BNI to increase loans for small businesses

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)