Bank Indonesia To Issue Rating for Small Enterprises Debtors

Bank Indonesia will rate debtors who will take a loan for small to medium enterprises. The rating establishes the risk profile of each debtor, to track and reduce non-performing loans.

Muliaman D. Hadad, Deputy Governor of Bank Indonesia, said the rating for small to medium business sectors is part of the financial inclusion plan, and will be applied by the central bank in 2012. Financial inclusion is one of the 23 policy packages of the central bank released in December 2010. Bank Indonesia launches a national financial inclusion strategy program and drafts a frame of reference containing strategic steps to widen people’s access, whether unfinanced persons or unbanked persons.

To create the rating, Bank Indonesia will cooperate with some rating institutions, like domestic institutions as the PT Pemeringkat Efek Indonesia (Pefindo), or foreign institutions as the Moody’s Investor Service.

Ronald T. Andi Kasim, President Director of Pefindo, admitted that the cooperation plans with the central bank. Pefindo will have a workshop on this with the Association of National Private Commercial Banks, The Indonesian Institute of Accountants, Bank Indonesia, and other parties.

The preparations will be finished wihtin the year. The rating scheme may be implemented in 2012, and will begin with companies. “Initial data is from the banks reveal that companies are the debtors for small to middle business loan in banks,” said Ronald.

The rating for small to medium enterprises will use a scale of 1 to 8, where companies with a 1 rating will be entitled to loans lower than companies with a 2 rating, and so on. Companies garnering better ratings are considered to have lower risks of non-performance of their loans. Pefindo will socialize the plan to several cities in Indonesia.

Rizqullah, President Director of Bank BNI Syariah, said that the rating on debtors of small to medium enterprises is a welcome development,t hat will indicate the bank’s "health" level, particularly maintaining loans for small to medium enterprises.

Data from Bank Indonesia recorded a loan distribution for small to medium enterprises last year reaching Rp 926.78 trillion, an increase of 25.6 percent from Rp 737.38 trillion in 2009. Non-performing loans for small to medium enterprises last year were recorded at Rp 24.07 trillion, increasing 5.9 percent from Rp 22.72 trillion in 2009.