Facilitating the Expansion of Community Credit Banks

Bank Indonesia (BI) policy relating to Community Credit Banks (BPR / BBank Perkreditan Rakyat) is one of expansion of existing banks rather than simply permitting new start-up ventures. A survey of BPR by BI indicated that of 1,926 BPR throughout Indonesia 1,503 were in either Java or Bali. The survey also indicated that there were only 104 BPR providing Syariah financial services in this sector. Therefore, the purpose of this BI Regulation, No. 8/26/PBI/2006 is to encourage the opening of greater numbers of branch offices for existing BPR and strengthening the economic role of the BPR sector.

To facilitate the expansion of current BPR facilities the BI Regulation reduces the required Capital Asset Ration from 15% to 10%. Furthermore, BPR can function with just 2 members on their respective Boards of Directors and these directors need only have a minimum of 2 years experience. This can be reduced even further, to experience of a 3-month internship with the completion of the relevant certification. One of the Directors will need to hold the relevant certification prior to the end of 2006 and the remaining members of the Board will be required to hold the relevant and necessary certification before the end of 2008.