OVERVIEW

It never rains but pours. This proverb refers to a cycle of misfortunes where disasters occur one after another, a situation which sadly seems to describe the situation of Indonesia’s underprivileged when it comes to accessing financial services.

Although not intended, banks seem to discriminate against low-income earners with their complicated administrative requirements. Credit or financing facilities, for example, will only be granted to customers who comply with the 5 C’s credit criteria, namely:  character, capacity, capital, collateral, and conditions. The application of this criteria to the underprivileged results in them having to rely on non-formal institutions that impose interest rates over prescribed-statutory levels and are generally over the roof.