JAKARTA, KOMPAS — Interest rates on loans provided by banks for micro, small, and medium enterprises (MSMEs) have begun to rise. While some banks have yet to increase credit interest rates for this business sector, the trend is pointing toward an upward adjustment.
Bank Indonesia (BI) stated that it is currently in active discussions with associations and banks regarding MSME loan interest rates. “Some banks have already raised interest rates, while others have not,” said Eni V. Panggabean, Executive Director of BI’s Financial Access Development and MSME Department, in Jakarta last weekend.
With the rise in MSME loan interest rates, BI is closely monitoring the potential increase in non-performing loans (NPL). However, according to BI, higher interest rates are not the sole reason for increased NPLs—rising inflation is also a contributing factor.
“NPLs have not risen significantly, but there is an increase. It needs to be monitored,” said Eni.
As of July 2013, BI data showed that the outstanding balance of MSME loans stood at Rp583.859 trillion, with an NPL ratio of 3.45 percent. In June 2013, the outstanding MSME loan balance was Rp583.741 trillion, with an NPL ratio of 3.35 percent.
In terms of loan usage, most MSME loans are allocated for working capital, amounting to Rp428.877 trillion, while only a smaller portion, Rp154.982 trillion, is used for investment.
When asked about BI’s efforts to lower MSME loan interest rates, Eni stated that BI does not regulate interest rates. Instead, banks determine rates based on various influencing factors.
The micro basic lending rate (SBDK), which all banks are required to disclose, serves as a reference for borrowers in selecting banks that offer the lowest interest rates. The SBDK also functions as a tool for banking transparency by revealing interest rate structures.
MSME Loan Quotas
BI has mandated that banks allocate at least 20 percent of their total credit portfolio to MSMEs by 2018. For this year, banks are only required to provide credit to MSMEs without a set percentage. By 2015, however, the allocation will be regulated at a minimum of 5 percent of total lending.
“We hope that all banks will contribute to improving MSME access to banking services,” said Eni.
BI expects that not only state-owned banks but also private banks will play a role in MSME lending.
Separately, Bank Mandiri’s Director of Commercial & Business Banking, Sunarso, stated that Bank Mandiri’s MSME loan share was around 9.82 percent as of June 2013. The total MSME loans disbursed by Bank Mandiri amounted to Rp60.16 trillion, compared to the national total of Rp612 trillion.
According to Sunarso, high interest rates on MSME loans need to be monitored. However, Bank Mandiri focuses on clusters or business groups that are less sensitive to interest rate increases.
Meanwhile, BRI disbursed Rp286.8 trillion in MSME loans as of June 2013. MSME loans dominate 80 percent of BRI’s total loan portfolio, which reached Rp391.8 trillion.
BRI Corporate Secretary Muhamad Ali stated that BRI’s extensive network of 9,300 branches supports its MSME loan distribution.
(Source: Harian Kompas, October 7, 2013)