Banks team up with state insurance firms

The Jakarta Post, Jakarta

A number of local banks and credit insurance firms are to collaborate on the provision of loans worth up to a total of Rp 14.5 trillion to about 568,000 micro and small-scale companies around the country.

Under the memorandum of understanding (MoU) signed Tuesday, the banks, which include Bank Rakyat Indonesia (BRI), Bank Mandiri, Bank Negara Indonesia (BNI), Bank Tabungan Negara (BTN), Bank Syariah Mandiri and Bank Bukopin, agreed to provide loans of up to Rp 500 million per borrower.

Meanwhile, state-owned credit insurance firms PT Asuransi Kredit Indonesia (Askrindo) and Perum Sarana Pengembangan Usaha (SPU), agreed to guarantee the loans as long as the lending rate was less than 16 percent.

Speaking at the official signing of the memorandum of understanding (MoU), State Minister for Cooperatives and SMEs Suryadharma Ali said the scheme was a positive and concrete step toward supporting the development of small and medium enterprises.

Suryadharma acknowledged that the scope of the scheme and number of companies that would benefit were small compared to the 43 million small companies registered in Indonesia. However, he said the initiative "should still be welcomed as a fresh start."

The government recently pledged to inject fresh funds worth about Rp 1.45 trillion into PT Askrindo and SPU to strengthen their loan-guarantee capacities.

According to Coordinating Minister for the Economy Boediono, the capital injection was expected to increase the number of loans they could guarantee by a factor of between 10 and 15.