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KUR Guarantee Program A Government Credit Guarantee Program to Boost the Economy. Presented by: Jamkrindo. Background of KUR Guarantee Program. The Legal Backgrounds of KUR Guarantee Program. Presidential Decree of Policy of Real Sector Development Acceleration and MSMEs Empowerment.
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KUR Guarantee ProgramA Government Credit Guarantee Program to Boost the Economy Presented by: Jamkrindo
The Legal Backgrounds of KUR Guarantee Program Presidential Decree of Policy of Real Sector Development Acceleration and MSMEs Empowerment MoU among stakeholders: 9 related ministries/ department, credit guarantee companies, and 6 banks Regulation of the Ministry of Economic Coordination about SOP of Implementa-tion KUR Legal Background Regulation of the Ministry of Finance for KUR Credit Guarantee Facility KUR Credit Guarantee Agreement between the Indonesian Government and Jamkrindo KUR Credit Guarantee Agreement between each designated bank and Jamkrindo
The Client of KUR Guarantee Program Medium Enterprise • an independent productive entity which owned by personal or company and not owned as subsidiary company or branch office with the net worth of: IDR 500 million < net worth ≤ IDR 10 billion not included land and building for business; or • with the annual income of IDR 2.5 billion < annual income ≤ IDR 50 billion.
certificate of credit guarantee • creditworthiness analysis • Micro Enteriprises • Small Enterprises • Medium Enterprises Scheme of KUR Guarantee Program >> Direct Lending Bank Client Jamkrindo Credit guarantee agreement Credit agreement
Dec 31, 08 Apr 30, 09 Number of Client: 184,125 Number of Client: 215,997 KUR Guarantee Portfolio of Jamkrindo Number of Employee: 280,209 Number of Employee: 324,158
Method of KUR Guarantee Approval • The bank perform the analysis of the credit and it has to comply with the standard of the credit worthiness in the bank itself • The applications of KUR credit guarantee to Jamkrindo are proposed by the banks on behalf of the MSMEs, and it is approved automatically
Method of KUR Guarantee Approval • At the beginning of the program, both Jamkrindo and bank are agreed on some terms and conditions that should be met by the prospective MSMEs to get both the KUR credit from the bank as well as the KUR credit guarantee from Jamkrindo. • The bank perform the analysis of the credit and it has to comply with the standard of the credit worthiness in the bank itself. • The applications of KUR credit guarantee to Jamkrindo are proposed by the banks on behalf of the MSMEs, and it is approved automatically.
Method of KUR Guarantee Monitoring • Indirect monitoring (on desk monitoring) : Jamkrindo is updating the credit performance based on the credit report from the bank. • Direct monitoring (on site monitoring), Jamkrindo itself or together with the bank are performing on the spot visit to the location to supervise the business of the MSMEs.
Method of KUR Guarantee Claim & Subrogation • The bank is allowed to propose the claim application if it meets condition as follows: • The client is not able to fulfill the credit settlement at the end of the credit period; • The credit is categorized as Non Performing Loan based on the criteria of the Central Bank of Indonesia; • The business of the client is insolvent • Calculation of the amount of the claim of KUR Credit Guarantee: • Claim Payment = 70% x (outstanding credit + the late charged)
The Challenges of KUR Guarantee Program • Because the conditional automatic approval, Jamkrindo does not know the MSMEs and their character. The credit guarantee agreement between Jamkrindo and the bank that accommodated all the requirements related to the eligibility of the MSMEs and their character is expected to be the tool to minimize the credit risk of KUR in the future. • Jamkrindo could not directly contact the MSMEs to learn their business. To monitor the MSMEs’ credit and business, Jamkrindo requires the bank to provide some credit report and business progress in periodical basis. • The government develops the KUR scheme only for new debtors, in order to provide more un-bankable MSMEs to accessing financing and increasing employment. While most of the new debtors are such new entrepreneurs, then their businesses are perceived as relatively high risk. • One of the key success factors of KUR credit program is the increasing number of employment. To achieve this objective, there are several things to be supported to the MSMEs, including the assistance from the bank. Unfortunately, to provide such assistance is meaning a higher credit cost.
KUR Guarantee Program to Boost the Indonesian Economy • The scheme of KUR Guarantee Program has an impact on the economic value added. By using the scheme, there are many MSMEs are taking benefit from the loan to develop the business and the real sector. KUR Guarantee Program could increase of the business yield, and at the same time the Indonesian Gross Domestic Product (GDP) will be growing up too. • The increasing business of the MSMEs has direct impact on the decreasing unemployment because there is new jobs creation. Reducing the unemployment means that there is improvement on the people welfare. As a result, KUR Guarantee Program does not only boost the national economy, but also on the welfare distribution. • The development of KUR credit guarantee is an appropriate policy to boost the Indonesian economy. • Indonesian Government has very great concerns on the KUR credit guarantee program and the government ascertains that the application of the program is appropriate to the goal of the program by performing an auditing to the related institution. • Facing some challenges regarding the KUR program, then The Government and the stakeholders should perform some supporting in order to convince that KUR Guarantee Program will always improve in the next period.
