ASEAN KEY DESTINATIONS
BCA considers jumping on govt micro loan bandwagon
Indonesia: Private lender Bank Central Asia (BCA) is considering joining a government-backed micro loan program through a channeling scheme as more lenders have been invited to participate, a top executive says.
BCA president director Jahja Setiaatmadja said the bank was reviewing its capacity to participate in the government program, dubbed Public Business Credit (KUR), as it had sufficient funds in its pipeline.
“We already have funding for that [KUR], but we are still thinking hard about how to disburse the funds. I think we have a capacity of at least Rp 2 trillion [US$145.2 million],” he said after an event at the Indonesia Stock Exchange on Friday.
Jahja said BCA, the country’s largest private bank, had made a proposal to the Financial Services Authority (OJK) to use a channeling scheme to disburse the KUR loans as the bank had very limited infrastructure to reach the micro segment.
The major part, or 38.5 percent, of BCA’s total outstanding loan worth Rp 364.9 trillion as of September last year went to the commercial sector as well as small and medium enterprise (SME) segment.
Meanwhile, the remaining 34.5 percent and 27 percent of BCA’s total loans went to the corporate and consumer segment as of September last year, according to its financial report.
According to Jahja, the bank will need quite a long time to build infrastructure if wants to disburse the KUR loans by itself.
“Our own branchless banking campaign even waited for more than nine months before we were ready to launch it,” Jahja said.
Should the financial regulator approve its proposal, BCA is considering disbursing the KUR loans channeling them through other lenders, such as rural banks (BPR) and regional development banks (BPD).
“Rural banks don’t have as much liquidity as large lenders, making their cost of funds expensive. Meanwhile, we have cheaper cost of funds, yet are limited in terms of infrastructure, so we can work together,” he said.
In addition to working with BPR and BPD, Jahja said the bank had also discussed the possibility of channeling the KUR loans with state-owned Bank Rakyat Indonesia (BRI) as BRI has the widest distribution of micro-credit outlets nationwide.
“We have even told BRI about our willingness to work together and we are ready to provide funding. For us, what’s important is that the loans can reach people,” he said.
Earlier this month, the government decided to allow more participants, such as private banks and multi-finance firms, to take part in the KUR loan program this year, as it has set a KUR disbursement target of Rp 100 trillion to Rp 120 trillion this year, more than twice the 2015 target.
In 2015, only three state-owned lenders — 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 in KUR, mainly offering loans to Indonesian migrant workers (TKI).
The OJK is currently evaluating 10 private banks and 11 BPDs nominated as potential new participants for the KUR loan program, according to Cooperatives and Small and Medium Enterprises Ministry data.
Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below