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NEWS UPDATES 6 September 2010

Indo banks facing difficulties with micro credit

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Indonesia’s major banks are still facing several constraints in disbursing government-sponsored micro loans (KUR) to small businesses , despite high demand.

Many credit applicants’ businesses failed to meet criteria set by banks to make sure they could pay back the loans, Bank Mandiri business banking senior vice president Tatang Tabroni told media.

“Before providing loans, we have to make sure their businesses have good prospects for the future, meaning they will have the ability to repay their debts,” he said over the telephone.

Tatang added that because of this requirement, Mandiri had not given loans to people wanting to start new businesses, but mostly to businesses that were already running.

According to the Cooperatives and Small and Medium Enterprises Ministry, in the first half of this year, Bank Mandiri had disbursed Rp 252.7 billion under micro credit loans (KUR) to 732 debtors. However, the government had asked Mandiri to disburse at least Rp 1.84 trillion worth of KUR by the end of this year.

The government is committed to developing the SME sector by allocating Rp 20 trillion from this year’s state budget to give SMEs easier access to capital.

As of July, 680,270 entrepreneurs had made use of Rp 6.5 trillion of the facility.

The government is disbursing the Rp 20 trillion worth of KUR loans through Bank Nasional Indonesia (BNI), Bank Mandiri, Bank Rakyat Indonesia (BRI), Bank Bukopin, Bank Tabungan Negara (BTN), rural banks (BPR) and Regional Development Banks (BPD).

BNI is expected to disburse Rp 3 trillion, Bank Mandiri Rp 2 trillion, BRI Rp 8 trillion, Bukopin Rp 750 billion and BTN Rp 750 billion. The remaining Rp 4.5 trillion is divided between rural banks and Regional Development Banks across Indonesia.

In 2009 the export value of the SME sector fell to US$1.23 million from $1.35 million previously.

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