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tate-owned largest lender PT Bank Mandiri Tbk signed on Thursday deals to disburse loans to cooperatives of oil palm farmers, in a move to boost the amount of credit disbursed to small and medium enterprises (SMEs) this year.

Mandiri agreed to lend a total of Rp 189 billion (US$20.79 million) to four cooperatives fostered by the Sinar Mas Group, one of Indonesia’s major palm oil producers. The four cooperatives are: Kopsa Puyang Gana, which will receive Rp 56.8 billion to work 1,024 hectares of land in West Kalimantan; Kopsa Mitra Bintang Moda, which has secured 59.49 billion to work 1,062 hectares of land in West Kalimantan; Kopsa Mitra Cipta Sejahtera with Rp 51.88 billion to work 936 hectares of land in West Kalimantan; and Kopsa Reantakam with Rp 21.08 billion to work 400 hectares in South Kalimantan.

A total of more than 1,700 farmers will be covered by the credits.

Mandiri’s commercial and business banking director, Sunarso, said the company has set interest rates at around 11 percent. The loans will mature in five years.

“However, the farmers will only bear 7 percent, while the remainder will be subsidized by the government. The 7 percent interest rates are also capitalized in total loans,” Sunarso said.

Mandiri included the loans to the four cooperatives in its scheme to provide credit for bio-energy development and plantation revitalization (KPEN-RP). With the national program, launched in 2007, Mandiri has committed to disburse Rp 11 trillion of the total national commitment, which includes other banks, of Rp 38.6 trillion.

However, as of March, Mandiri had only disbursed Rp 2.29 trillion. Sunarso said the availability of land for oil palm was one of several problems hampering Mandiri in its attempt to accelerate loan disbursements for plantations.

Sunarso said that the loans to the oil palm cooperatives were part of Mandiri’s plan to increase credit to SMEs this year. Mandiri, he said, disbursed Rp 30.2 trillion ($3.32 billion) in credit to SME’s from a total lending of around Rp 380 trillion last year.

“We are targeting credit for SMEs to reach Rp 40 trillion this year and hope to have a portfolio of Rp 73 trillion of lending to SMEs in 2014,” Sunarso said on Wednesday.

The figure is in keeping with Mandiri’s annual increases in lending to SMEs, which rose by around 30 percent from 2005 to 2011. The bank said it had disbursed credit to more than 40,000 SMEs.

Sunarso said that Mandiri implemented healthy credit to SMEs with a non-performing loans (NPL) ratio of 2.46 percent last year. He added that Mandiri wanted to hold 10 percent to 12 percent of shares in the SME credit market.

— JP/Raras Cahyafitri