Commercial, rural banks team up to support small, medium firms
March 05, 2008
To bolster the capacity of rural and regional banks to finance micro, small and medium enterprises (MSMEs), 14 commercial banks signed loan agreements worth Rp 1.63 trillion (about US$179.71 million) on Monday.The loans are part of the linkage program commissioned by Bank Indonesia since 2004, will be disbursed to a total of 470 rural and regional banks throughout the archipelago.Under the linkage program, commercial banks are expected to expand their lending to MSMEs, which mostly operate in remote areas, through rural and regional banks.
Under the newly signed agreement, which approved loan proposals received from June to December, total lending by banks through the linkage program amounted to Rp 4.97 trillion, with a total of Rp 2.93 trillion handed out.Bank Mandiri, the country's largest bank by assets, is the biggest lender with Rp 1.12 trillion of loans. Other big lenders are Bank Niaga with Rp 556.87 billion, Bank Internasional Indonesia (BII) with Rp 410.39 billion and Bank Danamon Indonesia Rp 319.72 billion.
BI director for research and banking administration Halim said about Rp 2 trillion for loans was not disbursed, a main reason being the reluctance of many MSMEs to borrow money from banks due to a limited knowledge of loan procedures."Meanwhile, rural banks shall not be afraid to lend money to MSMEs as commercial banks will be responsible, should there be any non-performing loans (NPLs)," Halim said.
MSMEs, which contributed to almost 70 percent of the country's growth domestic product last year, are expected to drive the economy through increased growth. BI projects total lending for MSMEs to grow by 27 percent, from 22.5 percent in 2007.
BI deputy governor Muliaman D. Hadad said the rate of NPLs for the linkage program in 2007 was only about 0.1 percent, a very small amount.Total lending for the program had increased in the past three years, he said.Muliaman said he expected cooperation between commercial banks and rural banks to be more than financial, in order to further support MSMEs, such as with joint-financing arrangements."They will have a more sustainable relationship with that kind of cooperation," he said.
During the agreement signing, Bank Syariah Mandiri (BSM) said it planned to disburse Rp 4.2 trillion of loans this year to support MSMEs.Over January 2008, BSM disbursed Rp 31.972 billion of loans to MSMEs. During 2007, BSM disbursed Rp 10.3 trillion in total for MSMEs.
posted by mcDamas @ 10:29 AM,
