Indonesia's Financial Services Authority issues rules requiring banks and non-banks to simplify and speed up MSME financing

Indonesia's Financial Services Authority (OJK) issued Regulation No. 19 of 2025 on facilitating access to financing for micro, small and medium enterprises (MSMEs), requiring banks and non-bank financial institutions to make MSME credit and financing easier, faster, lower-cost and more inclusive while maintaining prudential standards. The framework requires institutions to adopt policies such as simplified requirements and MSME feasibility assessments, tailored financing schemes including acceptance of intellectual property as collateral where adequate valuation methods exist, faster processes including through alternative credit rating tools, and “reasonable” pricing for MSME financing. It also strengthens governance and risk management expectations by requiring each bank and non-bank to prepare an MSME financing plan and report its realisation to OJK, and it covers collaboration/partnership models, use of information technology to support a digital MSME financing ecosystem, clarification of write-off and debt forgiveness treatment for MSME financing, financial literacy and consumer protection measures, and incentives for institutions that actively provide access. The regulation was promulgated on 2 September 2025 and takes effect two months after promulgation. It applies to commercial banks and rural banks (including Islamic banks and Islamic rural banks) and to conventional and Sharia non-bank financial institutions, including finance companies, venture capital firms, microfinance institutions, technology-based peer-to-peer funding services (pindar), pawnshops and other non-bank financial institutions such as Indonesia Eximbank (LPEI) and PT Permodalan Nasional Madani (PNM).