B

ank Indonesia and the Home Ministry signed a partnership deal on Monday to enhance the central bank'€™s debtor information system (SID) through the use of an electronic identity card database.

The agreement is a follow-up to a previous Memorandum of Understanding (MoU) on the topic signed by both institutions in 2013 in an effort to boost financial access for wider segments of society.

BI deputy governor Halim Alamsyah said the partnership would help the central bank utilize the ministry'€™s database of civil registry, citizens'€™ identity numbers (NIK) and the electronic identity cards '€” also known as e-KTP '€” during the process of its SID improvement.

The SID improvement will help banks and other financial institutions review their prospective and existing customers with less cost and time because of the more valid database, he added.

'€œCurrently, the SID records 82 million bank customers. However, we find that some of the customers'€™ data has yet to be clarified because it is possible they own multiple identity cards,'€ Halim said during a press conference after the signing.

Only 20 percent of Indonesia'€™s population of 250 million has access to banks because of a lack of public knowledge about finance, as well as because of a still-low number of formal ID cards, which are required to open accounts.

The director general of the Home Ministry'€™s civil registry, Irman, said the number of e-KTP cards had, as of now, reached 145 million. These cards contain chips containing biometric data, such as iris patterns and fingerprints.

According to Irman, the electronic-based ID card is believed to be authentic and reliable enough to be used by public services, including banks, because '€œit will no longer be possible for people to conduct identity fraud or have double IDs'€.

'€œThe system enables online checking from the ministry'€™s office in Jakarta to the level of regencies and districts, so that people cannot register themselves again with different identity details in other places if they already have e-KTP,'€ Irman said.

Irman said the ministry was still in the process of data clearing as it discovered in 2011 that at least 8.1 million citizens had multiple IDs as a result of being registered in more than one place.

In September last year, President Joko '€œJokowi'€ Widodo said he planned to improve the country'€™s civil administration by perfecting the single identity-number system, which he will later use as a means to combat poverty and income disparities.

The database of NIK was developed by then president Susilo Bambang Yudhoyono'€™s administration to produce identification numbers for all citizens so as to facilitate the provision of services in immigration, taxation, banking, insurance, population censuses and ID cards.

Halim said an improved SID database through NIK and e-KTP would also help banks implement the central bank'€™s program of digital financial services (LKD) to expand financial access.

Through the improved SID database, Halim said banks were expected to simplify their review process of customers'€™ financial profiles without the need to conduct difficult and high-cost surveys on the ground.

'€œBy owning NIK, people will be more disciplined in managing their finances and have high credit eligibility so that they will be easier to get loans from banks,'€ he said.

The improvement of SID is being conducted along with the Financial Services Authority (OJK), which has taken over the micro-prudential authority to monitor banks, according to Pungky Purnomo Wibowo, BI'€™s director of financial access and micro, small and medium enterprise.