BI moves to strengthen BPR<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The central bank inaugurated on Monday a certification program
\nfor rural banks (BPR) as part of its efforts to build a sound,
\nrobust industry able to provide additional benefits to the
\nnation's small and medium-size businesses.<\/p>\n
The program, mandatory for directors and prospective directors
\nof rural banks, aims to improve the management competence and
\nprofessionalism of the bankers -- notably their risk assessment
\nskills, Bank Indonesia governor Burhanuddin Abdullah said.<\/p>\n
\"The certification complements other efforts to build a strong
\nfoundation in support of accelerated recovery of soundness in the
\nnational banking system,\" he said.<\/p>\n
Burhanuddin was speaking while opening a training session in
\nMalang by a consulting arm of the Association of Indonesian Rural
\nBanks, which is serving as a pilot project. The central bank is
\nworking in cooperation with the Financial Institutions Project of
\nGerman Technical Cooperation on the project.<\/p>\n
Rural banks, of which there are 2,148 at present, play a
\ncrucial role in the economy as the main lenders to small and
\nmedium-size businesses (SMEs) in the country.<\/p>\n
And while the government has begun to provide more help to
\nSMEs -- as seen in various programs aimed at improving the
\ncompetitiveness of the sector -- Burhanuddin said the empowerment
\nof the BPR would be of major significance.<\/p>\n
\"This needs to be done simultaneously so that both sectors
\ncan complement and benefit each other,\" he said.<\/p>\n
Key aspects of the program include: accounting management,
\ncredit management, legal aspects of credit operations, assets and
\nliabilities management, assessment of market potential and
\nmarketing of products\/services, regulations and external
\nsupervision, and internal control and examination.<\/p>\n
The target of the program is to have at least one certified
\ndirector in each rural bank by Dec. 31, 2006, and for all
\ndirectors of rural banks to be certified by Dec. 31, 2008.
\nDirectors will be required to resign if they fail to meet the
\ncertification requirement.<\/p>\n
The urgency of the program is apparent as some rural banks
\nhave begun to suffer capital deterioration.<\/p>\n
Sri Mulyati Tri Subari, a deputy director for BPR supervision,
\nsaid the central bank had closed down two rural banks and put
\nfour others under special surveillance as their capital adequacy
\nratios worsened.<\/p>\n
\"This month we have liquidated two BPRs, one of them I think
\nwas located in Kupang. We have also asked the rural banks under
\nspecial surveillance to inject fresh capital,\" Sri said, adding
\nthat the capital adequacy ratio of the closed down BPRs was
\nnegative, or far below the 4 percent minimum requirement.<\/p>\n
She said the two rural banks were not included in the
\ngovernment's blanket guarantee scheme.<\/p>\n
Indicators of National Rural Banks<\/p>\n
-------------------------------------<\/p>\n
March 2004
\n-------------------------------------
\nNumber of BPRs 2,148
\nBusiness Volume Rp 13.4t
\nCredit extended Rp 9.4t
\nNPL 8.2%
\nLDR 76.9%
\n-------------------------------------
\nSource: Bank Indonesia<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bi-moves-to-strengthen-bpr-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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