BI Rate Down, OJK Asks Banks To Lower Interest Rates

OJK (photo: dock. Antara)

JAKARTA - The Financial Services Authority (OJK) continues to urge banks to gradually adjust their interest rate to stay in line with market conditions, healthy financial ratios and not create unhealthy interest competition.

"The national banking industry is also asked to maintain consumer transparency and protection in conveying information related to banking products," said OJK Banking Supervision Chief Executive Dian Ediana Rae in a statement, quoted Monday, August 25.

For information, Bank Indonesia (BI) decided to lower the benchmark interest rate or BI-Rate by 25 bps to 5.00 percent. In addition, BI also lowered the deposit facility interest rate and lending facility rate by 25 bps, bringing it to 4.25 percent and 5.75 percent, respectively.

Dian conveyed that along with the decline in the benchmark interest rate (BI Rate), bank lending rates also showed a downward trend, where in July 2025, the average weighted rupiah loan interest rate fell 7 bps compared to the previous year, especially on productive credit.

"Generally, the decline in the BI Rate will be followed by a decrease in credit interest with a certain time lag, so it is estimated that the downward trend will continue throughout 2025," he said.

Dian assessed that there is still room for further lower lending rates, in line with expectations of a reduction in global interest rates in the second half of 2025 and a decrease in the BI Rate to 5 percent as of August 20, 2025.

However, he said that the reduction in interest rates depended on the cost of funds (CoF) structure of each bank, because some still relied on expensive funds (time deposits) in the composition of the DPK.

"Therefore, banks need to manage funding strategies, especially by increasing the portion of low-cost funds, to create a more significant space for lowering credit interest," he said.