BNI to increase loans for small businesses

JAKARTA (JP): The state-owned Bank BNI will increase the portion of its credits allocated for small businesses to 50 percent next year from 38.2 percent at present, the bank's president said here yesterday.

Winarto Sumarto told reporters that his bank as of May had channeled 61.8 percent of its total credits of Rp 13.4 trillion (US$6.20 billion) to large-scale companies which generally deal with wholesale businesses.

"But because our research indicates that small businesses have been the key ingredient in improving the bank's performance amid fierce competition with private banks, we will increase credits for small businesses," he said.

He said the bank had steadily increased the portion of loans for small businesses from 33 percent as of March to 38 percent as of May.

Bank Indonesia, the central bank, reported last month that banking credits provided for small businesses reached only Rp 28 trillion as of March, as compared to Rp 150 trillion given to medium- and large-scale businesses.

Monetary officials have repeatedly urged banks to increase allocations of credits to retail and small-scale businesses to avoid high a concentration of credits for conglomerates, some of which have caused large amounts of high non-performing loans.

Winarto also said that his bank charges retail businesses and small-scale companies an annual interest rate of 14 percent, far lower than the 17 percent charged to wholesale and large-scale businesses.

"I am optimistic that our target of expanding credits by 16 percent per year will be met," he said.

He explained that credits for wholesale businesses are generally over Rp 25 billion each, those for medium-scale businesses range between Rp 400 million and Rp 25 billion and those for retail and small-scale businesses are between Rp 250 million and Rp 400 million.

Winarto said his bank's non-performing loans are estimated at two percent of its total credits. (fhp)