Micro loans extended to poor families in E. Java

Micro loans extended to poor families in E. Java

JAKARTA (JP): Bank Indonesia, the central bank, yesterday
introduced loans for very small businesses in East Java in a bid
to help eradicate poverty in the province.

Bank Indonesia's director of credit, Mukhlis Rasyid, yesterday
signed documents on the channeling of the credit from the Asian
Development Bank to the East Java development bank, 11 secondary
banks and a number of non-governmental organizations in East Java
to help alleviate poverty in the province.

Bank Indonesia said in a statement yesterday that it has also
advocated the extension of such loans -- called micro credit --
in Central Java.

East and Central Java are among the five provinces chosen by
Bank Indonesia for its micro-credit pilot project. The other
provinces in the project include West Java, South Kalimantan and
West Nusa Tenggara.

Micro loans, each with a value of up to Rp 500,000 (US$213),
will be channeled to poor families and individuals or a group of
poor families which run very small businesses. The loans will be
available through development banks, secondary banks and non-
government organizations in the five provinces.

"The main objectives of extending such loans are to help
develop very small rural businesses, to help eradicate poverty
and to encourage the participation of women in the development,"
Bank Indonesia announced.

The central bank has earmarked Rp 90 billion (US$38.5 million)
for micro credit. Of the total fund, 60 percent will come from
the Asian Development Bank.

The micro-credit program so far involves 37 secondary banks,
40 institutions specializing in extending credit to poor people
and 16 non-governmental organizations in Central and East Java.

Within the next five years, it is expected that the central
bank's micro loans will involve 700 institutions specializing in
extending credit to poor people, 400 secondary banks, 30 non-
governmental organizations and 300,000 customers. (rid)