Indonesian banks face difficulties disbursing micro credit

Indonesia's major banks are still facing several constraints in disbursing government-sponsored micro loans to small businesses despite high demand, the Jakarta Post quoted an executive as saying on Monday.

"Many credit applicants' businesses failed to meet criteria set by banks to make sure they could pay back the loans, " Tatang Tabroni, senior vice president for business banking at Bank Mandiri, the country's largest bank, told the daily on the weekend.

"Before providing loans, we have to make sure their businesses have good prospects for the future, meaning they will have the ability to repay their debts," he said over the telephone.

Tatang added that because of this requirement, Mandiri had not given loans to people wanting to start new businesses, but mostly to businesses that were already running.

According to the Cooperatives and Small and Medium Enterprises Ministry, in the first half of this year, Bank Mandiri had disbursed 252.7 billion rupiah ( about 28.1 million U.S. dollars) under micro credit loans to 732 debtors. However, the government had asked Mandiri to disburse at least 1.84 trillion rupiah (about 204.3 million dollars) by the end of this year.

Source:Xinhua