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Background
Policy & Strategy
1
2
Challenges
4 Achievement
3
The Way Forward
5
01
The Level of Banking Services
Source : WEF, Redefining the Emerging Market Opportunity, 2012
5
• Percentage of poor people (rural & urban), Sep 2013 • Poor people: people who have an average expenditure/income per GDP/ month under poverty
line • Poverty line under US$25.9/GDP/month (Sept 2012)
Indonesia’s Bank Branch Distribution and
Percentage of poor people in the population
sumber: Bank Indonesia, BPS, 2012
17.7
31.5
6.4
14.3
3.7
4.5
Source: Bank Indonesia, BPS, Sept 2013
Percentage of household have saving account based on the type
of institution
Saver’s Financial Inclusion
Source: World Bank, 2011
Source: Household Balance Sheet Survey- BI, 2011
Save 48%
Don’t save 52%
74%
5%
3%
2%
5% 6% 5%
Saving only in Bank
Saving only in Non-Bank Financial Institution (NBFI)
Saving only in Non-Financial Institution (NFI)
Saving in Bank & NBFI
Saving in Bank & NFI
Saving in NBFI & NFI
Saving in Bank, NBFI, NFI
Based on World Bank Survey, 68% of Indonesian households are financially
included (do saving)
Based on Bank Indonesia’s survey, 48% of Indonesian household already saving their money. Majority of them, saved only in Bank (74%)
Percentage of household borrowing based on the source of financing
Borrower’s Financial Inclusion
Source: World Bank, 2011
Source: Household Balance Sheet Survey- BI, 2011
Borrow 45%
Can’t Borrow 55%
23%
17%
30%
6%
11%
9%
4% Borrow only from Bank
Borrow only from Non-Bank Financial Institution (NBFI)
Borrow only from Non-Financial Institution (NFI)
Borrow from Bank & NBFI
Borrow from Bank & NFI
Borrow from NBFI & NFI
Borrow from Bank, NBFI, NFI
Based on World Bank Survey, 60% of Indonesian households are financially
included (have credit)
Based on Bank Indonesia’s survey, 45% of Indonesian household have access to credit. Majority of them, borrow only from Non Financial Institution (30%)
International Concern
• Many countries have made efforts to improve access to financial services
• Financial inclusion become a concern in international fora, among others:
AFI – Maya Declaration
G20 – Global Partnership on Financial Inclusion
APEC – Financial Inclusion Initiative
OECD – International Network for Financial Education
ASEAN – Financial Inclusion Initiative
• More comprehensive way through national strategy on financial inclusion
*) source: Ros Grady, Asia-Pacific Economic Co-operation, “Accelerating Financial Inclusion in Asia and the Pacific: An Operational Dialogue on Innovative Financial Inclusion Policies”, Hawaii, 15 September, 2011
ASIA ASIA
Cambodia Indonesia Laos Nepal Pakistan Phillipines Vietnam Malaysia
AFRICA AFRICA
Benin Burkina Faso Cameroon Congo Ethiopia Gambia Liberia Madagascar
Mali Malawi Mauritania Mozambique Nigeria Rwanda Sierra Leone Senegal
South Africa Tanzania Togo Uganda Zimbabwe Côte d'Ivoire
Kyrgyz Republic Russia Uzbekistan
Egypt Jordan Syria Yemen
EUROPE & CENTRAL ASIA EUROPE & CENTRAL ASIA
MIDDLE EAST MIDDLE EAST
02
Before 1999
Developmental Role
1999 - 2013
Promotional Role 2014 - ...
New Bank Indonesia
Background Background :
• Financial market have not fully evolved yet.
• The development of priority sectors needs financial support.
• Monetary policy instruments directly affects the economy liquidity.
Legal basis:
Legal basis:
Central Bank Act No. 13/1968
Background :
Background :
• The need of financial market deepening.
• Monetary policy instrument has little impact on the economy with abundant liquidity.
Legal
No.3/2004
Legal basis:
Central Bank Act No. 23/1999 revised to Central Bank’s Act No.3/2004
Background
Background :
Role of Bank Indonesia after the establishment of OJK :
• the development of
financial access and MSMEs Framework;
• Inflation stabilization from the supply side & supporting inclusive economic growth.
Instruments :
• Technical Assistance
Instruments :
• Providing liquidity credits (financial assistance)
• Regulation of Quota on Lending to micro and small enterprises.
