Bank Rakyat Indonesia (BRI), Bank Negara Indonesia (BNI) and Bank Mandiri, three state-owned banks in Indonesia, will resume efforts to distribute IDR 20 trillion (USD 1.5 billion) during 2015 via the microloan program Kredit Usaha Rakyat (KUR) . The program was suspended in January 2015, following the release of a report showing that non-performing loans (NPLs), those have payments over 90 days past due, were above the central bank’s benchmark of 5 percent.
KUR is designed to encourage traditional banks to expand within the microfinance sector by providing government guarantees to reduce their exposure to losses from bad loans . While the banks will source the loan funds from internal accounts, the government has set aside IDR 1 trillion (USD 77.0 million) for guarantees . Prior to the suspension, 33 banks were involved in loan disbursal via the KUR project, but based on the government’s reevaluation, the other 30 banks have been removed from the program .
In re-opening the program, the government reduced the cap on the annual interest rate of KUR loans from 22 percent to 21 percent. The maximum amount of each collateral-free loan has also been set at IDR 15 million (USD 1,150).
By Caroline Zhu, Research Associate
About Bank Rakyat Indonesia (BRI)
Bank Rakyat Indonesia (BRI), which was established in 1895, provides saving and lending services to a range of customers, with priority given to micro-, small and medium-sized enterprises (MSMEs). As of December 31, 2014, BRI reported total assets IDR 802 trillion (USD 61.9 billion), return on assets (ROA) of 3.40 percent and return on equity (ROE) of 27.4 percent.
About Bank Negara Indonesia (BNI)
Bank Negara Indonesia, which is backed by the government of Indonesia, was established on July 5, 1946 to serve as the country’s central bank. After distributing the first official currency of Indonesia, the bank was transformed into a development bank in 1949, and then a commercial bank in 1955. As of December 31, 2014, Bank Negara Indonesia reported total assets of IDR 393 trillion (USD 30.4 billion), return on assets (ROA) of 3.50 percent and return on equity (ROE) of 23.6 percent.
About Bank Mandiri
Bank Mandiri was formed in 1998 as part of a restructuring of the national financial system by the government of Indonesia. 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 as well as microentrepreneurs and other individuals. As of December 31, 2014, Bank Mandiri reported total assets of IDR 855 trillion (USD 66.0 billion), return on assets (ROA) of 2.60 percent and return on equity (ROE) of 20.9 percent.
About Kredit Usaha Rakyat (KUR):
Established in 2008, the Kredit Usaha Rakyat program is a government program that aims to provide farmers with credit. Through KUR, working capital is provided to microfinance institutions by commercial banks. The loans are guaranteed by the state.
Sources and Additional Resources:
 The Jakarta Post news, “Three state-owned banks to dish out Rp 20 trillion in KUR,” http://www.thejakartapost.com/news/2015/03/09/new-flash-three-state-owned-banks-dish-out-rp-20-trillion-kur.html
 MicroCapital.org article, December 3, 2009 “MICROCAPITAL BRIEF: Indonesian Microfinance Program Kredit Usaha Rakyat May Offer New Paradigm,” https://www.microcapital.org/microcapital-brief-indonesian-microfinance-program-kredit-usaha-rakyat-may-offer-new-paradigm/
 The Jakarta Post news, “State Lenders to Resume Govt-backed Micro loan Project,” http://www.thejakartapost.com/news/2015/03/05/state-lenders-resume-govt-backed-micro-loan-project.html
MicroCapital Universe Profile: Bank Rakyat Indonesia
MicroCapital Universe Profile: Bank Mandiri
MicroCapital Universe Profile: Kredit Usaha Rakyat
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