Despite improving credit growth, a substantial portion of Indonesia’s approved loans remains unused, signaling caution among businesses and structural inefficiencies in credit absorption. Bank Indonesia reports that undisbursed loans reached Rp2,372.11 trillion in August 2025—over 22% of total available credit. As the central bank targets 8–11% credit growth for the year, unlocking this idle financing is key to sustaining economic momentum.
Key Facts & Background:
- As of August 2025, undisbursed loans totaled Rp2,372.11 trillion, or 22.71% of total credit ceiling.
- Sectors with the highest undisbursed loan ratios:
- Industry
- Mining
- Business services
- Trade
- Credit growth improved to 7.56% YoY in August 2025, up from 7.03% in July.
- Factors limiting credit demand:
- High lending interest rates
- Business “wait and see” attitude amid uncertainty
- Preference for internal funding over external borrowing
- On the supply side, credit expansion is supported by:
- Ample banking liquidity (AL/DPK ratio at 27.25%)
- Improved lending conditions and monetary liquidity expansion
- Bank Indonesia projects full-year credit growth between 8–11%.
- Banking sector remains resilient:
- Capital Adequacy Ratio (CAR): 25.88% (July 2025)
- Non-Performing Loans (NPL): 2.28% gross, 0.86% net
- Stress tests confirm strong banking stability and corporate profitability
- BI continues policy coordination with the Financial System Stability Committee (KSSK) to mitigate global and domestic risks.
Strategic Insights:
The high volume of undisbursed loans in Indonesia’s banking system reflects a critical disconnect between credit availability and real-sector absorption. While banks are well-capitalized and liquid, businesses remain hesitant to borrow—driven by elevated interest rates, macroeconomic uncertainty, and a preference for internal financing. This cautious stance, particularly in capital-intensive sectors like industry and mining, dampens the multiplier effect of credit on economic growth.
Bank Indonesia’s forecast of 8–11% credit growth for 2025 is achievable only if structural bottlenecks are addressed. Lowering lending rates, streamlining approval processes, and enhancing borrower confidence are essential to convert approved credit into productive investment. The central bank’s emphasis on improving lending requirements and liquidity conditions is a step in the right direction, but demand-side interventions—such as fiscal incentives and regulatory clarity—are equally vital.
The resilience of Indonesia’s banking sector offers a strong foundation for expansion. With CAR and NPL ratios well within safe thresholds, banks are equipped to absorb risk and support broader economic recovery. However, the challenge lies in translating this financial strength into real economic activity. Undisbursed loans represent untapped potential—capital that could drive infrastructure, innovation, and employment if mobilized effectively.
Looking ahead, coordinated policy efforts between Bank Indonesia, the Ministry of Finance, and KSSK will be crucial. By aligning monetary, fiscal, and structural reforms, Indonesia can unlock its credit pipeline and sustain growth above 5%—a threshold critical for poverty reduction, competitiveness, and long-term development. The undisbursed loan issue is not merely a banking statistic; it’s a strategic lever for national progress.