Many foreign banks have not complied with SMEs credit policy
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Bank Indonesia said many banks mainly branches of foreign banks have not complied with the call for setting aside at least 10 percent of their credits for micro, small and medium enterprises (SMEs) .
Head of Bank Indonesias division for development of SMEs Yunita Resmi Sari in Jakarta said despite facility such linkage branches of foreign banks are still in difficulty in extending credits for SMEs as asked by the central bank.
“We are aware that foreign banks have limited networks of branches and their capacity is not for SMEs,” Yunita said here on Thursday.
In 2015, the central bank asked banks to increase the portion of their credits for SMEs by 5 percentage points a year to 20 percent in 2018.
Yunita , the central bank is preparing a policy on SMEs credits from foreign bank branches.
Until August, this year, more than 100 of the 119 banks in the country already set aside 10 percent of their credits for SMEs.
Yunita said the SMEs credit market is still wide open , pointing out only 22 percent of 57.8 million units of SMEs have access to bank credits.
SMEs account only 19.7 percent or Rp827.3 trillion of the total outstanding credits of banks in the country by the end of the second quarter of 2016.
The SMEs credits grew 8.3 percent year-on-year in the second quarter of 2016.
Questions & Answers
Q.Which types of banks are failing to meet the credit allocation targets for SMEs?
Which types of banks are failing to meet the credit allocation targets for SMEs?
Bank Indonesia has identified that many banks, particularly branches of foreign banks, have not complied with the requirement to allocate at least 10 percent of their credits to micro, small, and medium enterprises.
Q.What is the primary reason foreign bank branches struggle to lend to SMEs?
What is the primary reason foreign bank branches struggle to lend to SMEs?
Yunita Resmi Sari from Bank Indonesia stated that foreign banks face difficulties due to their limited branch networks. Their operational capacity is not typically structured to cater to the specific needs of SMEs.
Q.When did the central bank initially instruct banks to increase their SME credit portions, and what was the target?
When did the central bank initially instruct banks to increase their SME credit portions, and what was the target?
In 2015, the central bank asked banks to increase their SME credit allocations by 5 percentage points annually. The aim was to reach a 20 percent allocation for SMEs by the year 2018.
Q.How many banks have met the 10 percent credit target for SMEs so far this year?
How many banks have met the 10 percent credit target for SMEs so far this year?
As of August this year, over 100 out of the 119 banks operating in the country have successfully allocated at least 10 percent of their total credits towards micro, small, and medium enterprises.
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