Jakarta. Bank Indonesia (BI) reported that bank lending grew 7.56 percent year-on-year in August 2025, marking a slight pickup from July’s 7.03 percent. However, the central bank said credit expansion remains insufficient to power stronger economic growth.

“Bank lending growth needs to be further strengthened to support the economy. While it improved in August, the pace is still not robust enough,” BI Governor Perry Warjiyo said in an online press conference following the central bank’s monthly policy meeting on Wednesday.

According to Perry, credit demand was held back by businesses’ wait-and-see attitude, elevated lending rates, and companies’ greater reliance on internal funds. This has left a significant portion of available loans undisbursed. The undisbursed loan ratio reached Rp 2,372.1 trillion ($143.6 billion), or 22.7 percent of total loan facilities, in August, with the bulk concentrated in mining, business services, and trade sectors, mostly in working capital loans.

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On the supply side, Perry said that ample banking liquidity has supported lending, reflected in a loan-to-deposit  ratio of 27.25 percent. This was aided by monetary liquidity expansion, macroprudential incentives, and looser lending requirements.

Still, high lending rates remain the main obstacle to faster growth in bank financing, Perry said, adding that BI continues to work closely with the government and the Financial System Stability Committee (KSSK) to spur credit expansion.

Overall, the central bank projects bank lending growth this year in the range of 8 to 11 percent.

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