International Finance Development








About IFD












Projects > Indonesia_May-Jun08


The purpose of this study for GTZ-ProFI (Promotion of small Financial Institutions) was to assess the current efficiency and outreach of the People’s Credit Banks in Indonesia (Bank Perkreditan Rakyat – BPR) and its correlation with their level of interest rates.

As a basis for the study a questionnaire was developed requesting from the BPRs amongst other things to slice their loan portfolio into their internal product types and providing for each of these the outstanding loan volume, the number of loans as well as the typical interest rate and term. To calculate a blended funding rate the questionnaire also asked for their average funding rates on non-bank third party savings and term deposits as well as bank loans. Beyond this the BPRs reported on their number of loan officers and supervisors including their respective average salaries. Estimations on the number of households in the areas served were performed, too.

The data was requested from 60 BPRs of different size in three provinces with different conditions regarding the financial market and the standard of living: West Sumatera, Yogyakarta and Nusa Tengarra Barat (NTB).

On-site interviews took place at twelve of these BPRs.

The data together with the available information in the reports for Bank Indonesia (BI), i.e. balance sheet and profit and loss statement allowed

  1. determining indicators for efficiency, productivity and outreach as well as some preliminary benchmarks indicating a good performance
  2. comparing the BPRs amongst each other
  3. calculations of first rough profit margins per loan product and the total estimated income over the last and next period


Overall it was found that a few banks - outside of NTB - do already quite well in terms of efficiency and productivity but that that there is room for further improvement and a large potential for outreach, i.e. expansion.

Suggestions of ways how the observed issues could be improved by the BPRs themselves, through an improvement of the supervisory system as well as in terms of regulations are described in the working paper ProFI WPS WP 02/2008.

  Director of BPR Cincin in West Sumatera at his desk.

Management of BPR Nusamba and

GTZ-ProFI in Yogyakarta.

BPR Ampenan on the iland Lombok in NTB is located next to the biggest market in this area.

Two very successful clients of a BPR in Lombok:

Repair shop for motor bikes: Over many years all the necessary machinery was financed with micro and later on small sized loans. The well functioning business allows paying back the loans thereby still leaving an appropriate net income.

Being a master of her small trade with bamboo: Processing the bamboo tubes into long stripes allows producing mats that can either be rolled up to be sold directly or further processed into walls, mattress and other things.