Mandiri to expand lending to SMEs

Mandiri to expand lending to SMEs

Despite reports of possible bad loans, state-owned Bank Mandiri, the nation's richest bank, is planning to channel some Rp 4.5 trillion (US$478 million) to micro and small businesses this year, from Rp 1.2 trillion last year.

Mandiri director for small and medium businesses Sasmita said on Monday that the expansion was aimed at strengthening the bank's position in the sector, as well as helping revive the real economy.

"Mandiri formed a special division last year that will deal with small businesses and micro banking. The division will cooperate with micro banks located throughout the country to help channel the loans," Sasmita said.

At present, the bank's outstanding loans to micro, small and medium businesses stand at some Rp 32 trillion; accounting for about 34 percent of the bank's total lending portfolio, which reaches more than Rp 95 trillion.

Sasmita said the bank had projected outstanding loans for its micro, small and medium businesses to reach about Rp 125 trillion by 2010. Bank Mandiri's policy sets loans of below Rp 100 million for micro businesses, between Rp 100 million and Rp 2 billion for small businesses, Rp 2 billion and 5 billion for commercial, and above Rp 5 billion for medium businesses. -- JP