JAKARTA – Bank Indonesia’s decision to lower the secondary reserve requirement from 5% to 4% beginning in June will free up 78.45 trillion rupiah (approximately $4.84 billion) in liquidity for domestic banks, allowing for greater flexibility in financial management, a senior official confirmed on Monday.
Solikin M. Juhro, head of macroprudential policy at the central bank, shared the update during a press conference, underscoring the policy’s intention to stimulate lending and economic activity.
The reserve cut, initially announced last week, accompanied Bank Indonesia’s third interest rate reduction since September — part of a broader effort to accelerate growth in Southeast Asia’s largest economy.
In a further move to ease liquidity conditions, Bank Indonesia will also raise the cap on foreign borrowing by local banks. Starting June, banks will be allowed to source foreign funding up to 35% of their capital, up from the current limit of 30%.
Solikin stated the measure is aimed at “increasing liquidity and supporting loan growth.”
