T

he government has again revamped its people'€™s business credit (KUR) scheme by allowing more lenders to take part in it, in a bid to increase the number of recipients across the country.

The revamp was made on Friday at a meeting that also agreed to slash the interest rate to 12 percent from 21 percent for all KUR types.

The meeting on Friday was attended by Coordinating Economic Minister Sofyan Djalil, State-Owned Enterprises (SOE) Minister Rini Soemarno, Finance Minister Bambang Brodjonegoro, representatives of several state lenders and other government officials.

During the meeting, the government decided to include state, private and regional development lenders for the credit program that is scheduled for launch on July 1.

A new KUR type was launched in addition to the existing micro and retail KUR. The new type is called KUR TKI and is specifically for migrant workers.

The total amount of loans to be disbursed this year has been set at Rp 30 trillion (US$2.25 billion).

The list of participating lenders now comprises state-owned Bank Rakyat Indonesia (BRI), Bank Mandiri, Bank Negara Indonesia (BNI), private-owned Bank Internasional Indonesia (BII) and Bank Sinarmas, and six regional development banks (BPDs).

It was a contrast to a previous meeting that named BRI as the sole participating bank in the KUR program for 2015.

Sofyan said that it had been decided to involve more banks, so that the program could cover a higher number of recipients across the country.

The government has also cemented its decision to significantly slash the interest rate to 12 percent from the previous 21 percent for all KUR types.

Under the new rate scheme, the government will provide an additional 7 percent interest subsidy for the micro KUR and 3 percent interest subsidy for the retail KUR.

According to Bambang, the government has allocated around Rp 900 billion of funds from the 2015 revised state budget to cover the subsidies until year-end.

Meanwhile, BRI vice president director Sunarso said that it would adjust operational and overhead costs to cope with the interest rate change.

'€œIn the past, we received 21 percent in interest for the micro KUR and now will receive 19 percent only under the new program. We have to take efficiency measures internally, in the hope that they will not significantly impact our margin,'€ he said.

BRI '€” the biggest player in the micro lending market '€” has been assigned to channel up to Rp 21.4 trillion of loans for the revamped program, the highest allocation among all banks.

The figure is made up of Rp 17 trillion of micro KUR, Rp 4 trillion of retail KUR and Rp 400 billion of TKI KUR.

Mandiri, on the other hand, will be responsible for the disbursement of Rp 3 trillion in loans, consisting of Rp 1 trillion for micro KUR, Rp 2 trillion for retail KUR and Rp 200 billion for migrant workers.

BNI business banking director Sutanto said that everything was in place for the lender to carry out the program. The amount of loans allocated for BNI this year amounted to Rp 3.2 trillion.

It is made up of Rp 1 trillion of micro KUR, Rp 2 trillion of retail KUR and Rp 200 billion of TKI KUR.