DistantNews
Support us
🇮🇩 Indonesia /Economy & Trade

Bank Indonesia urges 25 banks to optimize liquidity, reduce securities holdings

From Republika · () Indonesian

Translated from Indonesian and summarized by DistantNews. Read the original for the full story.

At a glance

News Official statement Context piece
  • Bank Indonesia (BI) has flagged 25 banks for holding a large proportion of securities compared to their funding, indicating suboptimal liquidity deployment.
  • These banks hold about 48.4% of total banking securities but have not optimally channeled funds into credit or the money market.
  • BI plans to adjust its macroprudential liquidity incentive policy to encourage better fund management, potentially offering incentives for banks with lower securities ratios.

Bank Indonesia (BI) has identified a group of 25 banks that are holding a substantial amount of securities relative to their overall funding. These banks collectively account for approximately 48.4% of the total banking securities in circulation, yet their liquidity deployment into credit and money markets is deemed suboptimal.

There is a group of banks that holds too many securities, but does not enter the money market and does not channel credit.

— Alexander LubisDirector of BI's Macroprudential Policy Department, explaining the issue with certain banks' asset holdings.

Alexander Lubis, Director of BI's Macroprudential Policy Department, explained that these banks maintain a macroprudential intermediation ratio (RIM) of up to 84%, but their securities-to-funding ratio exceeds 19%. Lubis noted that this situation is a concern because a significant portion of banking funds remains tied up in securities, not actively circulating through lending or money market transactions.

If the securities are already more than 19 percent, we do not need to add more liquidity.

— Alexander LubisBI's policy on liquidity incentives based on securities holdings.

In response, BI intends to adjust its Macroprudential Liquidity Incentive (KLM) policy. Banks with a securities ratio above 19% will not automatically receive additional liquidity incentives. Conversely, banks with a securities-to-funding ratio below 19% may be eligible for increased incentives to expand their credit lending capacity.

If the securities held are large enough, they can be repoed so that their liquidity can circulate.

— Alexander LubisBI's suggestion for banks to use securities for repo transactions to generate liquidity.

BI also highlighted that banks can utilize their existing securities for repo transactions, allowing these assets to generate liquidity. Lubis emphasized that the policy aims not to force portfolio changes but to encourage more optimal fund management, whether through credit extension or money market activities. The central bank seeks to influence liquidity management towards a more efficient state. As of early August 2026, the KLM has reached approximately Rp446.5 trillion, and from September 1, 2026, the KLM will be increased from 5.5% to a maximum of 6% of third-party funds (DPK). BI hopes this additional incentive will stimulate lending and positively impact economic activity.

We are trying to influence liquidity management to reach an optimal point.

— Alexander LubisBI's objective in adjusting its liquidity policies.
About this summary

Originally published by Republika in Indonesian. Translated, summarized, and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

More Stories

From Our Blog