Major banks in Indonesia expect loan disbursement to accelerate this year driven by a rising demand in the trading and construction sectors, Erwin Rijanto, Bank Indonesia's deputy governor said on Monday (13/02). (JG Photo/ Dhana Kencana)

Finance Authority Kicks Off Branchless Banking Program for Rural Areas


MARCH 27, 2015

Jakarta. The Financial Services Authority, known as OJK, on Friday launched its branchless banking service as part of the government’s efforts to attract more customers, especially in rural areas.

The branchless banking program uses individual agents equipped with mobile devices, providing services to customers who have limited or no access to brick-and-mortar banking institutions, particularly those living in remote villages.

OJK shortlisted Bank Rakyat Indonesia, Bank Mandiri, Bank Central Asia and Bank Tabungan Pensiunan Nasional (BTPN) for the initiative this year, out of 17 banks that requested a permit.

“Branchless banking will help providing basic financial services for people who don’t have access to banks,” Muliaman. Agents will aid customers in managing finances through mobile banking, saving them the hassle and expenses of having to travel to a bank branch.

Services on offer include savings, loans for micro businesses and insurance.

“The program aims is to boost financial access to small villages. I am sure it will also be beneficial in eradicating loan sharking,” Muliaman said in February.

The service, he added, does not have a minimum requirement for bank deposits; nor does it include administration, monthly or deposit fees.

Savings still earn interest and is guaranteed by the Deposit Insurance Corporation (IDIC).

BRI initiated its launch on Friday in Jayapura, Papua, while Bank Mandiri kicks off the service today in Gowa, South Sulawesi. BTPN will start its program in Lubuk Pakam, North Sumatra on Monday, and BCA launches its service on April 6 in Grobogan, Central Java.

The banks plan to recruit more than 128,000 agents this year, Muliaman said.

Branchless banking program follows the footpath of M-Pesa, a similar initiative in Kenya, which now accounts for the majority of transactions in the country.

The government hopes to replicate M-Pesa’s success, as it seeks to bring 50 million Indonesians into the banking sector.

RI corporate secretary Budi Satria  said the bank is upbeat about he program’s potential. “The investment cost is low, we can reach out to potential customers in areas that are difficult to access and it is a business incubation that would bring a lot of advantages,” he said.

Investment includes $300 for each electronic data capture [EDC] device and training for agents at BRI main office.

GlobeAsia, Investor Daily