Menkop and UKM Minister Syarif Hasan has urged the banks that disburse People’s Business Credit (KUR) not to manipulate the mechanism by converting debt. In other words, weak entrepreneurs who have previously experienced non-performing loans should not have their debts converted into KUR debtor status. Instead, such borrowers should have their businesses evaluated, settle their existing debts, and only then be eligible to receive KUR.
"There should be no performance manipulation. For example, if there is a debtor A who has a non-performing loan because they are a weak entrepreneur, then their credit should not simply be converted to KUR. It should first be evaluated," Syarif stated at the Coordination Meeting for the Implementation of KUR in North Sulawesi Province on Saturday (25/9).
He further explained that debts arising from non-performing loans are recorded with Bank Indonesia (BI). Therefore, if any manipulation of the mechanism occurs, it will eventually be discovered.
According to Syarif, one of the KUR policies signed in March 2010—and which was implemented by banks starting in April 2010—increased the credit ceiling from Rp5 million to Rp20 million without collateral and without requiring prior verification with BI regarding the financial management conditions, particularly related to non-performing loans. In this scheme, the collateral is essentially the business itself.
In the first-year evaluation of KUR absorption for 2010, the overall budget was reduced from Rp20 trillion to Rp18 trillion, with the Rp2 trillion reduction allocated to Askrindo and Jamkrindo as guarantors for KUR disbursement.
"Nevertheless, the lower target remains at Rp13.1 trillion, while the upper target is still Rp18 trillion," he noted.
Given these budget conditions, Syarif added that there is a need to accelerate the disbursement process, especially considering that the uptake of the KL R budget has been less than encouraging.
"The Ministry of Cooperatives and SMEs is trying to implement relaxations to speed up KUR absorption. Besides the credit ceiling, this also includes setting a maximum interest rate—14 percent for KM and 22 percent for micro credits. The rationale behind this budget determination is that the cost of the funds disbursed is relatively low.
"Lastly, the government’s policy on providing micro KUR is no longer restricted to just one bank (BRI); now, all government banks and Regional Development Banks (BPD) are allowed to disburse KUR," he explained.
(source: internet)