T

he government has decided to increase the target for its subsidized micro loan program from the initial allocation set earlier this year despite failing to meet its target last year.

The government announced on Thursday that the target for the micro loan program, dubbed People'€™s Business Credit (KUR), had been increased slightly to Rp 103.2 trillion (US$7.69 billion) from the Rp 100 trillion set in January, saying it was now preparing new participants to take part in the scheme.

Coordinating Economic Minister Darmin Nasution said the meeting had approved the target, which was agreed by 19 banks that would participate in the program this year, far higher than the number involved in 2015.

The decision to increase the target was taken during a coordination meeting held at the Coordinating Economic Ministry'€™s headquarters attended by ministers and officials of state agencies as well as executives of state-owned banks.

He said the ministry was also expecting that the Financial Services Authority (OJK) would soon complete its ongoing review of four multifinance firms that were deemed as prospective candidates to join the KUR program.

The four multifinance firms are BCA Finance, Adira Finance, Mega Central Finance and Federal International Finance, which are expected to disburse at least Rp 1.5 trillion of KUR loans this year.

'€œApart from those four companies, there are several other multifinance firms who have already submitted their proposals to the OJK and are still under review,'€ Darmin said.

Darmin said the government had also added seven guarantor companies to provide insurance for the program, namely Jamkrindo, Jamkrindo Syariah and Askrindo as well as guarantors owned by the regional governments of Riau, Bangka Belitung (Riau Islands), South Sumatra and Central Java.

In 2015, three state-owned lenders '€” Bank Rakyat Indonesia (BRI), Bank Mandiri and Bank Negara Indonesia (BNI) '€” participated in the KUR program, along with one private lender, Bank Sinarmas, which played a relatively small role, mainly offering loans to Indonesian migrant workers (TKI).

As of Dec. 31, 2015 total loans disbursed by the KUR program reached Rp 21.4 trillion to 960,424 customers, lower than the Rp 30 trillion targeted.

According to the Coordinating Economic Ministry'€™s data, the three state-owned lenders had continued to disburse Rp 6.48 trillion of KUR loans to more than 290,000 customers between Jan. 1 and Feb. 5 this year.

In order to achieve the 2016 nationwide KUR target, the government has allowed more banks, including privately owned and regional development banks, to join the program, with certain requirements in terms of financial situation and business portfolios.

OJK chairman Muliaman D. Hadad said at least 70 percent of the total allocated amount would be disbursed by three state-owned lenders '€” BRI, Bank Mandiri and BNI '€” while the rest would go to other participants.

With more participants in the program, Muliaman said the financial regulator was intensively reviewing the candidates, including studying its plan to involve rural banks to act as channeling agents for some banks.

'€œWe'€™ve also paid special attention to seven regional development banks involved in the program in order to ensure their readiness,'€ he said.