JAKARTA – Micro, small, and medium enterprises (MSMEs) can rejoice. The government will ease the rules for disbursing People's Business Credit (KUR). However, banks must exercise caution, as the risk of an increase in problematic loans, or non-performing loans (NPL), is looming.
Minister of Cooperatives and SMEs Syarief Hasan stated that starting next year, MSME entrepreneurs will be able to obtain two KUR loans simultaneously. Until now, MSME entrepreneurs could only apply for one type of loan—either investment credit or working capital credit.
This policy is intended to boost MSME growth in the future. "MSME entrepreneurs not only need production equipment but also require investment financing," said Syarief yesterday.
Of course, this policy is not without risks. Problematic KUR loans may further increase, especially since the KUR NPL ratio has been relatively high. As of last August, KUR disbursements were recorded at Rp45.87 trillion with an NPL ratio of 4.2%. Some banks disbursing KUR have recorded NPL ratios exceeding 5% (see table).
Bank Mandiri economist Destry Damayanti believes that the risk of rising KUR NPL is unavoidable if KUR disbursements are increasingly boosted. This is because MSME entrepreneurs who apply for KUR generally do not have adequate collateral nor detailed and complete financial statements. "This is the reason for the high KUR NPL risk," said Destry.
Bank Rakyat Indonesia (BRI) Company Secretary Muhammad Ali stated that entrepreneurs need a relaxation of the rules for disbursing MSME KUR. However, Ali is not worried that this relaxation will increase the KUR NPL ratio. The important factor is that banks must implement proper risk management. "The proof is that BRI's KUR NPL as of August is only 1.9%," said Ali.
Similarly, Bank BNI President Director Gatot M. Suwondo believes that relaxing the KUR rules is a sound step, as it will make banks more flexible and ease the disbursement of KUR. Gatot also dismissed the notion that such relaxation will increase the KUR NPL ratio.
The government is also not overly concerned about the risk of rising NPL, with Syarief arguing that KUR NPL has so far been lower than that of commercial credit. However, Destry contends that the risk of increasing KUR NPL should be taken seriously. The government and banks need to develop a mechanism to ensure that KUR debtors commit to repaying their installments.
(Source: Harian Kontan, October 7, 2013)