MSME Credit Slumps, OJK Prepares POJK for MSMEs

Bank lending in 2025 is heading toward a slowdown. According to data from the Financial Services Authority (OJK), bank lending as of June 2025 grew 7.77 percent year-on-year to Rp8,060 trillion. Throughout 2024, bank lending still grew at a double-digit rate of 10.58 percent.

The most distressed segment is micro, small, and medium enterprises (SMEs), whose growth has slowed to just 2.17 percent, far below the 10.78 percent increase in corporate credit and the 8.49 percent rise in consumer credit.

Even credit growth in the micro segment contracted by 2.5 percent. Similarly, MSME financing by multifinance companies plummeted by 6.43 percent, while credit from rural banks (BPR) rose by 3.28 percent.

The slowdown in bank lending runs counter to the need to accelerate Indonesia's economic growth. This is because Indonesia is a developing country that desperately needs investment and funding for development.

Meanwhile, the banking sector itself still has ample room for growth, as the credit-to-GDP ratio in Indonesia is only 40 percent, far below that of developed countries, which have already surpassed 100 percent. Therefore, economic growth is greatly influenced by credit growth.

This was also stated by Dian Ediana Rae, Executive Director of Banking Supervision at the OJK.

“The economy is driven by the banking system. Economic performance is highly dependent on the banking system; that’s the clue, and it’s also in the textbooks. If the performance and role of banks are good, then it will also drive good economic performance,” he said in response to a question from Infobanknews.com in Bandung on August 2, 2025.

To encourage credit growth in the MSME segment, the OJK has prepared a draft OJK regulation.

“It just needs to be numbered and signed,” Dian interjected.

According to him, the SME sector plays a strategic role as it contributes 61 percent of GDP and absorbs 97 percent of the workforce in the country. The regulation was created to reorganize SME credit, which has grown significantly due to regulations, including credit program incentives.

“To ensure that SME development is not merely about credit access but also about mapping the conditions of good borrowers and providing guidance to SME operators by lenders. This includes the OJK, which will establish an SME Department,” explained Dian.

What are the obstacles to credit growth until the end of 2025, aside from uncertainty caused by global economic conditions and domestic economic pressures? What is the projected growth of SME sector credit after the implementation of the OJK SME Regulation? How did the performance of 105 commercial banks and 413 rural banks fare according to the Infobank Rating 2025? Read the full story in Infobank Magazine Issue 568, August 2025!