Large banks asked to help secondary banks
Large banks asked to help secondary banks
JAKARTA (JP): Minister of Cooperatives and Small Enterprises
Subiakto Tjakrawerdaya has called on the country's commercial
banks to cooperate with secondary banks in assisting rural
economic development.
"Rather than opening sub-district-level branch offices, I
think commercial banks would do better to cooperate with the
existing secondary banks," Subiakto said yesterday, after
witnessing the sale of 651,000 rights shares by Bank Bali to 26
cooperatives from Java and Bali at the Equatorial Hotel.
Subiakto suggested that the cooperation between commercial and
secondary banks take the form of share participation by
commercial banks in secondary banks. Under such an arrangement,
commercial banks would be obliged to help improve the management
of the secondary banks, which mostly operate in rural areas, he
said.
However, he cautioned that such cooperation should not lead to
the acquisition of secondary banks by commercial banks.
Subiakto said that another form of cooperation would see
commercial banks and cooperatives jointly establishing new credit
banks.
"Such an arrangement would, in my opinion, result in a more
efficient banking system in our country, especially at the
village level," Subiakto said. "At the very least, such an
arrangement would prevent commercial banks from taking more money
from the villages to the cities."
According to some critics of Indonesia's banking sector, large
commercial banks, by operating branch offices at the sub-district
level, have been absorbing rural financial resources to help
finance urban projects.
Subiakto praised Bank Bali's pioneering move of forming 18
secondary banks in cooperation with 91 cooperatives in Java and
Bali, saying that the move helped cooperatives to gain access to
modern banking management techniques and technology.
He added that Bank Bali's partnership with cooperatives also
improves the image of cooperatives as business partners.
Bank Bali Chief Commissioner Djaja Ramli said that the 18
secondary banks involved in the scheme were established in 1992
with a paid-up capital of 1.8 billion (US$790 million), of which
Rp 1.03 billion came from Bali and the remainder from the 91
cooperatives.
Ramli said that the 18 secondary banks currently have total
assets of Rp 9 billion and that between January and August of
this year they posted a before-tax profit of almost Rp 500
million.
"Thus, based on their return on equity, these 18 secondary
banks are very, very healthy," he said, adding that, initially,
Bank Bali had had to work hard to get the secondary banks off the
ground.
Ramli said Bank Bali will soon establish 10 new secondary
banks in cooperation with cooperatives. (rid)