LPS Ensuring Financial Stability with Broad Deposit Insurance Coverage
The Indonesia Deposit Insurance Corporation (LPS) has reported that its deposit insurance scheme continues to provide widespread coverage across the nation’s financial system. As of the end of June 2025, a significant 636,773,067 commercial bank accounts were fully covered by the scheme, which protects deposits up to Rp 2 billion per depositor per bank. This impressive figure accounts for 99.94 percent of all commercial bank accounts. The coverage is even more extensive for Rural Banks (BPR) and Sharia Rural Banks (BPRS), with 15,536,549 accounts, or 99.97 percent of the total, falling under the insurance program. Purbaya Yudhi Sadewa, the Chairman of the LPS, affirmed that maintaining such a high level of deposit insurance coverage is a critical strategy to uphold public trust in the financial sector. This stability is viewed as essential for supporting a robust environment for economic recovery and ensuring that citizens feel confident in the safety of their savings.
Responding to Bank Failures and Timely Disbursements
The importance of the LPS’s role has been demonstrated by recent events in the banking sector. Since the beginning of the year, two Rural Banks have had their licenses revoked by the Financial Services Authority (OJK), an action that triggered the LPS to step in to protect depositors. The two banks were PT BPRS Gebu Prima in Medan, North Sumatra, and PT BPR Dwicahaya Nusaperkasa in Batu City, East Java. The LPS acted quickly to address the financial fallout from these closures. Purbaya stated that the corporation has already disbursed Rp28 billion to customers of BPRS Gebu Prima, which constitutes approximately 70 percent of the bank’s total deposits. For the more recent closure of PT BPR Dwicahaya Nusaperkasa, which had customer deposits on its balance sheet totaling around Rp30 billion, the LPS is scheduled to begin its insurance payments this week. This prompt action is crucial for maintaining public confidence in the system and ensuring depositors are not adversely affected by bank failures.
Adjusting Interest Rates to Align with Monetary Policy
In addition to its role in providing insurance coverage, the LPS also manages the deposit insurance interest rates (TBP) to align with broader monetary policy. Effective from June 1, 2025, the TBP for rupiah deposits in commercial banks was set at 4.00 percent, while the rate for BPRs was set at 6.50 percent. These rates were the result of a 25 basis point reduction for both types of banks during a regular review in May 2025. This adjustment was made in direct response to Bank Indonesia’s interest rate cuts, including a recent 25 basis point reduction in July 2025 that brought the BI-Rate down to 5.25 percent. The LPS noted that Bank Indonesia has now lowered the BI-Rate three times this year, for a total reduction of 75 basis points. Purbaya concluded by stating that the LPS will continue to actively monitor deposit insurance coverage and evaluate the TBP to ensure it remains aligned with current interest rate trends, banking sector liquidity, and the broader national economic developments, reinforcing its role as a key pillar of financial stability.
