Bank Indonesia Amplifies Liquidity Support Amid Slow Credit Rate Adjustment

Enhanced Macroprudential Liquidity Incentives

Bank Indonesia has significantly increased its Macroprudential Liquidity Incentives (KLM) to Rp404.6 trillion as of early November 2025, marking a substantial rise from the initial allocation of Rp283 trillion for the full year ³

• Private banks: Rp179.9 trillion
• State-owned banks: Rp179.4 trillion
• Regional development banks: Rp39.3 trillion
• Foreign bank branches: Rp6 trillion ²
  Source 2

  https://keuangan.kontan.co.id/news/gelontoran-insentif-likuiditas-makroprudensial-bi-meningkat-apa-dampak-ke-perbankan

Addressing Slow Credit Rate Transmission

Despite a 125 basis point reduction in BI Rate since the beginning of 2025, banking credit rates have shown limited response, with:

• One-month deposit rates decreasing by only 56 basis points (from 4.81% to 4.25%)
• Lending rates dropping merely 20 basis points (from 9.20% to 9.00%) ¹
  Source 1

  https://finansial.bisnis.com/read/20251119/11/1930079/bos-bi-sentil-lagi-perbankan-lambat-turunkan-suku-bunga-kredit

Sectoral Focus and Implementation

The KLM program specifically targets priority sectors including:

1. Agriculture, trade, and manufacturing
2. Real estate, housing, and construction
3. Transportation, warehousing, tourism, and creative economy
4. MSMEs, ultra-micro enterprises, and green economy initiatives

Enhanced Framework for Future Implementation

BI is strengthening the KLM framework effective December 1, 2025, focusing on performance-based incentives that encourage banks to:

1. Channel credit to specific sectors (lending channel)
2. Align lending rates with monetary policy direction (interest rate channel)

This adjustment is expected to provide additional liquidity incentives of approximately Rp18.5 trillion ²