Indonesia's Banking Sector Undergoes Major Consolidation

OJK Revokes Licenses of 7 Rural Banks

The Financial Services Authority (OJK) has revoked the licenses of 7 Rural Banks/People's Financing Banks (BPR/BPRS) in 2025 as part of a comprehensive banking sector consolidation program. The most recent revocation was for PT BPR Bumi Pendawa Raharja on December 15, 2025, following capital and liquidity issues. This action follows similar revocations throughout the year, including BPRS Gebu Prima in April and BPR Dwicahaya Nusaperkasa in July.

Large-Scale Merger Process Underway

OJK is currently processing the merger of 226 BPR/BPRS into 79 entities, continuing a multi-year program to strengthen the industry. As of December 10, 2025, OJK had already approved the consolidation of 130 BPR/BPRS into 45 entities. The ongoing merger process aims to create more robust institutions capable of serving micro, small, and medium enterprises (MSMEs) more effectively.

Rationale Behind Consolidation Efforts

According to Dian Ediana Rae, OJK's Head of Banking Supervision, the consolidation is crucial for enhancing the BPR/BPRS sector's capital base, governance, and overall resilience. The initiative is designed to help these banks achieve a more substantial scale of operations and improve their service delivery, particularly in regional areas where MSMEs are prevalent.

Impact on Financial Sector

This consolidation is expected to have a positive impact on the financial sector by creating more stable and capable banking institutions. The reduction in the number of BPR/BPRS through mergers will likely lead to better risk management and more efficient operations, ultimately benefiting consumers and the broader economy.