Undisbursed Loans of Rp2,575 Trillion: What It Means for Indonesia's Economy
Amid hopes that bank credit will drive economic growth, one phenomenon has attracted attention. As of May 2026, banks in Indonesia have provided credit facilities worth Rp2,575 trillion that are ready for borrowers to use, but the funds have not yet been disbursed.
This phenomenon is known as undisbursed loans — credit facilities approved by banks but not yet fully drawn down by customers. The sheer size of the figure raises the question of whether businesses are holding back expansion or simply pursuing a more cautious financing strategy.
The Financial Services Authority (OJK) believes the high level of undisbursed loans does not mean the banking sector’s intermediation function is weakening. On the contrary, the figure shows that financing headroom remains available for businesses to tap once investments and operational activities begin to materialise.
“The relatively high undisbursed loans, or drawdown flexibility, of Rp2,575 trillion currently shows the potential for utilisation for business expansion according to each company’s timeline, and therefore has the potential to boost credit growth in the future,” said Dian Ediana Rae, OJK’s Chief Executive of Banking Supervision.
Why has approved credit not been disbursed?
In banking practice, credit approval is not always followed by an immediate, one-off disbursement of funds.
For investment loans, companies generally draw funds in stages according to project progress — for example, when entering the construction phase of production facilities, the purchase of machinery, or payments to contractors.
The same applies to working capital loans. Companies usually use only part of the borrowing ceiling according to operational needs, so that interest costs remain efficient.
This means undisbursed loans are not problem loans or cancelled borrowings. The funds remain available and can be drawn at any time in accordance with the schedule agreed between the bank and the borrower.
According to Dian, the gradual disbursement pattern also reflects the prudence of businesses in managing their financing.
“The staged realisation of credit drawdowns also reflects the caution of businesses in managing their funding needs amid economic dynamics,” she said.
Mostly for productive activities
The composition of undisbursed loans also shows that the majority of facilities not yet disbursed come from the productive sector.
OJK recorded that 54.33% of total undisbursed loans are working capital loans, used to support companies’ operational activities.
By bank group, undisbursed loans as of May 2026 stood at Rp545 trillion at state-owned banks (Himbara), while at national private banks they reached Rp1,664 trillion, in both committed and uncommitted loan forms.
“The largest share comes from working capital loans at 54.33%, which shows that these credit facilities are mostly prepared to support the productive activities of the business world,” said Dian.
The finding suggests that future credit growth will stem more from investment and production activity than from consumer financing.