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Saving and improving lives in the world’s toughest places.Saving and improving lives in the world’s toughest places.
The Role of Rural Banks in Disaster Preparedness
Lesson Learned from Indonesia Liquidity Facility After Disaster (ILFAD) Program
Presented by: M Alfi Syahrin
ILFAD Program ManagerMercy Corps Indonesia
A presentation for:Third UN World Conference on Disaster Risk Reduction (WCDRR)Sendai, 13-15 March 2015
Saving and improving lives in the world’s toughest places.
INTRODUCTION TO WEST SUMATRAThe Role of Rural Banks in Disaster Preparedness
Padang Earthquake in 2009, West Sumatera• Scale: Mw 7.6 • Casualties: 1,100
fatalities; 3,000 injuries• Damage: 100,000
structures• Estimated losses: IDR
21.6 trillion (USD 2.3 billion)
Data source: Indonesian National Disaster Management Agency (BNPB)
Saving and improving lives in the world’s toughest places.
BACKGROUND: WEST SUMATERA CASE» As per Bank Indonesia’s rules and regulations, the role of
APEX Banks in Indonesia does not permit them to disburse liquidity facility for purposes other than mismatch.
» Thus, revising the regulation to “merge” ILFAD liquidity facility scheme into the APEX roles is fundamental.
» Alternatively, creating an association that is able to facilitate disaster liquidity fund service is approached.
The Role of Rural Banks in Disaster Preparedness
Saving and improving lives in the world’s toughest places.
THE ESTABLISHMENT PROCESSThe Role of Rural Banks in Disaster Preparedness
Meetings with PERBARINDO (Rural Banks Association), MFIs and Bank Nagari as an APEX institution in West Sumatera.
Bank Nagari suggested ILFAD and PERBARINDO to discuss the matter with OJK (Financial Service Authority) to help revise the *regulation.
Idea to form a sovereign institution as an alternative solution for the realization of disaster liquidity account among MFIs.
20 rural banks involved in ILFAD program signed a commitment to be part of ABSIGAB and contribute on all expenses to be incurred by forming the association.
Saving and improving lives in the world’s toughest places.
ILFAD-ABSIGAB MODELThe Role of Rural Banks in Disaster Preparedness
Mercy Corps Indonesia
APEX Bank MOU
Membership fee
Sav
ings
Acc
ount
Esc
row
RuralBank
Rural Bank
RuralBank
ABSIGAB
Capacity
Building
Liqu
idity
Fac
ility
D
epos
it P
lace
men
t
Others fundingNGO, Gov’t, etc.
Deposit Placement
Campaign, Technical support
Saving and improving lives in the world’s toughest places.
DISASTER LIQUIDITY FUND» Membership fee:o IDR 500,000 ~ $50 (membership premium)o IDR 250,000 ~ $25/month within 1 year (contribution)
» Interest rate and payment term:o Deposit placement (within 12 months) of 1% of their third-
party funds in return for 10% draw down capability in the event of disaster.
» Standard Operation Procedure o DRR related actions in MFIs
The Role of Rural Banks in Disaster Preparedness
Saving and improving lives in the world’s toughest places.Saving and improving lives in the world’s toughest places.
M Alfi SyahrinILFAD Program ManagerMercy Corps Indonesia
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Thank You!
