LPS Lowers Guaranteed Interest Rate to 3.75 Percent

JAKARTA - The Deposit Insurance Corporation (LPS) Board of Commissioners Meeting (RDK) on Monday, August 25, 2025, decided to lower the deposit guarantee interest rate by 25 basis points (bps) at rural banks (BPR) and commercial banks and maintain the deposit guarantee interest rate (TBP) for foreign currency deposits at commercial banks.

The TBP for rupiah deposits at commercial banks is 3.75 percent, and the TBP for rupiah deposits at rural banks is 6.25 percent. Meanwhile, the TBP for foreign currency deposits at commercial banks is 2.25 percent. These TBPs will be in effect from August 28 to September 30, 2025.

The Chairman of the LPS Board of Commissioners, Purbaya Yudhi Sadewa, explained that the TBP determination was based, among other things, on the relatively solid domestic economic performance, which still needs to be strengthened amidst increasing risks of uncertainty.

"Domestic economic performance is relatively well maintained, supported by improving investment activity and stable consumption levels. Indonesia's GDP grew 5.12 percent (yoy) in the second quarter of 2025," he said on Tuesday, August 26.

Furthermore, economic and banking performance showed strong dynamics. The economies of major economies recorded positive growth throughout the second quarter of 2025.

Several global central banks continued to lower benchmark interest rates in an effort to encourage better economic performance. However, others are also continuing to monitor the impact of developing tariff policies on inflation and the broader economy.

He also highlighted several recent positive developments, including the continued positive trend in banking intermediation performance, accompanied by adequate capital and liquidity resilience.

In July 2025, credit disbursement grew 7.03 percent yoy, driven by still-high investment activity, while Third Party Funds (TPF) increased by 7.00 percent yoy.

Deposit accumulation was primarily supported by improvements in government fiscal activity, corporate finance, and private consumption, as reflected in a 10.72 percent year-on-year increase in current accounts and a 5.91 percent year-on-year increase in savings accounts.

Furthermore, capital resilience remained solid, acting as a buffer against market and credit volatility. The industry's capital adequacy ratio (CAR) was maintained at 25.81 percent in June 2025. Meanwhile, liquidity remained relatively adequate, with the liquidity/non-cash deposit ratio at 119.43 percent of the 50.0 percent threshold, and the liquidity/deposits ratio at 27.08 percent (10.0 percent threshold) in July 2025.

Maintained capital levels were also supported by robust credit risk management. This is reflected in the Non-Performing Loan (NPL) ratio which is controlled at 2.28 percent and the Loan at Risk (LaR) ratio which continues to decline and is at 9.68 percent of total credit distribution in the July 2025 period, this level is already lower than in 2019 before the COVID-19 pandemic.