Kur 100 Million Ceiling Increase Ineffective: Bank Play Safe, Debtors That's It

Illustration (Photo: Special)

JAKARTA – Head of Finance and Banking of the Central Governing Body (BPP) of the Indonesian Young Entrepreneurs Association (Hipmi) Ajib Hamdani criticized the government's policy of raising the unsecured People's Business Credit (KUR) ceiling from Rp50 million to Rp100 million.

According to him, the move does not touch the essence of financing distribution becomes more massive. Because, the decision is considered to increase the portion of credit to existing customers and not new customers.

"This I think will only provide greater financing to customers who already have credit and not to new customers," he said in a webinar held by the Indonesian Association of Economic Scholars (ISEI) Jakarta, Thursday, April 8.

Ajib added that the government's policy is also considered to provide greater space for KUR lending banks to spur credit growth without having to think about further mitigation strategies.

"So I said banks do not have to worry about finding new customers, they just increase the ceiling from for example Rp50 million to Rp70 million. So banks will tend to be comfortable and will play it safe, whereas the intent of this policy is to increase credit penetration more evenly," he said.

Furthermore, he predicted that if his view is correct then the impact of economic improvement as expected is difficult to achieve.

"It will not cause economic leverage, because all that can be credited is that person," he said.

"So the government should make rules such as incentives to be able to attract more debtors but in business it is visible," he continued.

As reported by VOI earlier, the government through coordinating minister for economic affairs Airlangga Hartarto decided to increase kur without guarantees that have been limited to Rp50 million to Rp100 million.

Not only that, Airlangga also revealed that the government plans to increase the portion of MSMEs credit from the current 18-20 percent to 30 percent of the total financing disbursed in 2024.

"Mr. President's directive related to MSME financing asks that given the greater challenge that there is a leap increase so that it is targeted more than 30 percent until 2024," he said in a virtual press conference after a limited meeting at the Jakarta Presidential Palace, Monday, April 5.

For information, kur distribution until April 5, 2021 has reached Rp63.13 trillion, or 24.9 percent of this year's target of Rp253 trillion.

Meanwhile, the realization of KUR throughout 2020 has successfully broken the target of 104 percent with a value of not less than Rp198.53 trillion.