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tate-owned banks involved in the government'€™s subsidized microloan program are committed to accelerating credit disbursement following an agreement to relax the rules of the scheme.

The state lenders '€” Bank Rakyat Indonesia (BRI), Bank Mandiri and Bank Negara Indonesia (BNI) '€” agreed with the government on Tuesday to widen the range of businesses that are eligible for loans under the so-called '€œPeople'€™s Business Credit'€ (KUR) program, which is what the lenders had proposed earlier to boost loan disbursement.

The agreement was reached in a final meeting at the Office of the Coordinating Economic Minister and is set to be followed up by a revised government regulation (PP) immediately.

BRI president director Asmawi Syam said the government had decided to open the scope of the KUR program to any sectors that were '€œproductive'€, which is a wider definition than the previous one that covered only the trading, plantation, maritime and agriculture sectors.

'€œAs long as the business is productive, banks participating in the program are allowed to lend. We are trying to accelerate loan disbursement as we approach the end of the year,'€ Asmawi told reporters after the meeting.

Asmawi said the government had also allowed banks to extend KUR loans to micro and small businesses owned by spouses of their existing customers, adding that '€œwe can give KUR credits to wives or husbands of our existing loan customers, as long as the businesses owned by the spouses run smoothly.'€

Mandiri president director Budi Gunadi Sadikin, who also attended the meeting, said the revised rules also sped up the disbursement of interest rate subsidies from the government to the banks, which often faced difficulties in the program'€™s cash flows.

'€œWe often wait for a year for the subsidy to be disbursed, but now the government has decided that it will be disbursed each month,'€ Budi said.

The relaxation was proposed by the participating banks to help them achieve the Rp 30 trillion (US$2.2 billion) target this year. As of September, the lenders had disbursed merely Rp 4.5 trillion, less than a sixth of the target.

BRI is expected to disburse Rp 21 trillion and Mandiri and BNI Rp 3 trillion each, while the remaining loans would be channeled through regional banks, which were still awaiting approval from the Financial Services Authority (OJK).

As the target is far from being reached, Cooperatives and SME Minister Anak Agung Gede Ngurah Puspayoga said recently that the government had revised down the target to between Rp 19 trillion and Rp 20 trillion, which he called '€œmore realistic owing to the delayed start of the program in mid-August.'€

It is hoped that the KUR loans will stoke growth in total bank lending, which has slowed this year along with the country'€™s overall economic activity.

BRI'€™s Asmawi said the bank had disbursed at least Rp 5 trillion as of now to roughly 300,000 customers and had redoubled efforts by opening microloan outlets located in traditional markets to operate on weekends as well, adding that '€œwe will also add more marketers and analysts, but they must be trained first.'€

'€œMandiri booked around Rp 600 billion as of September and it is quite difficult to achieve the Rp 3 trillion target, but we are trying to accelerate [loan disbursement],'€ Mandiri'€™s Budi said.
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