[REVISION HISTORY]

Indonesia LPS rural bank stabilization and inclusion efforts

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2026-09-05 13:52 UTC → 2026-09-07 02:31 UTC · added ~~removed~~

The Indonesia Deposit Insurance Corporation (LPS) is implementing new mandates and strategies to stabilize the national banking system, specifically targeting rural banks (BPR) and Sharia rural banks (BPRS). To strengthen oversight, LPS is mandating core banking integration for approximately 1,400 rural banks. This integration is intended to allow for the earlier detection of transaction changes, facilitating faster and more prudent bank resolution processes. Under Law Number 4 of 2026, the LPS has expanded its authority to include managing liquidity issues by placing funds when banks face difficulties, moving beyond its previous focus on solvency. In addition to technical integration, the LPS is exploring investor relation schemes to rescue troubled banks through acquisitions or mergers rather than liquidation. This strategy involves offering troubled entities to potential investors, such as existing investors or regional development banks (BPD). This follows a period in the first half of 2026 where the LPS completed the liquidation of seven BPR/BPRS entities and initiated processes for 18 others. Expanding its scope toward broader financial ecosystem stability, LPS Chairman Anggito Abimanyu announced plans to increase financial inclusion by targeting two million unbanked individuals to open accounts annually. This initiative aims to reduce the unbanked population from approximately 15 million to 13 million by next year through expanded literacy programs. Furthermore, the Insurance Policy Guarantee Program (PPP) is projected to become active by mid-2027, subject to government regulations and coordination with the Financial Services Authority (OJK).

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