Indonesia’s largest private lender Bank Central Asia (BCA) expects that collaboration with financial-technology (fintech) companies could assist in loan expansion to micro, small and medium enterprises (MSMEs) in line with Bank Indonesia’s (BI) requirements.

The publicly listed bank considers it urgent to boost loan disbursement to MSMEs as BI requires lenders to have 20 percent of their total lending going to the sector by the end of 2018.

BCA director Henry Koenaifi acknowledged that it would be a “big challenge” for the lender to meet the central bank’s requirements.

“It is not easy to achieve that target because our credit growth in other segments is very good,” he said on Monday, referring to BCA’s loan growth in the corporate and consumer sectors.

BCA’s loans to the corporate and consumer sectors grew by 21.2 percent year-on-year (yoy) and 20.6 percent yoy, respectively, as of September last year.

On the other hand, BCA’s credit growth in the MSME and commercial sectors was recorded at only 2.4 percent yoy to Rp 150 trillion (US$12 billion) as of the third quarter last year compared to the same period in 2016.

Loans to the MSME sector made up almost 14 percent of BCA’s total portfolio, worth Rp 439.8 trillion last year.

BCA president director Jahja Setiaatmadja has said the bank aims for MSME loan growth of between 8 and 9 percent this year.

In an effort to increase its MSME lending, BCA on Monday signed a partnership with PT Aman Cermat Cepat (KlikACC), a fintech company specializing in peer-to-peer lending, enabling the bank to act as the firm’s channeling agent to disburse loans totaling Rp 25 billion this year.

“These credit facilities will provide benefits for MSMEs as they provide easier access to funding,” said Liston Nainggolan, BCA executive vice president of commercial business and SMEs, after the signing ceremony.

KlikACC provides a financing platform using partnerships with large companies such as Tokopedia, Indosat and XL. In 2017, the firm disbursed Rp 30 billion in total loans to various sectors.

“Our focus is to partner with companies in industries that are developing well in Indonesia, such as telecommunications, travel and other sectors. We’re targeting the millennial generation,” said Rusli Hidayat, president director of KlikACC.

Under the partnership with BCA, KlikACC will ease the financing process as the platform enables customers to fill loan-application forms and submit the required documents.

Afterward, KlikACC’s credit analysis program will provide a recommendation, which will become BCA’s consideration in approving a customers’ loan applications.

BCA has been collaborating with other e-commerce companies to accelerate credit growth, namely with Blibli, Tokopedia and Lazada.

In a partnership with online marketplace Tokopedia, for example, BCA focuses on providing micro-loans, locally known as People’s Business Credit (KUR), so small entrepreneurs can expand their businesses.

“Tokopedia will give referrals to BCA regarding sellers with good ratings. Then, BCA will process the recommendation to disburse loans to sellers,” Liston explained.

For 2018, BCA has set a KUR loan-disbursement target of Rp 110 billion, up from its realization of Rp 103 billion last year.

Liston added that until the end of 2017, the non-performing loan ratio for MSMEs in BCA was fairly low at around 1 percent.

Popular

Volcano erupts in North Sulawesi, hundreds evacuated

Dubai roads, airport reel from floods after record rains

Ramadan boosts consumer confidence, retail sales