Jakarta. The government has placed Rp 200 trillion ($12.2 billion) in several state-owned banks to spur future lending, a move that Finance Minister Purbaya Yudhi Sadewa described as a strategic push to accelerate economic growth.

The funds, previously parked at Bank Indonesia (BI), were transferred to five state-owned banks -- BRI, BNI, and Bank Mandiri with Rp 55 trillion each, BTN with Rp 25 trillion, and BSI with Rp 10 trillion. The government expects the injection to ease liquidity and channel credit into the real sector. Banks are barred from using the funds to purchase government bonds.

Purbaya said the fund placement is intended to channel liquidity into bank lending, supporting efforts to meet the government’s economic growth targets of 5.2 percent in 2025 and 5.4 percent in 2026.

Still, credit growth faces headwinds this year. Liquidity is only part of the challenge, as overall demand remains muted with many businesses relying on internal financing. From the supply side, banks continue to prefer government securities and maintain tight lending standards despite BI’s monetary easing.

As of July 2025, bank lending grew just 7.03 percent year-on-year. Non-performing loans (NPL) climbed to 2.28 percent, up from 2.08 percent at the end of 2024, reflecting lenders’ cautious stance.

A senior official at the Financial Services Authority (OJK) welcomed the government’s move, noting it could lower banks’ cost of funds and push down lending rates. However, Dian Ediana Rae, OJK's Executive of Banking Supervision, underscored that lending expansion hinges not only on liquidity but also on business confidence, economic outlook, political stability, and human capital.

“OJK urges banks to apply prudent risk management so that loan quality is preserved and government funds remain secure,” Dian said on Sunday.

Permata Bank Chief Economist Josua Pardede added that the Rp 200 trillion placement would significantly boost primary money growth. However, he warned the impact on GDP depends on credit demand and the pace of fiscal execution. “Coordination between fiscal and monetary policy will be crucial to ensure liquidity translates into stronger domestic demand,” he said.