Government Cracks Down on Banks Requiring Collateral for Small KUR Loans

Regulatory Compliance Enforcement

The Indonesian government has taken a firm stance against banks that continue to demand collateral from borrowers seeking Kredit Usaha Rakyat (KUR) loans below Rp100 million. The Ministry of Cooperatives and Small and Medium Enterprises (SMEs) has emphasized that such practices are in violation of existing regulations governing KUR programs.

Monitoring and Penalty Implementation

Vice Minister Helvi Yuni Moraza stated that the government routinely monitors and evaluates the distribution of KUR. The ministry is prepared to impose penalties on banks that fail to comply with the regulations. The government has observed that some banks still require collateral from borrowers despite the rules prohibiting such practices.

Challenges in KUR Distribution

The distribution of KUR to micro, small, and medium enterprises (UMKM) has faced challenges from both the banking and borrower sides. While some UMKM lack readiness, there are instances where banks are reluctant to provide KUR to eligible borrowers. The government aims to address these issues through stricter oversight and support for both lenders and borrowers.

Supporting Small Business Growth

The government's enforcement of KUR regulations is part of a broader effort to support the growth of small businesses and ensure that subsidized credit programs achieve their intended purpose. By preventing banks from requiring collateral for smaller loans, the government aims to make credit more accessible to UMKM, thereby promoting economic development at the grassroots level.