Indonesia central bank issues new banking rules on mandatory MSME lending

JAKARTA : Indonesia's central bank has issued new rules making it easier for banks to meet requirements on supporting small and medium business, in a measure also aimed at bolstering an economic recovery from the COVID-19 pandemic, it said in a statement.

Under the new regulation, which takes effect in June next year, banks must provide financing of at least 20per cent of their total portfolio for MSMEs, their supply chains or low income earners in what Bank Indonesia calls the macroprudential inclusive financing ratio The mandatory ratio will go up to 25per cent in June of 2023 and to 30per cent in June of 2024 and banks that fail to meet the ratio must pay fines.

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