• Regulation for Sectoral Credit • Technical Assistance
InInstruments :
• Technical Assistance • Regulation • Strategic Partnership
1010
Regulation Before & after year 2000
InInstruments :
• Technical Assistance • Regulation • Strategic Partnership
Legal
No.3/2004
Legal basis:
Central Bank Act No. 23/1999 revised to Central Bank’s Act No.3/2004
Indonesia National Strategy for Financial Inclusion
Intermediary/
Distribution
Facility
Supporting
Regulation/
Policy
Mapping on
Financial
Information
Public
Financial
Facility
Financial Institution
(Bank & Non Bank)
• Banking mediation
• Product transparency
• TabunganKu • Digital Financial
Services • “start-up” credit • land certification
• Multilicensing • Digital Financial
Services • “Start-up” credit
• Education (for example: migrant worker, student)
• National Campaign
• Financial Identity Number (FIN)
• Credit Rating
Poverty reduction Financial System Financial System
Stability Equitable Income Equitable Income
Distribution
Productive and high purchasing power society & Easy access to financial system
Program
Strategy
Channel
6 Pillars of Financial Inclusion
Customer
Protection
Target Groups
Financial
Education
Public Financial
• Subsidy • Fiscal
Incentives • Social
welfare program
Financial
Product/Services
• Saving
• Credit
• Insurance
• Remittance
• Pension Fund
• Mutual Fund, dll
Migrant Employee Group and People in Remote Areas Migrant Employee Group and People in Remote Areas
Very Poor Very Poor Working poor/
Productive Non - Poor
• PKH • Jamkesmas • BLT • Bansos
Resilience
Intermediation
Efficiency
Government
Main
Goal
To reach economic welfare through poverty reduction, distribution income, and financial system stability in
Indonesia by creating financial system that can be accessed by whole people in this country
Financial Inclusion Programs by Bank Indonesia
Digital Financial Digital Financial Services
Mobile phone Number
Mobile phone Number
Mobile Phone Number linked with E-Money and Account Number
Financial Identity Number
Customer Data Profile
Website & Financial Inclusion Information System
Bank Led
Database Development
Agriculture Price Information
(SMS)
Financial Education
E-KTP
• Very poor, • Near poor, • Poor
G2P G2P
Electronic Money/ Electronic Money/ TabunganKu/
basic saving account
Digital Financial Services by Bank Indonesia
240 juta pengguna
telepon genggam
2 juta agen & retailer
telco
12,5 juta mobile money
diterbitkan
240 million user of mobile phone
2 million agent &
retailer of telcos
12,5 juta mobile money issued
Implementation of Digital Financial Services will be made possible and will enlarge access to financial and payment services for urban and rural areas
Partnership Program Between BI and related ministries
List of Regional Champion
Product
Lending
Model Cluster
Training/
Assistance
/Promotion
Bank &
MSME
financing
institution
MSME
Business
Development
Service Provider
Policy
Setting
MSME
Profile
Database
New
Entrepreneurs
Training
Regional Credit Guarantee Agency
MSMEs’ credit MSMEs’ credit
rating Land
Certificate
Livestock
Insurance 1414
MSME programs by Bank Indonesia
15
Sumber : Data BPS (diolah)
Distribution of BI’s Cluster Development1) for Food Security Commodity
1) Clusters are geographic concentrations of interconnected companies, specialized suppliers, service providers, and associated institutions in a particular field that are present in a nation or region. Cluster development initiatives are an important new direction in economic policy, building on earlier efforts in macroeconomic stabilization, privatization, market opening, and reducing the costs of doing business (Delgado M, Porter ME, Stern S, 2011)
16
Collaboration And Strategic Partnership
Banking Association
Related Ministries
Parliament Bank
Indonesia HQ / FSA
International
International/Domestic
Organization Regional
Government
Regional
Indonesia
Regional Office of
Bank Indonesia
Banking system
• Policy • Regulation
• Policy • Regulation • Surveillance
• Synergy of FI program • In charge to conduct FI
programs in region
•Regional Policy & Regulation • Synergy Program
•Regulation • Synergy of
Infrastructure and program
• Synergy infrastucture
•Endorsement & constitution supports
National Economic
Regional Economic
•Research, development, and training
03 ACHIEVEMENTACHIEVEMENT
1818
NUMBER OF BANK BRANCH OFFICE & ATM
The number of bank branches and ATMs increased every year.
