Minister Tito And Purbaya Agree: Regional Funds Are Not Allowed To Park At Banks

Minister of Home Affairs Tito Karnavian (VOI)

JAKARTA - Minister of Home Affairs Tito Karnavian emphasized that he and Minister of Finance Purbaya Yudhi Sadive agreed that local government funds (Pemda) should not be deposited in banks and must be immediately spent on the benefit of the community.

"Our goal is the same, regional funds should not be deposited in banks, but will be spent immediately on the community," he said in a statement quoted on Monday, October 27.

Tito also responded to differences in local government deposit data between the Ministry of Home Affairs and the Ministry of Finance. Based on data from the Regional Government Information System (SIPD) as of October 2025, local government deposits were recorded at IDR 215 trillion, while Bank Indonesia data as of August 2025 showed a figure of IDR 233 trillion.

Tito explained that the difference of Rp. 18 trillion was reasonable because of the difference in the reporting period, and said the funds might have been spent.

The issue of local government funds deposited in the bank was in the spotlight after the central government discovered the large accumulation of local government deposits in banks in a number of regions.

The central government encourages the funds to be immediately disbursed to support public development and services, because delays in spending are considered to slow regional economic growth and the effectiveness of programs-priority.

A number of regional heads also raised their voices regarding the issue of local government funds that were deposited. Khofifah Indar Parawansa, Governor of East Java, stated that her party had explained that the funds that appeared to be 'depositing' in the bank were basically part of the needs of the APBD cash-flow, such as routine shopping, employees, and unexpected assistance.

On the one hand, Khofifah also suggested that the regional tobacco excise profit sharing fund (DBH-CHT) be increased as a mitigation for cutting central transfer funds.

Meanwhile, Dedi Mulyadi, Governor of West Java, emphasized that the placement of local government funds in regional banks is a legal mechanism to maintain transparency and security in the payment of development projects. He said that large work payments were made in stages so that there would be no abuse.

As for Bobby Nasution, the Governor of North Sumatra, denied the narrative that the North Sumatra Provincial Government had funds of IDR 3.1 trillion deposited in the bank.

He stated that the current balance amount is only around Rp. 990 billion and emphasized that the funds are being diverted for development programs.