Since President Prabowo inaugurated the establishment of 80,081 village cooperatives (Koperasi Merah Putih - KMP or Koperasi Desa - KopDes) across all Indonesia villages and wards (Kelurahan) on 21 July 2025, the Ministry of Finance has issued Ministry Regulation PMK No 49 / 2025 that would govern the lending activities related to these KopDes.

We outline the key details of the regulations that highlight loan procedures for financing these KopDes below.

1. Legal basis and purpose

   • Enacted to implement Presidential Instruction No. 9/2025 regarding the acceleration of Merah Putih Cooperatives.
   • Aims to support national food self-sufficiency and inclusive rural development.
   • Provides a financing framework through synergy between government and banks.
   • Sets detailed loan procedures for village and urban cooperatives.

2. Loan scheme & key terms

   • Loan Ceiling: Up to IDR3bn (including up to IDR500mn for operational expenses).
   • Interest Rate: 6% per annum.
   • Tenor: Up to 72 months.
   • Grace Period: 6–8 months.
   • Monthly Installments: Due every 12th of the month.

3. Eligibility criteria for cooperatives

   • Be legally registered.
   • Have a cooperative registration number (NIK).
   • Own a cooperative-named bank account.
   • Possess a Tax ID (NPWP).
   • Have a Business Identification Number (NIB).
   • Submit a business proposal including budget, disbursement plan, and repayment schedule.

4. Approval & disbursement process

   • Proposal submitted to Bank with approval from village head or mayor.
   • Loan Agreement includes full terms.
   • Disbursement directed to cooperative account or vendor (for CapEx).
   • Interest accrues after grace period.

5. Repayment mechanism

   • Repaid via designated cooperative account.
   • If insufficient funds, the government (Dana Desa or DAU/DBH) will support.
   • Government support considered receivables.
   • Assets become collateral.

6. Oversight & reporting

   • Managed through OM-SPAN TKD.
   • Fund movements recorded in APBN, APBD, and APBDesa.
   • Follow national accounting regulations.

We expect that SOE banks (BBRI/BMRI/BBNI/BRIS – all rated Buy) will be at the forefront to provide financing to these KopDes. They play a crucial role for the success of such program, specifically providing access for financing.

At present, there is no clarity on the financing scheme. However, our recent channel checking suggests (subject to change) that the government would place deposits amounting to IDR33tn at an interest rate of ~2.0% (slightly lower than our initial expectation of ~3.0%). These suggest that the potential spread would be ~4.0%, less than existing NIMS for BBRI/BMRI/BRIS but potentially higher than BBNI’s 3.8-3.9%. Including all-in costs, and assuming CIR and CoC of 1.0% each, these suggest a ROAA of ~1.6%, lower than BBRI/BMRI’s ROAA currently.

Any risks of cannibalizing with banks’ existing mass-market loan portfolios would be limited, in our view.

Thus, combined with expectations of better liquidity (at least CoF to be stable in 2H25F), we see limited downside risks to these SOE banks.

Valuations and risks

BBCA IJ, Buy – We derive our TP of IDR12,300 using DuPont analysis with key parameters as follow: a risk-free rate of 6.5%, an equity risk premium of 7.8%, beta of 0.8x and a CAR-adjusted ROAE of 24.5%. Our TP implies 5.4x FY25F P/B (vs current price valuation of 3.9x) and 26.7x FY25F P/E (vs current price valuation of 19.3x). Risks are worsening economic trends, tighter liquidity competition, and/or higher credit cost and opex growth.

BMRI IJ, Buy – We derive our TP of IDR7,300 using DuPont analysis with key parameters as follow: a risk-free rate of 6.5%, an equity risk premium of 7.8%, growth of 11.0%, beta 1.05x and a CAR-adjusted ROAE of 19.5%. Our TP implies 2.3x FY25F P/B (vs current price valuation of 1.6x) and 12.2x FY25F P/E (vs current price valuation of 8.4x). Risks are worsening economic trends, tighter liquidity competition, and/or higher credit cost and opex growth.

BBRI IJ, Buy – We derive our TP of IDR5,000 using DuPont analysis with key parameters as follow: a risk-free rate of 6.5%, an equity risk premium of 7.8%, growth of 9.3%, beta of 0.85x and a CAR-adjusted ROAE of 18.0%. Our TP implies 2.3x FY25F P/B (vs current price valuation of 1.7x) and 12.8x FY25F P/E (vs current price valuation of 9.8x). Risks are worsening economic trends, tighter liquidity competition, and/or higher credit cost and opex growth.

BBNI IJ, Buy– We derive our TP of IDR6,100 using DuPont analysis with key parameters as follow: a risk-free rate of 6.5%, an equity risk premium of 7.8%, growth of 8.5%, beta of 1.0x and a CAR-adjusted ROAE of 16.5%. Our TP implies 1.3x FY25F P/B (vs current price valuation of 1.0x) and 10.7x FY25F P/E (vs current price valuations of 7.5x). Risks are worsening economic trends, tighter liquidity competition, and/or higher credit cost and opex growth.

BRIS – We derive our TP of IDR3,500 using DuPont analysis with key parameters as follow: a risk-free rate of 6.5%, an equity risk premium of 7.8%, beta of 1.2x and a CAR-adjusted ROAE of 18.0%. Our TP implies 3.2x FY25F P/B (vs current price valuation of 2.3x) and 21.3 FY25F P/E (vs current price valuation of 15.2x). Risks are worsening economic trends, tighter liquidity competition, and/or higher credit cost and opex growth.

INVESTMENT RATINGS
A rating of ‘Buy’, indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of ‘Neutral’, indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of ‘Reduce’, indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of ‘Suspended’, indicates that the rating, target price, and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companies that are labelled as ‘Not Rated’ or ‘No Rating’ are not in regular research coverage. Benchmark is Indonesia Composite Index (‘IDX Composite’). A ‘Target Price’, if discussed, indicates the analyst’s forecast for the share price with a 12-month time horizon, reflecting in part of the analyst’s estimates for the company’s earnings, and may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market in general. 

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Erwin Wijaya (erwin.wijaya@verdhana.id)