Bank Indonesia slashes reserve requirements to free up trillions of rupiah liquidity

Bank Indonesia disclosed a two-phase reduction of the Minimum Reserve Requirement (GWM) for all commercial banks, aiming to boost liquidity across the banking sector. For conventional banks, the GWM will move from nine percent to eight percent on November 1, then to seven percent on December 1. Islamic banks will see a cut from 7.5 percent to 6.5 percent on November 1 and to 5.5 percent on December 1.

The governor said the 2-percentage-point cut should free roughly Rp190 trillion in additional liquidity. In parallel, the central bank will trim the Macroprudential Liquidity Incentive (KLM) ceiling from six percent to five percent of third-party funds, with the KLM financing channel reduced from four percent to three percent. The unchanged KLM incentive for money-market deepening remains at two percent for banks meeting certain securities ratios. Deputy Governor Solikin M. Juhro noted the incentive adjustment follows an assessment of credit performance in priority sectors.