Indonesia's Rural Banking Crisis: What's Happening?

The Financial Services Authority (OJK) notes that the number of rural banks continue to decline until January 2024 as dozens of banks have closed along with several mergers.

Fahmi Ahmad Burhan & Rahmad Fauzan

14 Apr 2024 - 17.49
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Indonesia's Rural Banking Crisis: What's Happening?

Illustration for BPR or Rural Banks in Indonesia./Special

Bisnis, JAKARTA — Indonesia is seeing a downturn of rural banks, said to be the driver of economy and SMEs, due to increasingly prevalent bankruptcies and license revocations.

Widespread mismanagement and fraudulent practices in rural banks (BPR) and lacking human resource competency are cited as a cause for the numerous rural bank closures, despite promising business prospects in the banking sector.

The Financial Services Authority (OJK) notes that the number of rural banks continue to decline until January 2024 as dozens of banks have closed along with several mergers.

According to OJK’s Indonesian Banking Statistics, there were 1,400 rural banks in Indonesia as of January, a decrease of 37 banks from the previous figure of 1,437 in January of last year.

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