Bank Indonesia Sees Rise in Private Sector Credit Demand

Bank Indonesia (BI) is closely observing an increasing demand for private sector credit, with undisbursed loans reaching approximately Rp2,548 trillion as of July 2026. BI Governor Destry Damayanti explained that this trend is influenced by both demand and supply factors. Government-related activities primarily drove credit growth through the second quarter of 2026, while private sector demand remained relatively low.

However, BI is now witnessing a promising shift, with the private sector demonstrating positive credit demand signs. Destry elaborated that several banks previously held excess liquidity in securities, such as Government Securities (SBN) and Bank Indonesia Rupiah Securities (SRBI) due to weak loan demand. To stimulate bank intermediation, BI implemented a Macroprudential Liquidity Incentive Policy (KLM) for Market Deepening (PPU) on September 1, 2026.

Under this policy, lenders can receive incentives of up to 2 percent of third-party funds if they maintain non-repo SBN and SRBI holdings below 19 percent of total funding. This incentive is provided as a discount on the bank's average statutory reserve requirement (GWM) at Bank Indonesia. BI anticipates that this mechanism will redirect greater liquidity toward real-economy financing.

Early indications of strengthening credit growth emerged in August 2026, with overall bank lending increasing by 13.65 percent year-on-year. Investment credit rose by 25.11 percent, while working capital loans grew by 11.45 percent. This positive development signifies that credit growth is now flowing into productive sectors, reflecting a building economic momentum fueled by earlier capital investments, according to Destry.