FINANCING FOR CREDIT UNION DEVELOPMENT

FX Budi Widyatmoko (fxbudiw@yahoo.com)

Money

Is just a good Things that acts as a medium of exchange Can be cash, Can be intangible like amount in bank account Useful things

… but money by itself doesn't do the trick

Financing for development

The whole dicipline, art and science of managing money .

Collect money, hold, invest them Disburse money for development purposes Providing money, money flowing Contribution to educate members Use every last rupiah available as effective as

we possibly we can.

Credit union has a significant role in rise up people wealth creation and can have a significan role in SDG

Problem :There so many credit unions in Indonesia that can indicate a sustain credit union.

No sufficient provision for delinquency loan (NPL).

Poor Asset Quality indicate by percentage delinquency loan with total loan.

Poor Nett Institutional Capital

A Sustain credit union should fulfiled 86 indicators

Provision for P1 = 100 %Delinquency Loan < 5 % of Total Loan

Net Institutional Capital > 10 % of Total Asset

The Solution is like try to make a big picture of jigsaw puzzle

2 Way Approach Solution :

Reactive Approach : Proactive Approach

Reactive Approach :

1. Analize Financial Report

2. Search and Find the delinquent loans to pay their debts.

Reactive approach :

… like driving a sophisticated car by viewing rear mirror...

Proactive approach :

A SUSTAIN CREDIT UNIONA sustain Credit union

like gilded torch of Indonesian

National Monument

Quality Management System to develop credit union

Social Equity

Social equity should taking care.Becarefull with roumour, black campain or make

disapoint the key person or informal leader

Better get pain in pllanning in social equity than feel the pain of regret.

Social problem can impact to finacial problem in only couple of weeks.

Leadership

Board of Director shall demonstrate leadership and commitment by taking accountability for the effectivenes of credit union system by ensuring implementation and communicate of strategic direction, policy, objective, integration business processes and focus to member.

Planning

Credit union shall plan action to address risks and opportunity .

Credit union shall establish objectives and planning to achieve them.

(what will be done, what resources will be required, who will be responsible, when will be completed and how the results will be evaluated)

Support

Credit union shall determine and provide resources needed such as people, Infrastructure, environment for the operation of processes, monitoring and measuring resources and organizational knowledge, competence, awareness, communication and documented information.

Operation planning and control

Credit union shall plan, implement and control the processes needed to meet the requirement the provision of products and services and to implement the actions.

Credit union has to be as effectively as possible then is to tailor the finance itself specifically to the need using all those instruments.

Credit union has to match the financial instrument to its specific use.

Financial Counseling

1. The need to productive living2. Current Financial Condition3. We should know the limit of the capacity of the borrower.4. Term of payment.5. IOB payment6. Finding root cause why delinquent loan can be happened7. Reschedulling the loan

Survey fo member borrower

Capacity to repay the loan should be pinpointed with larger score than the others in analize 5 c.

Credit union basic members awareness and competency Credit union philosophy, principles and value Hard working Saving habit/living frugal Only borrow for productive activity and wealth

rising Pre membership seminar

Training,Competency and awarenessSmart spending based financial literacy , especially for woman, will also help the whealth of the family because financial literate woman will find ways to make their own kids and each other be more productive as they grow up.

Design and development of product and servicesBefore launching a new product or service should

be considered target market, interest rate minimum opening deposit, (none very low, high higher and high highest), minimum balanced requrement, atomatic roll over, withdrawal policy, promotion.

Control of externally provided products and servicesCredit union should ensure that externally

provided processes, product and service conform to the requirements.

Performance Evaluation

Credit union shall do :

Monitoring, measurement, analysis and evaluationInternal audit Management Review At periodic time.

Improvement

Credit union shall determine and select opportunities for improvement and implement any necessary action to meet member requirement and enhance member/customer satisfaction

Recomendation

Inkopdit/ CUCO Indonesia should endorse implementation of quality management system in every Puskopdit and credit union.

Access / QMS technical team to support credit union should be prepared

Puskopdit/Secondary tier credit union should have a supporting team for QMS or ACCESS implementation.