KUR Issue in Jember: Don't Blame State-Owned Banks, the Problem Lies with Collection Agents

Economist and banking observer Ibrahim Assuaibi has commented on the naming of three suspects by the East Java High Prosecutor’s Office in an alleged corruption case involving micro People’s Business Credit (KUR) at a national bank’s Jember branch. The case, which emerged between 2021 and 2023, caused state losses of Rp41.4 billion through a scheme involving fictitious debtors and misappropriation of funds by collection agents (CA). According to Ibrahim, this case is not new. The pattern of KUR misappropriation has been occurring for a long time across all distributing banks due to loopholes in the distribution system involving CAs and village officials. Ibrahim explained that KUR should be distributed to business groups such as farmers and fishermen. Funds are applied for by collecting members’ ID cards, processed by the CA, and approved by the government-appointed KUR distributing bank. ‘This CA is indeed important as an intermediary because they know the ins and outs of the farmers’ membership. But many CAs are playing games. They collaborate with village officials, manipulate data, and lure the lower-class community who do not understand anything,’ he said when met in South Jakarta on Saturday. He cited an example where funds intended for a group, ranging from Rp90 million to Rp100 million, often do not reach the members. The money is instead controlled by the CA to cover personal bad debts or other interests. ‘The reality is the money does not fall into the hands of the community. This happens a lot, not just now. Since the 1990s post-reformasi, during Habibie’s era, it was the same. CAs play games with certain individuals for their own interests,’ he revealed. Ibrahim stated that as a result, community members whose names are used end up bearing the burden of instalments and interest, even though they never received the money. ‘So the community is left to pay, but they do not feel they received the money. The ones responsible are the group leader and the CA,’ he stressed. He assessed that current economic conditions have made unscrupulous individuals bolder. ‘They think about how to get as much money as possible for other businesses but using the names of ordinary people. Whereas the purpose of KUR is to prevent the lower class from being trapped by loan sharks,’ he said. Ibrahim urged the government and the Financial Services Authority (OJK) to immediately strengthen regulations and sanctions. He stated that the revised Financial Sector Development and Strengthening Law (UU P2SK) must strictly bind KUR fraud perpetrators.