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Bank Indonesia policy on Financial Inclusion

Bank Indonesia policy on Financial Inclusion. The 1 st International Islamic Financial Inclusion Summit 2012. Dr. Muliaman D Hadad. Outline. Facts and Figures BI Household Survey National Strategy on Financial Inclusion Bank Indonesia Initiatives on Financial Inclusion

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Bank Indonesia policy on Financial Inclusion

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  1. Bank Indonesia policy on Financial Inclusion The 1st International Islamic Financial Inclusion Summit 2012 Dr. Muliaman D Hadad

  2. Outline • Facts and Figures • BI Household Survey • National Strategy on Financial Inclusion • Bank Indonesia Initiatives on Financial Inclusion • Challanges Ahead

  3. Fact and Figures • Some key facts of Indonesia: • Population of Indonesia: 237 million • GDP per capita: USD 3,508 • Banking industry holds more than 80% of financial sector assets • 97.4% of banks accounts are less than Rp100 million (less than USD10,000) • Number of commercial banks: 120 • Number of rural banks: +1.667 • Number of cooperatives: +13.000 • Number of microfinance institutions: +8.000 Public access on financial services is relatively low that is reflected by (a) the number of loan accounts which reach only 15.96% of the population, (b) the number of insured life insurance which reach only 14.54% and (c) the number of pension fund participants which is only 1.19 %

  4. Financial Services : Comparison Source : *) WorldBank Policy Research Working Paper, April 2012 **)IMF & WorldBank, 2010

  5. ACCESS TO FINANCE IN INDONESIA 60% 13.33% 64.25% Below Poverty Line Living in Rural Area Without access to bank 99.91% 60-70% MSMEs that have not been linked to bank % MSME compare to total business unit 5

  6. Outline • Facts and Figures • BI Household Survey • National Strategy on Financial Inclusion • Bank Indonesia Initiatives on Financial Inclusion • Challanges Ahead

  7. BI HOUSEHOLD SURVEY : Saving

  8. BI HOUSEHOLD SURVEY : Saving

  9. BI HOUSEHOLD SURVEY : Credit

  10. BI HOUSEHOLD SURVEY : Credit

  11. Outline • Facts and Figures • BI Household Survey • National Strategy on Financial Inclusion • Bank Indonesia Initiatives on Financial Inclusion • Challanges Ahead

  12. National Strategy on Financial Inclusion Vision Mission

  13. Remarks : On going Programn by BI : Program will be conducted by BI : Paralel program with other institutions outside of BI Financial Inclusion Framework

  14. Strategic Target Policy and Regulation Financial Education Financial Eligibility Preparing the regulation that support financial access and eliminating the various types of barriers • The Improvement of financial literacy on: • Banking products ; • Consumer Protection; • Financial management Increasing the number of eligible/bankable person or SME’s Intermediation Distribution Channel Increasing the range of formal financial system especially to remote areas community Increasing the financial distribution channel in terms of number and quality

  15. Outline • Facts and Figures • BI Household Survey • National Strategy on Financial Inclusion • Bank Indonesia Initiatives on Financial Inclusion • Challanges Ahead

  16. Financial Education and Customer Protection Programme Financial Education and Customer Protection Programme Pillar 1 - Education Financial Education for Student & Migrant Workers • School curricula • Pilot Project in 6 provinces for elementary & junior high school • Joint workshop & expanding outreach • Financial education for migrant workers in 5 provinces • Establish local financial education team Financial Planning • Basic Saving Account with no administrative charges • TabunganKu, targetted to achieve 5 million account and Rp5 trillion by end of 2012 • Campaign of TabunganKu • Joint effort, Bank Indonesia and banking industry Financial Literacy Survey • Policy recommendation on financial education • Fine tune financial education programme

  17. Financial Mapping & Intermediation Facilitation Programme Financial Mapping & Intermediation Facilitation Programme Financial Identity Number Pillar 2 - Eligibility • Baseline and comprehensive surveys • Database of individuals’ financial track record • Integrated with national identity database Pillar 3 - Intermediation Start-up Credit • Affordable credit scheme for new entrepreneur and productive poor • Cooperation with related governmental institutions

  18. Distribution Channel and Supporting Regulation Programme Distribution Channel and Supporting Regulation Programme Pillar 4 - Distribution Branchless Banking • Expanding access into remote area • Agent banking, mobile banking, electronic banking • IT Based infrastructure Pillar 5 - Regulation National Strategy for Financial Inclusion • Guidance for implementing financial inclusion initiatives • In the process of endorsement from the President of the Republic of Indonesia

  19. Outline • Facts and Figures • BI Household Survey • National Strategy on Financial Inclusion • Bank Indonesia Initiatives on Financial Inclusion • Challenges Ahead

  20. Challenges Ahead Problems Identified Pillars Proposed Program Lack of Customer Protection Framework for MFI Customer Lower income people is categorized as unbankable since they can not fulfill bank requirement

  21. Challenges Ahead Problems Identified Pillars Proposed Program Accelerating Financial education Program Banks and MFI compete in the same segment Financial services for people in remote are

  22. ThankYou

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