Micro Credit: Case of Bank Rakyat Indonesia


Code : SEP0002

Year :

Industry : Banking, Insurance and Financial Services

Region : Indonesia

Teaching Note:Not Available

Structured Assignment : Not Available

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Abstract: Bank Rakyat Indonesia(BRI) was considered one of the best micro finance institutions in the world. It became a model bank in Asia after its transformation from an ailing government-owned commercial bank into a viable self-sufficient financial intermediary. Its success revealed to the world how microcredit could help in a bank's long-term stability even in times of crises.

Even at the height of the Asian crisis, in 1998, BRI’s micro lending unit recorded a pretax profit of $89 million, while its corporate and retail banking units posted losses of $3.4 billion. As of September 2003, it was the country’s largest micro bank. Its total outstanding loans amounted to Rupiah 45.6 trillion of which 86.25% were channelled to small and medium-sized enterprises. During this period, the bank recorded an ROE of 45.23%, almost twice the average return booked by any other bank in Indonesia.

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Pedagogical Objectives:

  • To discuss the reasons for BRI's success
  • To discuss the possibility of adopting BRI's micro financing structure as a model for other banks across the world

    Keywords :Bank Rakyat Indonesia, Investment & Banking Case Study, Banking and financial services, Micro finance, Microcredit, New Unit Desas, Simpedes, Kupedes, East Asian financial crisis, Bimas, Simaskot, Agricultural credit, Rural financing, Subsidised credit programmes, Tabanas, Indonesian banking system

    Contents :
    » Bank Rakyat Indonesia
    » Rural Financing: KUPEDES
    » Deposit mobilisation mechanism: ‘Savings as a source of funds’

    Case Introduction >>

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