According to Solikin M. Juhro, BI’s Head of Macroprudential Policy, this shift will give banks greater autonomy in managing their funds, thereby encouraging more active lending and investment activity. Solikin made the remarks during a press briefing on Monday, underlining the central bank’s ongoing efforts to stimulate Southeast Asia’s largest economy.
The reserve requirement cut was initially disclosed last week, coinciding with BI’s third interest rate reduction since September—another measure in its toolkit aimed at reinforcing domestic demand and maintaining financial stability.
In a further move to promote capital inflows and widen funding options for banks, Bank Indonesia also plans to raise the cap on foreign borrowing. Starting in June, local banks will be permitted to source foreign funds up to 35% of their capital base, up from the current 30% limit. This policy, too, is geared toward expanding liquidity and fostering a more robust credit environment.
Collectively, the initiatives reflect Bank Indonesia’s measured approach to monetary easing, balancing growth imperatives with the need for macroeconomic resilience. As the global economic outlook remains uncertain, these adjustments signal the central bank's readiness to provide financial institutions with greater flexibility to support national economic priorities.