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Indonesia's next financial challenge: Turning access into welfare

10/27/2026

Jakarta (ANTARA) - Indonesia is beginning to redefine how it measures access to finance, shifting the focus away from the number of bank accounts people hold toward a more fundamental question: how resilient families are in the face of economic shocks.

The shift became increasingly apparent after President Prabowo Subianto unveiled the National Council for Financial Welfare (DNKK) at a national coordination meeting of regional teams tasked with expanding access to financial services, known as TPAKD, on Oct. 22, 2026.

At its core, the DNKK is a rebranded version of the National Council for Inclusive Finance. Yet the change appears to go beyond a simple renaming exercise.

The launch of the new council signals a broader recalibration of policy priorities, reflecting growing recognition that financial inclusion cannot be measured solely by account ownership.

Coordinating Minister for Economic Affairs Airlangga Hartarto said the DNKK is tasked with examining three fundamental aspects: families' overall financial condition, their ability to withstand economic shocks, and their sense of security and well-being in managing their finances.

With the council now in place, it is becoming increasingly clear that the government sees the previous approach to measuring financial access as insufficient, particularly after a recent survey revealed a significant gap between financial literacy and financial inclusion.

Conducted by the Financial Services Authority (OJK), Statistics Indonesia (BPS), and the Indonesia Deposit Insurance Corporation (LPS), the survey found that the country's financial inclusion rate had reached 93.61 percent, exceeding the 93-percent target set for 2029.

At the same time, financial literacy stood at only 69.57 percent, leaving a gap of 24.04 percentage points between Indonesians' access to financial services and their understanding of how to use them prudently.

That gap has practical consequences. People may open bank accounts and take out loans without fully understanding interest rates, repayment tenors, and the risks involved.

The DNKK was established to address this disconnect. Its creation is part of a national strategy for family welfare that seeks to encourage regional administrations to pursue two closely linked objectives: improving financial literacy and expanding access to financing for micro, small, and medium enterprises.

The logic is straightforward. Greater access to financing can unlock economic opportunities and support business growth, while stronger financial literacy can help ensure that financial services become tools for empowerment rather than sources of financial strain.

Prabowo and Airlangga serve as chair and executive chair of the DNKK, respectively. They are supported by the finance minister, the home affairs minister, the governor of Bank Indonesia, and the chair of the OJK Board of Commissioners.

Among the council's members, Home Affairs Minister Tito Karnavian has a particularly important responsibility: connecting the council's agenda with regional administrations, which oversee 552 TPAKDs established across all 38 provinces and 514 districts and cities nationwide.

Two lending programs have been rolled out alongside the expansion of the TPAKD network, with one specifically designed to steer borrowers away from loan sharks.

To date, the scheme has disbursed Rp64.85 trillion (some US$3.5 billion) to 2.28 million borrowers, a sharp increase from the Rp587.5 billion distributed to 47,800 debtors by the end of 2020.

TPAKDs have also channeled Rp5.41 trillion (nearly US$300 million) in loans to more than 103,000 debtors in priority sectors under the other program.

The OJK has identified accessibility as the main appeal of loan sharks. For many borrowers, the promise of near-instant cash outweighs concerns about the steep interest rates that will almost certainly follow.

To address this challenge, the anti-loan shark lending scheme was designed to combine two features often seen as difficult to reconcile: lower borrowing costs and rapid disbursement.

In practice, the program has taken different forms tailored to local needs. One example is Mawar Emas (Golden Rose), a mosque-based financing scheme launched by the West Nusa Tenggara TPAKD to help communities avoid loan sharks.

The approach has shown results in reducing loan sharks' presence. At Kliwon Market in Central Java's Purwokerto, for instance, their number has fallen from 18 to just six since a similar scheme was set in motion.

Taking note of this trend, the central government opted to adjust interest rates. Following instructions from Prabowo, state-owned microfinance provider PNM Mekaar lowered the annual interest rate for its women's lending program to 8 percent from 18–25 percent in September 2026.

PNM Mekaar serves more than 16.2 million clients, all women running ultra-micro businesses to help their families make ends meet. By offering loans at significantly lower interest rates, the company hopes to attract millions of households that have long relied on informal lenders.

The DNKK inauguration was not the only notable development at the TPAKD national coordination meeting. Prabowo also used the occasion to announce a more ambitious state-backed lending agenda.

The president said Rp400 trillion (over US$22 billion) in loans is set to be disbursed to around 28 million families in 2027, with the program expected to benefit more than 100 million people based on an average household size of four.

The targeted beneficiaries include farmers, fishers, villagers, low-income urban residents, and communities in disadvantaged, frontier, and outermost regions.

Prabowo also outlined how the initiative's success should be measured. He said welfare must not remain a slogan but should be reflected in rising real incomes and stronger household purchasing power.

That formulation shifts the focus from the sheer volume of loans disbursed to the income gains they generate, echoing the family welfare indicators championed by the DNKK.

This shift also means that assistance programs must keep pace with the expansion of lending.

As of 2026, the OJK had launched 135 programs aimed at fostering inclusive financial ecosystems for rural communities. They combine financial education, transaction digitalization, business mentoring, matchmaking between entrepreneurs and financing providers, and the marketing of flagship rural products.

Between August and October 2026, a total of 343 financial institutions disbursed Rp53.15 trillion in loans to more than 2.1 million borrowers. Five recipients—a ride-hailing driver, a clothing merchant, a food vendor, a farmer, and a fisher—received their loan agreements directly from Prabowo in a symbolic handover.

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