In an effort to develop small and micro businesses, 25 banks have been approved to take part in the government-supported people'€™s business credit (KUR) micro loan program, with a total target of Rp 120 trillion (US$8.67 billion) loan disbursements next year.

This year, only three state-owned banks -- the BRI, the BNI and Bank Mandiri '€“ took part in the program.

Coordinating Economic Minister Darmin Nasution said on Thursday that the government had set a target of disbursing Rp 30 trillion in micro loans this year, but total disbursements reach only Rp 21.4 trillion, with 960,424 debtors.

"The government is allowing other banks to be involved in the program as long they are in a healthy condition, with a maximum 5 percent of nonperforming loans in the micro-loan sector," Darmin said at a press conference in Jakarta on Thursday.

Additionally, Darmin said, the banks must have a debit portfolio to micro, small and medium enterprises of at least 5 percent of total credit.

"With that criteria, 25 out of 118 [existing] banks will be allowed to distribute micro loans," he said, adding that the number did not include Bank Perkreditan Rakyat (BPR, People'€™s Financial Institutions), which disburse micro loans.

Darmin said the government also intended to assess non-bank financial institutions and select two or three of them to participate in the KUR program, with requirements defined by the Financial Authority Services (OJK).

He said his office would cooperate with other institutions, including local governments, to boost KUR penetration in regions across the country

The targeted recipients of the loans are mostly farmers, fishermen and craftsmen. (bbn)

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