BI Strengthens Macroprudential Policy, Encourages Credit Interest Rate Reduction

BI Macroprudential Policy Director Irman Robinson. (Aris Nurjani / VOI)

BUKITTINGGI - Bank Indonesia (BI) since September 2024 has cut the benchmark interest rate or BI-Rate six times with a total decline of 150 basis points (bps), so that it is now at the level of 4.75 percent.

However, the decline has not been followed in a balanced manner by the reduction in banking interest rates, both in deposit interest and credit.

BI Macroprudential Policy Director Irman Robinson revealed that the one-month tenor deposit interest rate only decreased by 29 bps, from 4.81 percent in early 2025 to 4.52 percent in September 2025.

"Of course we have to encourage this, because if, for example, the special rate interest rate is still high, of course, it will make the transmission of the BI-Rate policy, to the credit interest rate will run slowly," he said in BI Journalists Training, Friday, October 24.

Responding to these conditions, he said that BI strengthened macroprudential policies by optimizing macroprudential liquidity incentives (KLM) as a step to facilitate the transmission of interest rate policies.

In September 2025, KLM's incentive growth was recorded at 18.58 percent (yoy), higher than M0's growth without taking into account the impact of KLM which was 13.16 percent (yoy).

Irman explained that this policy adjustment does not only focus on the distribution of KLM alone, but also on efforts to overcome various obstacles in the interest rate transmission process. He emphasized that the KLM policy had actually been implemented previously, but had not been optimally utilized by banks.

Furthermore, Irman explained that banks that distribute credit to priority sectors will receive incentives in the form of reducing Minimum Mandatory Giro (GWM) or additional macroprudential liquidity incentives.

According to him, this policy actually existed before, and previously it focused more on blending channels. However, currently the focus of the policy is expanded not only on blending channels, but also on the speed of banks in adjusting their credit interest rates.

He added that this policy was previously more focused on blending channels, but now it is expanded at the speed of banks in lowering credit interest rates, so that the sooner adjustments are made, the greater the incentives will be received.

Irman added that the total incentives that banks could obtain were also increased from the previous 5 percent to 5.5 percent of the Third Party Fund (DPK).

For information, the KLM incentive consists of two components, namely an incentive for lending channels with a maximum portion of 5 percent of the DPK, as well as an interest rate channel incentive with a maximum portion of 0.5 percent of the DPK, so that the total can reach 5.5 percent of the DPK.