Special Rates Keep Lending Costs High Despite BI Rate Cuts
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JAKARTA, Investortrust.id — Bank Indonesia Governor Perry Warjiyo explains on Monday Nov 17 2025 in Jakarta that high special rates offered to large depositors prevent lending and deposit rates from falling in line with the 125 basis point cut in the BI rate this year. He says these preferential rates keep funding costs elevated across the banking sector, Perry says.
Banks had continued to pay above average deposit rates to major clients, creating a stubborn gap between policy easing and lending behavior. “Deposit rates have fallen slowly and one reason lending rates have not yet dropped is the portion of third party funds under special rate arrangements,” he said.
By September 2025, special rate deposits had climbed to 31.1 percent of total third party funds, equal to Rp 2.540.8 trillion. These clients received 5.53 percent interest, far above the 4.52 percent market average.
The practice spanned the entire banking landscape, with regional development banks, state owned lenders, private national banks, and foreign branches all competing for large-ticket liquidity. This competition kept overall funding costs elevated despite monetary easing.
High funding costs also translated into slower credit expansion, because banks became cautious in pricing new loans and passing policy-rate reductions through to borrowers. The lag prevented lending growth from accelerating in line with BI’s expectations.
Regional development banks placed 32 percent of their deposits under special rate terms, equal to Rp 266.4 trillion. State owned banks and private national banks each committed more than 30 percent of their deposit base, while foreign branches placed 16.5 percent.
Government and state owned entities remained the biggest beneficiaries, securing 5.97 percent on their deposits, a rate still high even after declining from 6.6 percent in 2024. “The rate at 5.97 percent is still high and needs to come down through guidance, regulation, and liquidity incentives depending on how far banks reduce their lending rates,” he said.
Non bank financial institutions collected 5.86 percent and individuals received 5.73 percent. Other groups, including non residents and non state government entities, benefited from rates ranging from 5.19 percent to 5.39 percent.