Kemenkop UKM Will Form A Credit Scoring Consortium, Members Of The Coordinating Minister For The Economy To The Minister Of Finance

JAKARTA - The Ministry of Cooperatives and SMEs (Kemenkop UKM) will form a consortium of Innovative Credit Scoring (ICS) assessors with the Coordinating Ministry for Economic Affairs (Kemenko Perekonomian), Ministry of Finance (Kemenkeu) and the Financial Services Authority (OJK).

In general, credit scoring is an assessment system of a person's ability to pay for his loan obligations, including people's business credit (KUR). Usually credit scoring only uses conventional data, such as identity data, credit and banking bureaus.

Meanwhile, the ICS assessment system emphasizes the use of Artificial Intelligence (AI) and Machine Learning technologies to analyze the ability to pay prospective debtors dynamically and use alternative data sources.

Deputy for Micro Business at the Ministry of Cooperatives and SMEs Yulius said that this consortium will be tasked with regulating, supervising and determining the criteria for ICS that will be applied by banks.

Yulius assessed that the initiation in the formation of this consortium had been discussed by the Minister of SME Cooperatives Teten Masduki together with Finance Minister Sri Mulyani Indrawati, Coordinating Minister for the Economy Airlangga Hartarto and Chairman of the OJK Board of Commissioners Mahendra Siregar.

"We will form a consortium consisting of the Coordinating Minister for the Economy, OJK, the Minister of Finance and the Minister of Cooperatives itself as a member of the consortium," Yulius said at a press conference at his office, Thursday, September 19.

He explained that the ICS assessment method would later be proposed using alternative data dimensions such as telecommunication data, BPJS, electricity use, e-commerce transactions and others. According to Yulius, these data can be used to see their financial expenses or capabilities.

Later, Yulius assessed that the implementation of the ICS system could help the government and KUR channeling banks to attract MSMEs who could not apply for loans or KUR for certain reasons such as having no credit records or not having installments, even though they actually had the right to apply for loans.

"If at first credit scoring only used conventional data such as identity data, bureaus, credit and banking. However, the data is not enough to be used as an assessment because there are still MSMEs that are actually worthy but do not get credit," he said.

Furthermore, said Yulius, the ICS system has also been piloted on 72,004 MSME debtors. According to him, the ICS system has proven to be able to improve the assessment of the provision of bank loans to prospective debtors who are not caught with the conventional credit scoring system.

"We have piloted the project using 72,004 productive credit data, the credit approval rate has increased by 5 percent with the NPL risk level maintained at between 0.6 and 0.7," he explained.

"This means that by using (the ICS system) the data caught, the data we can use in this MSME, it has increased. However, the number of risks has not changed," added Yulius.

Previously, Coordinating Minister for SMEs Teten Masduki encouraged the Coordinating Ministry for the Economy to make policies related to the development of scoring credit innovation so that micro, small and medium enterprises (MSMEs) could access financing more easily.

Teten said policies to encourage banks to implement scoring credit.

According to him, if you still apply the old credit distribution model, MSME players are still difficult to obtain financing.

"For example, if the bank in distributing credit still uses credit history, MSMEs don't have assets, they don't have collateral. That's how there is no history of credit at the bank. Well, that's why we ask the Coordinating Minister for the Economy (Airlangga Hartarto) to immediately make a policy that KUR channeling banks must use innovative credit scoring. That's okay, please, because the government has the program," said Teten, quoted on Thursday, September 12.