Indonesian Banking Industry Burdened by Increasing NPLs for SMEs

BANKING - JAKARTA. The Indonesian banking sector has seen a rise in micro, small, and medium enterprises (MSMEs) defaulting on their loans. The Financial Services Authority (OJK) reported that the non-performing loan (NPL) rate for MSMEs stood at 4.27% in May 2024, a slight increase from the previous month's 4.26%.

Take, for instance, the MSME loan distribution of PT Bank Rakyat Indonesia Tbk (BRI), a bank with an 80% credit portfolio in the MSME sector. The bank's NPL rate increased by 10 basis points (bps) year-on-year to 3.21%.