JAKARTA, thekabarnews.com—The Indonesian government proposal to involve Red-and-White Village and Urban Cooperatives (KDKMP) in civil servant salary and pension payments has raised concerns. In particular, there are worries about its potential impact on regional development banks (BPD).

The government is studying whether cooperative outlets could serve as additional payment channels alongside banks. They are also considering state-owned postal company PT Pos Indonesia.

Officials have stressed that the proposal remains under review. It would not necessarily require civil servants to transfer their payroll accounts.

Cooperatives Minister Ferry Juliantono said his ministry had submitted the proposal to the Finance Ministry. He discussed the plan after a coordination meeting on KDKMP development in Jakarta on Wednesday, Oct. 14.

“It has been submitted to the Finance Ministry,” Ferry said.

Ferry said the government wanted cooperatives to expand their financial services and circulate more public-sector spending through local economies. Under the proposed arrangement, cooperative outlets could work with PT Pos Indonesia, BRIlink or other payment providers.

However, the government has not published a regulation, implementation schedule or detailed payment mechanism. Furthermore, publicly available statements do not establish whether the plan would move payroll deposits away from banks. They also do not show if it would simply allow cooperatives to act as payment agents.

Deputy Home Affairs Minister Bima Arya clarified the proposal’s status during a visit to Bandung regency on Oct. 15.

“It needs to be clarified that distributing ASN salaries through cooperative outlets is only one of the options,” Bima said.

Bima added that such outlets could eventually handle salary or pension payments. However, the government would not make the arrangement compulsory.

House of Representatives Commission II chairman Rifqinizamy Karsayuda proposed limiting the scheme to civil servants employed by central government ministries and agencies.

He said regional administrations should continue paying their civil servants and government contract workers through regional development banks (BPD).

“For Commission II, regional banks, as regionally owned enterprises, must certainly be protected,” Rifqinizamy said.

He attributed concerns about potential deposit outflows to the Association of Regional Development Banks.

Rifqinizamy said the proposed shift of regional payroll accounts and government cash management could affect as much as 70 percent of the banks’ low-cost funding. However, that figure remains an estimate cited by the lawmaker rather than an independently published regulatory assessment.

Payroll accounts provide BPDs with stable deposits and support automatic deductions for loans held by civil servants. Moving those accounts could therefore raise funding costs and complicate installment collection. The effect would depend on whether the final policy merely adds cooperative payment counters or transfers the underlying deposits.

Official data show that BPDs held Rp1.04 quadrillion (US$62 billion) in assets and Rp782.04 trillion in third-party funds as of March 2026. Their outstanding loans reached Rp656.87 trillion, according to the Financial Services Authority.

Meanwhile, Indonesia employed about 6.7 million civil servants and government contract workers in June, National Civil Service Agency data showed.

Rifqinizamy said BPDs could instead cooperate with village cooperatives while retaining their payroll role. He also called for governors to participate in the policy discussions.

“The governors should ideally be consulted because the operational readiness of the Red-and-White Village Cooperatives must also be confirmed in every region,” he said.

Until the government issues formal rules, the public should treat the plan as a proposed additional payment channel, not a mandatory transfer of civil servant payroll accounts.