Central Bank finds 30 percent of secondary banks unhealthy
Central Bank finds 30 percent of secondary banks unhealthy
JAKARTA (JP): More than 30 percent of secondary banks
(smaller, mostly rural banks) are unhealthy, according to Murti
Wijono, the chief of secondary bank supervision at Bank
Indonesia.
Wijono said yesterday 44.5 percent of the 1,990 secondary
banks under the central bank's supervision were classified as
healthy, 21.4 percent as relatively healthy, 14.4 percent as less
healthy and 19.4 percent as unhealthy.
According to official data, there are 9,313 secondary banks
throughout the country, including 5,345 under the supervision of
Bank Rakyat Indonesia, 1,990 under the central bank's supervision
and 1,978 under the supervision of local administrations.
The central bank had closed 42 unhealthy secondary banks in
the last five years, Wijono told a workshop on secondary banks,
organized by the Bina Swadaya development agency and Bank
Danahutama.
Wijono said the main reasons for bank failure included sparse
funds and poor management.
The workshop also launched the book 100 Tahun BPR di Indonesia
1895-1995 (100th Anniversary of Secondary Banks in Indonesia
1895-1995), published by Infobank magazine.
I Wayan Sadra, the chairman of the Association of Indonesian
Secondary Banks, said the main problem faced by secondary banks
was a lack of funds.
The problem could be solved by the development of alliances
between secondary banks and commercial banks, he said.
He said a central bank regulation in 1993 had obliged all
commercial banks to extend 20 percent of their credit to small
businesses with a credit ceiling of Rp 250 million (US$105,932).
About 80 commercial banks have cooperated with 950 secondary
banks to channel Rp 179.7 billion in credit to small business.
He said many secondary banks could not obtain credit for small
businesses because commercial banks demanded collateral and
imposed high interest rates.
He said the annual interest rates on credit for small
businesses from state banks to secondary banks ranged from 18
percent to 19 percent, and from private banks it ranged between
21 percent and 23 percent.
Secondary banks, with total assets worth Rp 2.5 trillion, had
raised Rp 1.5 trillion in private deposits by June, he said.
Secondary banks' total credits as of June amounted to Rp 2
trillion.(jsk)