New credit insurance scheme launched
New credit insurance scheme launched
Tony Hotland, The Jakarta Post, Jakarta
Small and medium-sized enterprises (SMEs) in regional areas are
expected to get better access to bank loans with the
implementation of a new credit insurance scheme launched on
Monday, Governor of Bank Indonesia Burhanuddin Abdullah said.
Burhanuddin said the new scheme, which was based on studies in
several neighboring countries, would provide insurance for
regional development banks (BPDs) in lending money to the SME
sector.
"The intermediary role will hopefully function better since
the risk loss due to bad loans could be kept at a manageable
level," he asserted on Monday.
The new scheme involves a risk-sharing management among
regional administrations, BPDs, and credit insurance firm PT
Askrindo.
Under the scheme, the risk of a loan channeled to SMEs will be
covered by the three parties, thus expected to minimize the risk
as there is more control and monitoring over the borrower from
the parties.
"Local administrations, down to the lowest levels, are the
ones who really know the history and situation of the SMEs in
their areas. With Askrindo coming in, BPDs are expected to have
more confidence in SMEs," added Burhanuddin.
SMEs in the country have been having difficulties in accessing
bank loans compared to giant companies due to the high risk of
incurring bad debts they naturally pose.
Askrindo president director Jati L. Mangunsong said the
maximum loans to be covered per one company borrowing would be
around Rp 50 billion (US$5.49 million).
"We will impose a 1 percent premium to the local banks for the
scheme. The premium is our standard and the same as other types
of loans we cover outside this scheme," Jati added.
The new scheme will be implemented in only four provinces for
the initial phase. The provinces are North Sulawesi, Gorontalo,
East Java and Riau.
"These provinces were considered the most prepared for this
stage," said Nelson Tampubolon, a banking researcher at the
central bank and a coordinator for the implementation of the
Indonesian Banking Landscape.
He added that the scheme would hopefully be implemented in
other provinces as soon as possible because almost all SMEs in
all provinces were facing similar problems in getting access to
bank loans.
Nelson also shrugged off the possibility of SMEs misusing the
loans knowing that the loans were insured, saying there were
already regulations and monitoring tools available.
"We'll be working with the lowest level of administration, and
also local banks that supposedly have a lot of knowledge about
businesses in their areas. There should also be a familiarization
process to the SMEs about the program and the source of funds,"
he added.
Elsewhere, Burhanuddin said the plan to sell the central
bank's shares in Askrindo was still pending the approval of the
new Cabinet.
He assured that the divestment plan would not affect
Askrindo's role in the new scheme. In fact, there is a
possibility for the shares to be sold to local administrations.
We are discussing it, he added.
The central bank owns 55 percent of Askrindo and the remainder
by the government.