Why SRBI Must Not Drain Too Much Bank Liquidity
Permata Bank Chief Economist Josua Pardede has explained why it is crucial for the central bank to ensure that Bank Indonesia Rupiah Securities (SRBI), which currently offer relatively high yields, do not excessively drain banking liquidity. “Because SRBI yields that are too attractive can force banks to raise deposit rates to retain funds,” Josua said in Jakarta on Saturday, 20 June 2026, as quoted from Antara.
Bank Indonesia had previously increased SRBI yields across all tenors in line with a 100 basis point (bps) BI-Rate hike in May-June 2026. The central bank took this step to attract foreign portfolio investment inflows into domestic financial assets, thereby helping to strengthen the rupiah exchange rate. Based on BI publications, the weighted average SRBI yield in the secondary market across all tenors tended to increase and was around 7 percent on Friday, 12 June 2026.
Furthermore, Josua stated that the central bank needs to refrain from further BI-Rate hikes if the rupiah exchange rate and inflation begin to stabilise. This is with consideration that the transmission of the rate hike to the cost of funds and credit is already underway. According to Josua, the Financial Services Authority (OJK) and BI need to closely monitor special deposit rates, liquid asset ratios, new credit growth, non-performing loans, and changes in new lending rates. “The government also needs to maintain the timing of state cash placements and withdrawals in banks so as not to suddenly add liquidity pressure.”
He also assessed that the 100 bps BI-Rate hike has the potential to reverse the direction of banks’ cost of funds. However, the impact of the benchmark rate increase could be gradual and not sharply spike for the entire industry. The early signs, according to Josua, are already visible from the rupiah third-party fund (DPK) interest rate, which rose from 2.65 percent in April 2026 to 2.7 percent in May 2026. “This increase indicates that competition for fund collection is starting to intensify, especially because cheap funding sources are limited and the need for credit funding remains large,” he said.
Even so, Josua assessed that the pressure on the cost of funds has not yet become a systemic pressure because banking liquidity is still relatively adequate and BI is still maintaining liquidity sufficiency through a policy mix, including repo auctions and strengthening banking liquidity instruments. “In other words, the downward trend in the cost of funds that occurred after the 125 bps BI-Rate cut in 2025 is indeed at risk of reversing direction in 2026,” he said.
He estimated that the outlook for deposit rates in the coming months tends to rise earlier than lending rates. The increase will mainly be seen in time deposits, large corporate funds, and large-value deposits that are more sensitive to interest rate changes. Meanwhile, savings and current accounts are usually slower to rise because they are more transactional in nature. If the BI-Rate holds at 5.75 percent until the end of 2026, according to Josua, deposit rates are likely to rise gradually, not spike. However, if rupiah pressure intensifies again and BI must raise rates further, competition for deposit rates will become increasingly fierce. “Especially for small-medium banks and banks with high loan-to-deposit ratios,” he said.
From a stability perspective, Josua noted that the current condition of the banking industry is still strong enough to absorb initial pressures. Banking credit performance in May 2026 grew 11.51 percent year-on-year (yoy), higher than April’s 9.98 percent yoy. Meanwhile, third-party funds (DPK) grew 13.47 percent yoy and the liquid assets to DPK ratio (AL/DPK) stood at 24.74 percent. In addition, capitalisation remains strong and aggregate credit risk remains under control. This means, Josua said, that the rate hike is not yet a direct threat to bank stability. However, the risk of a delayed impact remains large, primarily if deposit rates continue to rise, the cost of funds increases, lending rates rise, credit demand slows, and credit quality deteriorates. “Then banks will face dual pressure between maintaining credit growth and maintaining asset quality,” Josua said.