JAKARTA – Bank Indonesia (BI) has urged the banking industry to ease access to People’s Business Credit (KUR) for farmers in rural areas.
"The main issue is usually the difficulty in providing collateral or guarantees for loan applications," said Deputy Governor Budi Rochadi on Thursday (10/2).
However, he noted that the 12% annual interest rate is not the primary concern for farmers.
According to BI’s findings, some farmers still borrow from loan sharks at weekly interest rates of 3.5% despite the lack of collateral requirements.
Currently, the Non-Performing Loan (NPL) rate for KUR in the agricultural sector is relatively low, at around 1.8% per year. However, the demand for agricultural loans remains small.
Budi stated that BI continues to communicate with regional Bank Indonesia offices (KBI) and local banks to find solutions to improve credit access for farmers.
Meanwhile, Wimboh Santoso, Director of BI’s Banking Research and Regulation Directorate, reported that as of December 2010, total loans disbursed to farmers amounted to only Rp91 trillion, representing just 2%-3% of the total Rp1,756.12 trillion in bank loans.
Additionally, Sulaiman Arif Ariyanto, Director of Micro, Small, and Medium Enterprises (MSMEs) at BRI, noted that 460,000 KUR debtors have successfully transitioned to commercial loans.