Indonesia's Credit Growth Continues to Slow Despite Massive Liquidity Injection

Weak Demand and Cautious Businesses Drive Slowdown

Indonesia's banking sector experienced a continued slowdown in credit growth during October 2025, with the annual growth rate dropping to 7.36% from 7.7% in the previous month ¹

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Source 2

https://nasional.kontan.co.id/news/efek-injeksi-rp-200-triliun-belum-terlihat-menkeu-tambah-rp-76-triliun-ke-perbankan

. This deceleration occurred despite the government's significant efforts to boost liquidity through multiple injections totaling Rp276 trillion by November 2025 ⁴

Source 4

https://keuangan.kontan.co.id/news/kredit-umkm-melambat-bank-hati-hati-jaga-rasio-npl-dan-kualitas-pinjaman

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The primary factor behind this slowdown is weak credit demand as businesses maintain a cautious 'wait and see' approach, resulting in Rp2,450.7 trillion worth of undisbursed loans, representing 22.97% of total available credit facilities ¹

. Bank Indonesia (BI) Governor Perry Warjiyo noted that compared to the 125 basis point reduction in BI rate since early 2025, banking sector interest rates have not adjusted proportionally - one-month deposit rates dropped by only 56 basis points while credit rates decreased by merely 20 basis points ¹

Source 1

https://finansial.bisnis.com/read/20251120/90/1930195/permintaan-loyo-jadi-biang-keladi-kredit-melambat-saat-likuiditas-melimpah

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Factors Contributing to Slow Credit Growth

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1. Business Cautiousness: The 'wait and see' attitude among businesses continues to suppress credit demand.
2. Slow Interest Rate Transmission: Despite BI rate cuts, banking sector lending rates remain relatively high, affecting demand.
3. High Undisbursed Loans: Rp2,450.7 trillion in undisbursed loans indicates suppressed demand.
4. Liquidity Conditions: While banking liquidity is ample, with liquid assets to third-party funds ratio at 29.47%, credit growth remains sluggish ¹
   Source 1

   https://finansial.bisnis.com/read/20251120/90/1930195/permintaan-loyo-jadi-biang-keladi-kredit-melambat-saat-likuiditas-melimpah
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Government and BI Responses

The government has been proactive in addressing the situation:

1. Initial Rp200 trillion injection into state-owned banks in September 2025
2. Additional Rp76 trillion injection on November 10, 2025
3. BI maintaining accommodative monetary policy
4. Enhanced Macroprudential Liquidity Incentive (KLM) framework effective December 1, 2025 ²
   Source 2

   https://nasional.kontan.co.id/news/efek-injeksi-rp-200-triliun-belum-terlihat-menkeu-tambah-rp-76-triliun-ke-perbankan

Economic Outlook

BI projects credit growth to remain within the 8-11% target range for 2025, with expectations of improvement in 2026. Economists suggest that fiscal spending and exchange rate stability will be crucial in boosting consumer confidence and business expansion ¹

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Source 2

https://nasional.kontan.co.id/news/efek-injeksi-rp-200-triliun-belum-terlihat-menkeu-tambah-rp-76-triliun-ke-perbankan

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