Surge in Large Bank Deposits: A Double-Edged Sword for Indonesian Banking

Significant Growth in High-Value Deposits

Indonesian banks experienced a substantial increase in large deposits, with funds exceeding Rp 5 billion growing 18.3% year-on-year to reach Rp 5,562 trillion by October 2025. This growth, reported by the Lembaga Penjamin Simpanan (LPS), represents a continuation of a trend observed since the second quarter. Over the past three years, these large deposits have shown a remarkable growth rate of 29.5%.

Implications for Banking Sector

According to Moch Amin Nurdin, Advisor at the Banking & Finance Development Center, this trend could indicate that both individual and corporate clients are regaining confidence in domestic banks. However, the banking sector must carefully consider the implications of this growth. The practice of offering special interest rates to attract these large deposits could potentially strain bank finances.

Deposit Composition Concerns

The composition of these large deposits remains a critical factor. Amin highlights the need to distinguish between 'dana murah' (low-cost funds) and term deposits. The proportion of low-cost funds versus higher-cost term deposits can significantly impact a bank's overall funding costs and profitability.

Market Context and Future Outlook

The surge in large deposits reflects a broader trend of cautious financial management among Indonesia's high-net-worth individuals and corporations. Rather than investing or spending, these entities are choosing to maintain their funds in bank deposits. This behavior could be attributed to economic uncertainty or a wait-and-see approach amid evolving market conditions. As such, banks must navigate this influx of capital carefully, balancing the need to attract and retain deposits with the potential financial implications of offering competitive interest rates.