Microfinance disbursement to accelerate in Indonesia with third Islamic bank for People’s Business Credit

JAKARTA – Bank Negara Indonesia (BNI) Syariah will disburse 700 billion rupiah ($47.33 million) in microfinancing to around 7,700 debtors through its 68 branches across Indonesia this year, Iwan Abdi, its networks and retail business director told Salaam Gateway.

The state-owned bank has disbursed 2.5 billion rupiah to 16 debtors since it was appointed as the third Islamic bank to disburse People’s Business Credit (KUR) microfinance on Wednesday (September 2), after BRI Syariah and Bank NTB Syariah.

KUR loans are disbursed for investment or working capital for MSMEs. The loans carry lower interest or profit rates than the commercial market, only 6% per annum compared to around 16.5%. The government subsidizes the difference of around 10.5%. As of July 30, 93.53 trillion rupiah in micro loans were extended to 2,741,383 debtors, equivalent to 53.1% of this year’s target of 198 trillion rupiah ($13.39 billion). The target was increased from 190 trillion rupiah, according to a spokesperson at the Coordinating Ministry for Economic Affairs. More than 40 banks have been appointed to disburse the funds.