BI moves to strengthen BPR
BI moves to strengthen BPR
The Jakarta Post, Jakarta
The central bank inaugurated on Monday a certification program
for rural banks (BPR) as part of its efforts to build a sound,
robust industry able to provide additional benefits to the
nation's small and medium-size businesses.
The program, mandatory for directors and prospective directors
of rural banks, aims to improve the management competence and
professionalism of the bankers -- notably their risk assessment
skills, Bank Indonesia governor Burhanuddin Abdullah said.
"The certification complements other efforts to build a strong
foundation in support of accelerated recovery of soundness in the
national banking system," he said.
Burhanuddin was speaking while opening a training session in
Malang by a consulting arm of the Association of Indonesian Rural
Banks, which is serving as a pilot project. The central bank is
working in cooperation with the Financial Institutions Project of
German Technical Cooperation on the project.
Rural banks, of which there are 2,148 at present, play a
crucial role in the economy as the main lenders to small and
medium-size businesses (SMEs) in the country.
And while the government has begun to provide more help to
SMEs -- as seen in various programs aimed at improving the
competitiveness of the sector -- Burhanuddin said the empowerment
of the BPR would be of major significance.
"This needs to be done simultaneously so that both sectors
can complement and benefit each other," he said.
Key aspects of the program include: accounting management,
credit management, legal aspects of credit operations, assets and
liabilities management, assessment of market potential and
marketing of products/services, regulations and external
supervision, and internal control and examination.
The target of the program is to have at least one certified
director in each rural bank by Dec. 31, 2006, and for all
directors of rural banks to be certified by Dec. 31, 2008.
Directors will be required to resign if they fail to meet the
certification requirement.
The urgency of the program is apparent as some rural banks
have begun to suffer capital deterioration.
Sri Mulyati Tri Subari, a deputy director for BPR supervision,
said the central bank had closed down two rural banks and put
four others under special surveillance as their capital adequacy
ratios worsened.
"This month we have liquidated two BPRs, one of them I think
was located in Kupang. We have also asked the rural banks under
special surveillance to inject fresh capital," Sri said, adding
that the capital adequacy ratio of the closed down BPRs was
negative, or far below the 4 percent minimum requirement.
She said the two rural banks were not included in the
government's blanket guarantee scheme.
Indicators of National Rural Banks
-------------------------------------
March 2004
-------------------------------------
Number of BPRs 2,148
Business Volume Rp 13.4t
Credit extended Rp 9.4t
NPL 8.2%
LDR 76.9%
-------------------------------------
Source: Bank Indonesia