Regional Development Banks face funding challenges amid Simpeda growth

Regional Development Banks (BPD) in Indonesia are facing funding challenges as third-party funds (DPK) saw a year-on-year contraction of 1.69% to Rp 766.1 trillion as of June 2026. This decline occurs despite slow local government spending, which had only reached 45.27% of its Rp 1,257.83 trillion budget by late August 2026.

In contrast, the Simpeda savings product, managed collectively by 27 BPDs, reached approximately Rp 74.86 trillion in June 2026. Agus H. Widodo, Chairman of the Association of Regional Development Banks (Asbanda), stated that these funds reflect public trust and are intended to be intermediated into financing for MSMEs and local businesses to drive regional economic growth.

Specific institutions like Bank Nagari have reported growth in local government funds, with the proportion rising to 20% of its total DPK in mid-2026. This was attributed to central government transfer relaxations in Aceh, North Sumatra, and West Sumatra to support post-disaster reconstruction. Asbanda is now pushing for BPDs to enhance digital experiences to remain relevant to changing consumer behaviors.