Disparate Growth in High- and Low-Income Savings in Banking During the Pandemic

Indonesia Deposit Insurance Corporation (LPS) data shows a disparity in the increase of deposits from high-income and lower-middle-income individuals in the banking sector during the COVID-19 pandemic. This is evident in the differing deposit growth based on nominal tiering in May 2021.

Deposits from the tier above Rp 5 billion experienced the highest year-on-year increase, rising 15.8% from Rp 2.9 trillion in May 2020 to Rp 3.4 trillion in May 2021.

Deposits from the Rp 2 billion - Rp 5 billion tier increased by 5.5%, from Rp 559.4 billion to Rp 590 billion. Deposits from the Rp 1 billion - Rp 2 billion tier rose by 7.1%, from Rp 431.5 billion to Rp 462 billion.

Deposits from the Rp 500 million - Rp 1 billion tier increased by 7%, from Rp 490 billion to Rp 530 billion. Deposits from the Rp 200 million - Rp 500 million tier increased by 7.7%, from Rp 571.7 billion to Rp 615.9 billion.

Furthermore, deposits from the Rp 100 million - Rp 200 million tier increased by 7.2%, rising from Rp 358.9 billion to Rp 384.8 billion.

Meanwhile, deposits from the tier below Rp 100 million only increased by 5%, from Rp 898 billion to Rp 943.1 billion. This increase was the lowest compared to other nominal tiers.

This uneven increase in public deposits in the banking sector was highlighted by Finance Minister Sri Mulyani. According to Sri Mulyani, this issue is one form of disruption in the financial sector during the COVID-19 pandemic.

Moreover, the growth of public funds dominated by wealthy depositors was not accompanied by satisfactory loan disbursement performance. This will make it more difficult for the financial sector to recover.