Perum Jamkrindo anticipates a surge in claims in line with the increasing growth of KUR credit in banking.
Jakarta | The growth of People's Business Credit (KUR) continues to rise. As of June 2, 2016, KUR disbursement had reached Rp. 46.73 trillion. This amount is equivalent to 46.7% of the year-end target of Rp. 100 trillion.
According to data from the Ministry of Cooperatives and Small and Medium Enterprises (Kemenkop UKM), the breakdown of KUR disbursement is as follows: Micro KUR has reached 42.82% or Rp. 30.4 trillion, Retail KUR has reached 63.91% or Rp. 16.29 trillion, and KUR for Indonesian Migrant Workers (TKI) has only reached 1% or Rp. 34.9 billion.
Deputy for Financing of the Ministry of Cooperatives and SMEs, Braman Setyo, stated that the KUR credit program is expected to help achieve banking credit growth targets by the end of the year. As of April 2016, banking credit growth had only reached 7.7% of the 2016 year-end target of 12%-14%. "It is hoped that KUR can help boost banking credit growth," said Braman in Jakarta on Monday (07/06/2016).
For reference, the target for KUR disbursement by the end of the year is Rp. 100 – Rp. 120 trillion, equivalent to 13.5% of the total MSME credit in the banking industry in 2016.
Among the seven banks currently distributing KUR, BPD NTT has exceeded its target with Rp. 9 billion. Meanwhile, PT Bank Rakyat Indonesia Tbk has been an aggressive KUR distributor, with a realization of 51.95% or Rp. 35.06 trillion as of June 3, 2016.
According to Muhammad Irfan, Director of MSME at BRI, although KUR’s contribution has not yet reached 10% of the target, it is expected to help increase MSME industry credit. "Indeed, compared to total banking credit, its contribution has yet to make a significant impact," Irfan admitted.
For reference, BRI has been allocated Rp. 67.5 trillion by the government to distribute as KUR, which accounts for 12.02% of BRI’s total credit.
Meanwhile, Secretary of the Ministry of Cooperatives and SMEs, Agus Muharram, stated that KUR absorption among the public and debtors has been very good, as it had already reached 40% before mid-year. "Last year, at the same time, KUR absorption was not this high," he said in Jakarta in June.
According to him, this achievement was driven by the relaxation of KUR distribution regulations. These relaxations include a reduction in KUR interest rates from 12% to 9% and the removal of collateral requirements. "Next year, the KUR interest rate is planned to be reduced further to 7%," said Agus.
"Many entrepreneurs want to take advantage of this government program. The sectors being financed have also expanded to other areas. Now, there are special KUR programs for migrant workers and export-oriented MSMEs," Agus added.
Jamkrindo on Alert
On the other hand, the aggressive disbursement of KUR by banks has also triggered an increase in the ratio of non-performing loans. This has made the Indonesian Credit Guarantee Corporation (Perum Jamkrindo), one of the KUR MSME guarantors, remain cautious. Understandably, credit guarantee claims may increase in line with the projected rise in bad loans in the banking sector.
Rusdonodbanu, Director of Investment and Finance at Jamkrindo, stated that there are two credit segments that could increase Jamkrindo’s claims: micro, small, and medium enterprise (MSME) loans and People's Business Credit (KUR).
One factor driving the increase in claims is that some banks are no longer KUR distributors. As a result, uncollected bad loans are being claimed from Jamkrindo.
Additionally, the non-performing loan ratio for commercial corporate credit is expected to rise this year. This could push Jamkrindo’s claims this year to Rp. 1.25 trillion, an increase of 36.3% from last year’s Rp. 917 billion.
As of May 2016, Rusdonodbanu reported that Jamkrindo’s claims remained stable. "As of May, our claims stood at Rp. 324.1 billion, lower than May last year’s Rp. 328.3 billion," he said. The majority of claim expenses came from KUR, accounting for 74%, while the remaining 26% came from non-KUR guarantees. (various sources)