MICROCAPITAL BRIEF: Bank Indonesia Revises Electronic Money Policy, Allows Banks with $2b in Core Capital to Offer “Digital Financial Services” Via Agents

Bank Indonesia (BI), the central bank of Indonesia, reportedly has amended its electronic money regulations to allow all banks with at least IDR 30 trillion (USD 2.6 billion) in core capital to offer “digital financial services” to customers including the option for third-party agents to provide access to services in rural areas on behalf of the banks. According to a statement attributed to Eny Panggabean, the director of BI’s financial access development department, this change “will enable people to carry out financial transactions with their cell phones. If things go smoothly, we hope this will reduce financial inequality.” Four Indonesian banks currently hold sufficient assets to qualify under the new rules: Bank Rakyat Indonesia (BRI), Bank Mandiri, Bank Central Asia (BCA) and Bank Negara Indonesia (BNI) [1]. BRI reportedly has plans to engage 5,000 agents during 2014 to implement digital services in the country.

As of March 2014, BRI reported 6.7 million microloan clients in Indonesia [1]. As of the same year, BRI reported total assets IDR 596 trillion (USD 50.4 billion), a gross loan portfolio of IDR 432 trillion (USD 36.6 billion) and IDR 470 trillion (USD 39.8 billion) in deposits [2]. As of 2012, Bank Mandiri reported total assets of IDR 636 trillion (USD 53.4 billion), return on assets (ROA) of 3.5 percent, return on equity (ROE) of 22.6 percent and 1,810 domestic branches [3]. As of December 2013, BCA reported total assets of IDR 496 trillion (USD 41.7 billion), ROA of 3.8 percent and ROE of 28.2 percent [4]. As of 2013, BNI reported total assets of IDR 387 trillion (USD 32.5 billion), ROA of 3.4 percent, ROE of 22.5 percent and total deposits of IDR 292 trillion (USD 24.5 billion) [5].

By Benjamin Krupp, Research Associate

About Bank Indonesia

Bank Indonesia is the central bank of Indonesia. Established in 1953, the bank is led by the board of governors, which consists of the governor, a senior deputy governor and between four and seven deputy governors. As of June 2014, the acting governor is Darmin Nasution. The bank is headquartered in Jakarta and operates 37 offices across Indonesia as well as representative offices in New York, London, Tokyo and Singapore.

About Bank Rakyat Indonesia (BRI)

Bank Rakyat Indonesia (BRI) was established in 1895 and provides saving and lending services to a wide range of customers, with priority reportedly given to micro-, small and medium-sized enterprises (MSMEs). As of March 2014, BRI reported 6.7 million micro-loan clients in Indonesia. As of the same year, BRI reported total assets IDR 596 trillion (USD 50.4 billion), a gross loan portfolio of IDR 432 trillion (USD 36.6 billion) and IDR 470 trillion (USD 39.8 billion) in deposits.

About Bank Mandiri

Bank Mandiri was formed in 1998 as part of a restructuring of the financial system of Indonesia by the national government. In 1999, four state-owned banks – Bank Bumi Daya, Bank Dagang Negara, Bank Exim and Bapindo – were amalgamated into Bank Mandiri. Bank Mandiri provides financial services to private and state-owned businesses and individuals, including microentrepreneurs. As of 2012, Bank Mandiri reported total assets of IDR 636 trillion (USD 53.4 billion), return on assets (ROA) of 3.5 percent, return on equity (ROE) of 22.6 percent and 1,810 domestic branches.

Sources and Additional Resources

[1] The Jakarta Post: Major Lenders Gear Up for Digital Financial Services

[2] Bank Rakyat: Financial Update Presentation 2014

[3] Bank Mandiri: Annual Report 2012

[4] Bank Central Asia: Financial Highlights 2013

[5] Bank Negara Indonesia: 2013 Annual Report

MicroCapital, February 18, 2014: Bank Rakyat Indonesia (BRI) to Add 571 Branches to Reach Micro-, Small, Medium-sized Enterprises (MSMEs), Expand Agricultural Lending

MicroCapital, May 21, 2013: Bank Indonesia Releases “Guiding Principles” for Branchless Banking Trial; Indosat, Telkomsel, PT XL Axiata to Offer Money Transfers for $0.21

MicroCapital, January 27, 2009: Bank Indonesia Welcomes The Competition Of Foreign Banks Into Indonesia’s Microfinance Sector

MicroCapital Universe Profile: Bank Indonesia

MicroCapital Universe Profile: Bank Rakyat Indonesia (BRI)

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