The number of bank branches in January 2014 reached 35.931 offices, and 76,348 ATMs.
1. ACCESS DIMENSION
Source : Bank Reports, LPBR BI-OJK, January 2014 (analyzed)
Bank Office Growth Bank Office
Bank Office/Unit Percentage
19
NUMBER OF ACCOUNT (GIRO, SAVING, TIME DEPOSIT)
2. USAGE DIMENSION
Savings accounts still dominate banks’ total deposit (95.7% in January 2014).
The dominance of this savings account continues to increase gradually every year (94.4% in 2010 to 95.7% in January 2014).
Number of Account (Giro, Saving, & Time Deposit)
Saving Time Deposit
March 2013 June 2013 December
2013
January
2013
September
2013
2020 Source: TabunganKu Report from 74 Bank, February 2014
In January 2014, the number of TabunganKu (as basic saving account) reached 9.2 million accounts. This increases more than 1 million since December 2013.
2. USAGE DIMENSION
1,138,452
2,177,230 3,635,619
8,127,031
9,222,191
933,945 1,128,241 1,084,226 936,283
890,094
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
The growth of The growth of TabunganKu’sTabunganKu’s Account Account and The and The average balanceaverage balance
Number of Account
Average Balance
Dec'10 Dec'11 Dec'12 Dec'13 Jan'14
2121
Source: Monitoring report, Bank Indonesia, Dec 2013
From the pilot project of digital financial services (previously called Branchless Banking) we learned a very positive responses from society in the rural areas in term of financial and payment services. During the pilot project the frequency of transaction through agent banking increased significantly. Hence, BI prepared to launch regulation to accomodate society needs.
2. USAGE DIMENSION
The graphics display significant increases of financial and payment transaction digital financial services through agent. Its also shows that the frequent transaction through
agent is cash deposit and followed by payment transaction.
4% 23%
51% 60% 67%
47% 45%
6%
6%
6%
10% 8%
10% 9%
30%
50%
37% 19% 13%
9% 7%
60%
21% 6% 11% 12%
35% 39%
0%
20%
40%
60%
80%
100%
May'13 June'13 July'13 Aug'13 Sept'13 Oct'13 Nov'13
Precentage of Financial and Payment Transaction's Frequency
Cash deposit Withdrawl Transfer Payment
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
May'13 June'13 July'13 Aug'13 Sept'13 Oct'13 Nov'13
Fre
qu
ency
Frequency of Financial & Payment Services
Banks’ MSME outstanding loan in
December 2013 reached Rp608,8
trillion. Most of the credits was
disbursed to the middle enterprises
(49,9%).
2222
MSME outstanding loan based on Region
Source : Bank Reports, January 2014
20,7%
57.2%
7,2% 7,4%
2,3%
5,0%
Based on Region, MSME credit disbursement are
still focus in Java and Bali (62,0%)
MSME Credit GrowthMSME Credit Growth
Middle-sized Enterprises
Micro-sized Enterprises
MSME Credit Share (rhs)
Small-sized Enterprises
Growth MSME Credit –yoy (rhs)
Currently Indonesia is developing financial inclusion index (national and regional), which content usage
and access dimension based on international theory or practices.
04
• Demographic and geographic condition of Indonesia are the main challenges for financial inclusion program.
• Sharing role on some financial inclusion programs among institutions need collaboration and coordination effort effectively and efficiently.
• High level of financial illiteracy caused people hard to accept the new technology and innovation of financial services.
• Change the people way of life from traditional view to use formal financial services and its products.
05
1 1
2 2
3 3
The importance of improving financial literacy that can increase financial capability through financial
The importance of improving financial literacy that can increase financial capability and assist the effectiveness of financial inclusion through financial education.
The importance of innovative delivery channel and new technology in order the
The importance of innovative delivery channel and new technology in order to increase access and to broaden the outreach financial services for the unbanked people
The importance of a strong collaboration and coordination among the parties efficiency and improving Digital
The importance of a strong collaboration and coordination among the parties involved to achieve synergy and avoiding redundancy for efficiency and effectiveness, ie Education program, implementing and improving Digital Financial Services
In order to improve access to finance services, particularly for the unbanked people, Indonesia recognising: In order to improve access to finance services, particularly for the unbanked people, Indonesia recognising:
The
The importance of social-reenginering to change people way of life.
4 4