At the signing of a memorandum of understanding (MOU), Coordinating Minister of Economic Affairs Hatta Rajasa recently stated that the Indonesian government will provide a loan guarantee facility of IDR 2 trillion (USD 218 million) in support of the Kredit Usaha Rakyat (KUR) program.
The government loan guarantee facility is expected to generate IDR 20 trillion (USD 2.18 billion) of microfinance activities through KUR. In addition, the rules governing access to KUR program will be relaxed, including the lowering of lending rates and extending restructuring periods. The lending rate on microloans will be reduced from 24 percent to 22 percent and borrowers can now apply for consumer loans. In addition, borrowers with working capital loans can obtain a loan extension of five to ten years. Lastly, microfinance loans no longer need to obtain credit references from the Bank Indonesia’s “debtor information system.”
About Bank Indonesia (BI):
Established in 1999, the Bank Indonesia (BI) is the nation’s central bank. Pursuant to the Central Bank Act of 1999, BI became a fully autonomous institution empowered to formulate monetary policy and regulate the financial sector. The acting Bank Indonesia Governor is Mr. Darmin Nasution. BI website: http://www.bi.go.id/web/id/
About Kredit Usaha Rakyat (KUR):
Established in 2008, the Kredit Usaha Rakyat program aims to provide farmers with accessible credit. Through KUR, working capital and investment credit are provided to microfinance institutions by commercial banks which are in turn guaranteed by the state credit program. KUR website: http://www.kreditusaharakyat.com/
Bibliography:
About BI: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+Indonesia+%28BI%29
About KUR: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Kredit+Usaha+Rakyat+%28KUR%29
Additional Resources:
[1] Original article: http://www.microfinancefocus.com/news/2010/01/13/indonesian-govt-relaxes-micro-credit-regulation-report/
[2] Related article: “MICROCAPITAL BRIEF: Indonesian Microfinance Program Kredit Usaha Rakyat May Offer New Paradigm,” written by Hio Kyeng Lee, published by Microcapital.org (December 3, 2009), located at: https://www.microcapital.org/microcapital-brief-indonesian-microfinance-program-kredit-usaha-rakyat-may-offer-new-paradigm/
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