National Policy and Strategy for Microfinance Development

The National Policy and Strategy for Microfinance Development in Indonesia aims to create an enabling environment, which will allow existing microfinance institutions (MFIs) to expand their services and new MFIs to fill the gap of demand and supply, especially in rural areas. The document is divided into the following sections:

• Its vision has at its core the sustainable access to quality financial services by every household in every village on every island all over the Indonesian archipelago;
• Its objectives are to put in place a financial system that consists of:
  • An enabling legal framework;
  • Institutions that issue prudential regulation and supervise its implementation;
  • Institutions that provide technical support and assistance;
  • Institutions that provide financial services to MFIs.
• Its policy elements describe:
  • Re-orientation of the role of the Government;
  • A conducive environment for viable microfinance;
  • Improved prudential regulation and more effective supervision;
  • Institutional development and capacity building.

The Policy sets out the key activities that various government institutions at national, regional and district levels will perform together with the Central Bank to:

• Gradually phase out government subsidies;
• Set up a conducive legal and regulatory framework for MFIs;
• Ease opening of branch offices, especially in rural areas;
• Establish a comprehensive database for cooperatives and establish a rating system for them;
• Promote microfinance banks, microfinance cooperatives and non-bank non-cooperatives (NBNC) MFIs;
• Set up other promotional activities for microfinance.