Bank Indonesia remains confident that national credit growth can reach up to 11% by the end of 2025, despite current figures showing moderate expansion. With September’s year-on-year growth at 7.70%, the central bank attributes the gap to cautious corporate sentiment and relatively high lending rates. As liquidity remains strong and policy incentives are in place, the challenge now lies in translating available financing into real economic activity.
Key Facts & Background
- Credit growth (YoY):
- August 2025: 7.56%
- September 2025: 7.70%
- BI’s 2025 credit growth target: 8–11%
- Credit composition (September 2025):
- Working capital loans: 43.48%
- Investment loans: 29.12%
- Consumer loans: 27.39%
- Growth by credit type:
- Working capital: 3.37%
- Investment: 15.18%
- Consumer: 7.42%
- Bank liquidity indicators:
- AL/DPK ratio: 29.29%
- Third-party funds (DPK) growth: 11.18%
- Government liquidity support: Rp200 trillion placed in major banks
- BI macroprudential support: Liquidity easing and incentives to stimulate lending
- Undisbursed loans (September 2025): Rp2,374.8 trillion (22.54% of total credit ceiling)
- Undisbursed loan concentration: Corporate sector, especially trade, industry, and mining
- Outlook for 2026: BI expects higher credit growth driven by improved sentiment and policy transmission
Strategic Insights
Bank Indonesia’s optimism about achieving up to 11% credit growth in 2025 reflects a broader confidence in the country’s macroeconomic fundamentals and liquidity conditions. With third-party funds growing robustly and liquidity ratios well above regulatory thresholds, the banking sector is technically equipped to expand lending. However, the sizable volume of undisbursed loans—over Rp2.3 trillion—highlights a critical disconnect between available financing and actual credit uptake.
This gap is largely driven by corporate hesitation, particularly in sectors like trade, industry, and mining. Businesses remain in a “wait and see” mode, wary of global uncertainties, domestic demand fluctuations, and interest rate levels. While BI has implemented macroprudential easing and injected substantial liquidity into state-owned banks, the effectiveness of these measures depends on how quickly confidence returns to the real sector.
The composition of credit growth offers important clues. Investment loans surged by over 15%, suggesting that long-term capital formation is gaining momentum. In contrast, working capital loans—typically more sensitive to short-term business cycles—grew modestly at 3.37%. This divergence indicates that while some firms are planning for future expansion, many remain cautious about day-to-day operations, possibly due to inventory overhangs or weak consumer demand.
Consumer credit growth at 7.42% reflects stable household borrowing, supported by digital banking and retail financing. However, to sustain broader economic momentum, corporate lending must accelerate. BI’s strategy to loosen credit terms and enhance liquidity access is a step in the right direction, but further efforts are needed to improve credit transmission. This includes better risk-sharing mechanisms, streamlined loan approval processes, and sector-specific financing schemes.
The large pool of undisbursed loans also presents an opportunity. If unlocked, these funds could significantly boost investment, employment, and productivity. BI and commercial banks must work together to identify bottlenecks—whether regulatory, procedural, or psychological—and address them through targeted interventions. Sectoral dialogues, credit guarantees, and blended finance models could help convert cautious intent into active borrowing.