Expansion of Liquidity Incentives & New Bank Credit Scheme under PADG 22/2026

Introduction

On 31 July 2026, a Member of the Board of Governors of Bank Indonesia enacted Bank Indonesia Board of Governors Member Regulation Number 22 of 2026 concerning the Amendment to Bank Indonesia Board of Governors Member Regulation Number 27 of 2025 concerning Implementing Regulations for the Macroprudential Liquidity Incentive Policy (“PADG 22/2026”). PADG 22/2026 was issued to refine the implementing provisions of the Macroprudential Liquidity Incentive Policy (“KLM”) for commercial banks through the addition of a new incentive scheme and an update to the interest rate calculation formula.

The issuance of PADG 22/2026 was prompted by Bank Indonesia’s need to maintain financial system stability and support sustainable economic growth through the optimization of banking funding sources outside third-party funds (DPK). In addition, PADG 22/2026 was formulated to adjust the incentive calculation formula for interest rate setting by taking into account the asymmetric behavior of banks in transmitting monetary policy. In line with this, PADG 22/2026 expands the scope of KLM by adding the aspects of corporate securities holdings and the achievement of non-DPK funding, which is expected to support optimal and resilient banking intermediation performance.

Comparison

PADG 22/2026 amends a number of provisions of PADG 27/2025, particularly with respect to the scope of KLM provision, the interest rate incentive formula, and the amount of KLM. The comparison of these amendments is set out in the following table:

Key Provisions

• Expansion of Corporate Securities and Non-DPK Objects

Pursuant to Article 5, the instruments eligible for KLM have now been expanded to include Banks that purchase corporate securities to support the disbursement of Credit or Financing, as well as Banks that successfully achieve non-third-party-fund (non-DPK) funding targets. Specifically for corporate securities purchase transactions, the calculation is integrated as part of the achievement in the MSME, cooperative, inclusion, and sustainable sectors.

• New Formula Based on Interest Rate Differential

Article 7 revises the requirements for obtaining interest rate incentives; whereas the previous formula used an elasticity metric, the incentive is now calculated directly based on the difference between the new Credit interest rate (or the percentage of return on new Financing) and the Bank Indonesia policy rate. As elaborated in Article 12, a Bank is entitled to an incentive of 1% if the difference is less than 3%. An incentive of 0.4% is granted if the difference is between 3% and below 6%, and an incentive of 0.1% if the difference is between 6% and below 10%.

• Additional KLM Scheme from Non-DPK Funding

Through the insertion of Article 8A, Banks are given the opportunity to obtain additional KLM based on the achievement of non-DPK funding, with the principal requirement that the cumulative KLM amount from the Bank’s credit and interest rate sectors has not yet reached the maximum limit. Another essential requirement is that the Bank must operate within the target range of the macroprudential intermediation ratio prescribed by the regulator. The additional KLM amount under this non-DPK scheme is allocated up to a maximum of 0.5%.

• Distribution of Maximum Limits for Disbursement Sectors

Article 10 provides that the amount of KLM granted for the disbursement of Credit/Financing to certain sectors and the purchase of corporate securities is determined based on the commitment to the Credit/Financing disbursement plan submitted to Bank Indonesia and/or the Credit/Financing market share. The KLM amount constitutes the accumulated incentives from each sector, subject to the following maximum limits:

The KLM amount for each sector is determined based on the Bank’s Credit/Financing market share and growth. Specifically for the MSME, cooperative, inclusion, and sustainable sectors, the growth calculation also takes into account corporate securities holdings. Accordingly, the higher the achievement of Credit/Financing growth and, for such sectors, corporate securities holdings, the greater the KLM that may be obtained by the Bank, up to the prescribed maximum limit.

Closing

PADG 22/2026 expands and refines the KLM scheme by adding sources of incentives through the purchase of corporate securities and the achievement of non-DPK funding, as well as adjusting the interest rate incentive formula. These changes provide Banks with greater scope to obtain more diverse incentives based on their intermediation performance and funding structure, while continuing to observe the maximum KLM limits prescribed for each sector.