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State lenders to resume govt-backed micro loan project
Major state-owned lenders Bank Rakyat Indonesia (BRI), Bank Negara Indonesia (BNI) and Bank Mandiri are set to resume the disbursement of micro loans (KUR), which was suspended in January following reports of rising non-performing loans (NPLs)
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Major state-owned lenders Bank Rakyat Indonesia (BRI), Bank Negara Indonesia (BNI) and Bank Mandiri are set to resume the disbursement of micro loans (KUR), which was suspended in January following reports of rising non-performing loans (NPLs).
The three state lenders have been reappointed as the sole agents to carry out the government-backed project.
BRI micro, small and medium enterprises director Djarot Kusumayakti said that the bank needed to make only minor adjustments to its KUR mechanisms to be allowed to take the project back up.
'So far the plan seems to be the same, with the exception of the interest rate,' Djarot said during a telephone interview on Wednesday.
His comments came after the government announced that it would resume the project next week. It was suspended in January following reports that a majority of participating banks had recorded increasing non-performing loans far above the minimum 5 percent set by the central bank.
According to Cooperatives and Small and Medium Enterprises Minister Anak Agung Gede Ngurah Puspayoga, the government has completed the evaluation of the KUR project and decided to scrap a number of participating banks in light of their spiking bad loans.
'We will only involve BRI, BNI and Mandiri because they are the most qualified banks to carry out the project, according to our evaluation,' he said late on Tuesday after attending a KUR coordination meeting.
Coordinating Economic Minister Sofyan Djalil and Finance Minister Bambang Brodjonegoro were among the officials that attended the meeting.
Prior to suspension, the KUR project involved 30 other lenders, such as Bank Tabungan Negara (BTN), Bukopin, Bank DKI, Bank Jatim and Bank Jabar Banten.
In terms of NPL ratio, November 2014 data from the KUR Committee show that regional lender Bank Sulteng ' located in Palu, Central Sulawesi ' posted the highest ratio with 30.9 percent.
Bank Jabar Banten and Bank Syariah Mandiri reported high NPL ratios as well at 21.2 percent and 17.2 percent, respectively.
Besides reducing the number of participating banks, the government has also set a cap on the interest rate at 21 percent and set the maximum limit of non-collateral loans at Rp 15 million (US$1,157).
'We hope to be able to channel up to Rp 20 trillion of funds through new disbursements this year, down from around Rp 30 trillion disbursed in 2014,' Puspayoga said, adding that the government expected to launch the revised project next week.
According to Djarot, BRI will comply with the government's call to shift loan disbursement to the agriculture and maritime sectors, although the bank has so far channeled the largest amount of credit to trading-related businesses. BRI's own data show that it already channeled Rp 117 trillion-worth of KUR from 2007, when the project was introduced, until January 2015.
The average loan ranged at around Rp 8.42 million per person for the micro segment and Rp 175.84 million per person for the retail segment.
Meanwhile, Mandiri senior vice president for business banking Hendrawan said that the lender would stick to its partnership strategy in its implementation of the renewed KUR project.
