not applying for loans because they do not yet feel the need, and almost 90% of their business financing coming from personal funds. Despite this, the supply side remains highly supportive, evidenced by a 94.3% approval rate when formal UMKM businesses do apply for credit. Aviliani, Head of Economic and Banking Research at Perbanas, expressed hope that the UMKM Centre will help unbankable businesses become bankable, provide mentorship, and collaborate with various stakeholders to elevate the class of UMKM players.