Finance Minister Criticizes Banks Over Cautious Lending Practices

Stagnant Credit Growth Amidst Liquidity Injection

Indonesia's Finance Minister, Purbaya Yudhi Sadewa, has criticized commercial banks for their risk-averse behavior, suggesting they prefer investing in government securities over lending to businesses. Despite a significant Rp200 trillion liquidity injection into state-owned banks in September, credit growth has remained stagnant at around 7% for the past six months.

Policy Coordination Challenges

Purbaya attributed the sluggish credit growth to coordination issues between fiscal and monetary authorities, though he noted that communication has improved over the past month, particularly in the last two weeks. He emphasized that synchronized policies between the Ministry of Finance and Bank Indonesia will be crucial for achieving better economic growth in 2026, targeting a rate of 6%.

Business Community Concerns

The Indonesian Entrepreneurs Association (Apindo) echoed concerns about the high cost of capital and weak consumer demand. According to an Apindo survey, 43.05% of businesses complained about high lending rates, with the average bank lending rate remaining at 8.96% as of November 2025, despite the BI rate being lowered to 4.75%.

Policy Recommendations

To address these challenges, Apindo is calling for a holistic stimulus package that targets both supply and demand sides of the economy. This includes reducing the high cost of doing business by lowering input costs such as raw materials, labor, and energy, as well as improving the efficiency of financial services.