Danamon to triple funds disbursed to credit banks
Danamon to triple funds disbursed to credit banks
Leony Aurora, The Jakarta Post, Jakarta
To promote increased lending to small and medium-size enterprises
(SMEs) and micro-businesses, Indonesia's fifth largest lender,
Bank Danamon, will triple its lending portfolio to credit banks
(BPRs) to Rp 600 billion (US$64.86 million) in 2005.
Danamon, which had been criticized for moving in on the
customers of BPRs with its Danamon Simpan Pinjam (DSPs), or
Danamon Savings and Loans branches, will increase the number of
BPRs receiving Danamon's two-step loans to 300, the bank's vice
president director, Emirsyah Satar, said on Tuesday.
The two-step loan system allows Danamon to provide loans to
the credit banks, which then extend loans directly to customers
at higher interest rates.
"We hope to achieve this target by the end of 2005 or early
2006 at the latest," Emirsyah said after a hearing with House of
Representatives Commission XI for financial affairs.
Danamon currently extends loans to about 100 BPRs, channeling
more than Rp 200 billion to these credit banks.
Danamon, which is 62 percent owned by the consortium of
Singapore-based Temasek Holdings and Deutsche Bank, was reported
to the House earlier this year by the Association of Indonesian
Credit Banks (Perbarindo), which accused Danamon of killing their
business with its DSP branches.
Danamon told the House that of approximately 42 million micro-
businesses and SMEs operating across the country, only 13 percent
were able to obtain loans from banks, proving there was room in
the market for new players.
"(Our) entry into this segment was to fill a void," said
Danamon president director Francis Andrew Rozario.
This year has been anointed the year of the microcredit by the
government and the United Nations. The disbursement of loans to
small enterprises, which have proven to have the resilience to
survive economic crises, is seen as vital for alleviating
poverty.
Danamon hopes to increase its lending portfolio to Rp 15
trillion this year, with most of that increase going to the micro
and SME sector.
Rozario further said upon the complaint made by Perbarindo,
Danamon had made a policy not to hire employees of credit banks.
Since their introduction in March last year, 264 DSP branches
have served about 147,000 customers. As of the end of December
2004, the DSPs had a total of about Rp 280 billion in savings and
had channeled Rp 655 billion in loans.
Danamon plans to open 609 new branches -- including DSPs --
across the country this year.
House members questioned whether Danamon, after being acquired
by foreign investors, should be allowed to open branches at the
district level.
According to Bank Indonesia regulations, foreign banks can
operate only in provincial capitals. However, it is unclear
whether Danamon would be categorized as a foreign bank.