State-Owned Bank Chief Notes SBN Repo Phenomenon Used to Hoard SRBI

The Chairman of the State-Owned Banks Association (Himbara), Putrama Wahju Setyawan, has highlighted the increasing practice of banks performing repurchase agreements (repo) on Government Securities (SBN) to place funds into Bank Indonesia’s Rupiah Securities (SRBI). This trend suggests that the banking industry’s intermediation function is not operating optimally, despite the industry’s loan-to-deposit ratio (LDR) reaching 90% as of March 2026.

Putrama, who serves as the President Director of PT Bank Negara Indonesia (Persero) Tbk (BBNI), noted that the SBN repo proceeds, amounting to Rp238 trillion, are likely being placed into SRBI. “The funds are rotated; they buy SBN, and once they see that the yield from SRBI is more attractive, they perform a repo and then place it into SRBI,” he stated during a Public Hearing with Commission XI of the Indonesian House of Representatives (DPR RI) on Tuesday (2/6/2026).

According to Putrama, this phenomenon is one of the reasons why the banking sector’s intermediation function remains sub-optimal. This is further reflected in the credit-to-economy ratio in Indonesia, which remains relatively low compared to other Southeast Asian nations. Putrama noted that Indonesia’s credit-to-GDP ratio is only around 32%, significantly lower than those of Thailand, Malaysia, Singapore, and Vietnam.

Consequently, Putrama suggested there is still significant room for the national banking industry to increase its credit distribution capacity to support economic growth. In this regard, he mentioned that consolidation could be undertaken to bolster this capacity. “In the current context, consolidation is not merely about reducing the number of banks, but rather strengthening the industry’s capacity with the aim of forming institutions that possess stronger, more resilient business scales and regional as well as global competitiveness,” Putrama concluded.