Indonesian Banking Industry Burdened by Increasing NPLs for SMEs

July 27, 2024, 05.25 PM | Reporter: Adrianus Octaviano

ILUSTRASI. Workers finish making bags at a home industry in Jakarta, Wednesday (16/7/2024). The Financial Services Authority (OJK) noted that the realization of the distribution of People's Business Credit (KUR) until May 31, 2024 reached IDR 116.94 trillion or an increase of 45.72 percent compared to the previous period. ANTARA FOTO/Akbar Nugroho Gumay/Spt.

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%.

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