BPD and BPR Collaboration Can Develop Micro Markets with Strict Risk Mitigation

JAKARTA - Chairman of the Association of Regional Development Banks (Asbanda) who is also President Director of Bank Jakarta Agus H Widodo assessed that collaboration between Regional Development Banks (BPD) with People's Economic Banks (BPR) and Sharia Banks (BPRS) has excellent business potential.

However, Agus emphasized that this cooperation must be placed in the right structure and accompanied by strict risk mitigation.

"But the important thing is that we put it in the right structure. If compared to BPD or BPRNS, if compared to BPR or BPRNS, it has relatively good resources. BPR or BPRS has a closeness to the micro market," said Agus in a press release, Wednesday, August 5.

Agus explained that BPR and BPRS have advantages in terms of access to services and strong proximity to the micro market segment, an area that is relatively difficult to reach directly by BPD.

The advantages of each of these regional financial institutions are considered to be complementary if optimally synergized.

The forms of collaboration that can be built between BPD and BPR/BPRS include digital models, content provision, and the use of distribution channels (channels).

However, Agus gave a critical note that the form of cooperation should not lead to moral hazard in the form of inter-institutional credit risk transfer.

"But more importantly, in my opinion, don't let it shift the risk from one institution to another. Why? Because this, the form of collaboration or openness can actually be in the form of digital models, content, channels, that's it," said Agus.

In the concept of regional development, understanding the profile and track record of borrowers is considered very vital so that credit risk can be measured accurately.

Therefore, transparency and mature risk mitigation are absolute requirements so that cooperation between BPD and BPR/BPRS can run sustainably and benefit both parties.

"Well, in this concept, we must know and understand the development of the region other than the borrower. So that the risk cannot be measured well. So in principle, this cooperation is very good for both parties," said Agus.