Banks Cheer Planned Rp 200 Trillion Liquidity Shift, Signal Faster Credit and Market Recovery

JAKARTA, Investortrust.id — Major Indonesian banks have welcomed the government’s decision to inject fresh liquidity into the financial system, saying the planned placement of Rp 200 trillion is set to lift confidence, ease funding costs, and quicken the flow of credit to businesses and households.

In subsequent remarks, officials clarified that the funds would come from excess budget cash (SAL), held at the central bank. The Ministry of Finance and Bank Indonesia (BI) have coordinated on the mechanism, with the Rp 200 trillion, equal to $12.5 billion, to be placed in government-owned lenders to support lending rather than bond purchases.

PT Bank Central Asia Tbk (BBCA), Indonesia’s largest private bank, and PT Bank Mandiri (Persero) Tbk (BMRI), one of the four —state-owned lenders grouped under Himbara—said the move could smooth monetary transmission and improve market sentiment.

Executive Vice President Corporate Communication and Social Responsibility BCA Hera F. Haryn said the measure would give “a fresh breeze” to the market. She emphasized that banks respond to real-sector demand, and any policy that accelerates market activity would be positive for the industry.

"As part of banking, as part of the industry, bank follows the trade. So of course, any stimulus provided by the government, as long as it drives the market to move faster, we in the industry will certainly see it as positive," Hera said during Public Expose Live on Thursday, Sep 11, 2025, underscoring that clarity and speed would help restore momentum in financing.

Bank Mandiri’s Corporate Secretary M. Ashidiq Iswara echoed that assessment, noting the liquidity injection would reinforce third-party funds, or DPK, and support a healthier loan-to-deposit dynamic across the system.

"This will allow the circulation of money in the economy to run more optimally,"  Iswara said.

He added that improved liquidity historically strengthened the effectiveness of monetary policy transmission, allowing banks to manage funding costs more efficiently and pass benefits to borrowers through more competitive lending rates.

Market strategists have also read the policy as a turning point for the sector. Sucor Sekuritas highlighted that recent declines in SRBI outstanding and yields, an upturn in M2 growth to 6.5% year on year by July, and a pullback in the industry’s loan-to-deposit ratio have already signaled easing pressures.

With the additional Rp 200 trillion, equal to $12.5 billion, analysts see banks in a stronger position to protect net interest margins in the second half while sustaining prudent growth.

"With this background, the valuation of Indonesia’s banking sector has fallen to low levels, creating an attractive entry point for long-term investors seeking quality exposure," said Edward Lowis, an analyst at Sucor Sekuritas.

How the Policy Was Structured—and Why It Matters

In appearances before the legislature on Wednesday, Sep 10, 2025, Finance Minister Purbaya Yudhi Sadewa explained that the government held roughly Rp 425 trillion, equal to $26.6 billion, at BI and would redeploy about Rp 200 trillion to the banking system. 

The placement is designed to resemble time deposits at government-owned banks—specifically the four Himbara banks and two sharia banks—on terms that discourage passive parking and encourage onward lending to the productive economy.

So far this year, Indonesia’s money expansion has been driven largely by central bank operations rather than fiscal policy. The sharp spikes in adjusted base money (M0 adj.) show how Bank Indonesia’s liquidity incentives have kept the system flush, while raw M0 and broader M2 have risen only modestly.

This indicates that the monetary side has shouldered the task of supporting liquidity, whereas fiscal disbursements and real-sector absorption have not yet played a decisive role in accelerating money circulation. 

Crucially, officials said the intent was not to channel the money into government bond holdings but to expand credit that supports growth pillars such as manufacturing, logistics, housing, and small businesses. By prioritizing loans over securities, policymakers aim to speed up the circulation of money through payrolls, procurement, and investment multipliers in the real sector.

Banks said the design fits with how intermediation works in practice. With liquidity buffers rebuilt, lenders can lean into viable credit demand, calibrate funding costs, and maintain coverage ratios without sacrificing risk discipline.

For large lenders with deep low-cost deposit franchises, the additional liquidity should also help defend return on equity while creating room to compete selectively on pricing in priority segments.

Investors, meanwhile, have begun to revisit sector valuations. According to Sucor Sekuritas, the banking sector has traded near minus one standard deviation below its 10-year average price-to-book value, levels last seen during the pandemic.

With medium-to-high sustainable ROE and strong capital buffers, analysts argue that valuation and profitability have diverged, opening an accumulation window for long-term investors in high-quality names. Sucor’s top picks include BBCA, target price Rp 11,500, and PT Bank Rakyat Indonesia (Persero) Tbk (BBRI), target price Rp 5,300.

The Optimism—and a Note of Caution from Real-Sector Economists

While banks and equity analysts have cheered the plan, economists have cautioned that liquidity alone does not guarantee faster growth if loan demand remains soft. The Institute for Development of Economics and Finance (Indef) pointed out that approvals on paper have sometimes outpaced actual drawdowns, meaning liquidity can idle if projects stall or business expectations turn cautious.

Indef’s Eko Listiyanto argued that fiscal measures—such as targeted productive spending, timely transfers to regions, and tax-base expansion—must work alongside the liquidity injection to ignite real-sector activity.

From a policy-mix standpoint, both fiscal and monetary settings have leaned pro-growth. Authorities insisted the plan would not fuel runaway inflation, explaining that price pressures arise when credit growth exceeds the economy’s potential growth. With the domestic growth path still below that threshold, officials said the risk of overheating remains limited.

The key test will be whether banks can convert lower funding costs and stronger buffers into actual lending for viable projects across manufacturing, infrastructure, housing, and household consumption.

For now, bank managements remain confident. They have cited pipeline opportunities in consumer, mortgage, and SME lending, and said seasonal demand in the final quarter typically adds positive momentum.

If fiscal disbursements accelerate on schedule and business confidence firms, lenders expect credit growth to improve toward the high single digits this year after a high base last year, with asset quality manageable and coverage ratios still well above pre-pandemic norms.

As execution unfolds, investors will watch three markers: the speed of placing the funds into selected banks; the terms that nudge credit rather than passive parking; and evidence of transmission into loan growth, especially in segments most sensitive to funding costs.

Those signals—together with global rate expectations—will shape the trajectory of margins, volumes, and, ultimately, sector valuations into year-end.

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