B. Gunawan, Jakarta – Believe it or not, although the monetary authority has continued to lower the interest rate, loans for the real sector have not increased. On the other hand, many banks are busy offering consumer loans to the public. They are even luring customers with all manner of offers.
Take Mega Refund, for example, a product that Bank Mega is now offering customers. This product is really attractive, as after a certain period of time the bank will refund the entire loan principal to the loan receiver.
This product is indeed not purely a banking product, tending to resemble an insurance product. Installments are needed as the premiums, and then Bank Mega pays these premiums to Mega Life, an insurance company. So, the refund of the installment principal, plus the premium, will not be borne by the bank as it is the insurance company that will invest the funds in a number of investment baskets.
"So, after a certain period of time, the customer can get back his money plus the premium," said Bank Mega's vice president of the consumer business division, Jopie Jusup.
Bankers are certainly very good at packaging their consumer loan products, and they usually find no difficulties selling their products given that consumerism runs deep in the veins of many members of the public. These people are eager to get loans for the purchase of houses, motorized vehicles, electronic goods and household appliances.
Is consumerism running high in society? The following data compiled by Bank Indonesia may help answer the question. According to the data, total consumer loans stood at Rp 58.598 trillion in 2001, and it increased to Rp 111.216 trillion the following year. In 2004, consumer loans jumped to Rp 151.081 trillion in value.
In 2005, despite the worsening macroeconomic conditions, the growth of consumer loans remained high throughout the year. The growth rate was even faster compared with the loans channeled in 2004. The growth rate for consumer loans throughout 2005 stood at 36.73 percent, with a credit position of Rp 206.691 trillion, while in 2006 the figure rose to some Rp 203 trillion.
Banks, which are highly sensitive to such developments, realize this tendency. Don't be surprised, therefore, if in 2007 many banks rely on the consumer sector as their loan targets. Indeed, the consumer banking business seems to remain the prima donna in Indonesia. The increase in fuel prices twice in 2005 did worry banking circles. However, their worries have not proven correct. In other words, the consumer banking business continues to develop well.
According to Bank Mandiri senior vice president Pardi Sudradjat, there are several reasons why the consumer banking business continues to flourish. First, national banks are still too traumatized to augment the corporate sector. The experiences that the banking circles went through during the economic crisis made them realize that the corporate sector, which looks glamorous and lucrative, can easily collapse in a very short time during a crisis.
As referred to earlier, consumerism runs deep in the veins of many Indonesians. It comes as no surprise, therefore, that the growth of the credit card business, which is one of the spearheads of consumer banking, has never slackened. The total number of credit cards issued by 21 banks now reaches 8.5 million. Meanwhile, there are about 4 million credit card holders in Indonesia. This means that every cardholder in Indonesia owns an average of two credit cards.
The jump in the use of credit cards can be seen from the fact that about 30 credit card transactions are conducted per second. The growth of credit cards has become increasingly faster, reaching about 20 to 30 percent a year. Meanwhile, the total value of credits reaches almost Rp 19 trillion a year.
Obviously, the flourishing consumer banking has led to competition in the business. Up to the end of 2006, consumer loans continued to increase, although the interest rates on consumer loans also went up. As is known, Bank Indonesia has continued to lower its BI rate, and this rate is expected to continue to go down to 8.5 percent. However, a high interest rate on loans has not discouraged customers from taking consumer loans. Loans without collateral (KTA) for individual customers, for example, have now become very popular.
As for the banks themselves, they are competing with one another to offer KTAs to the extent that sometimes they neglect the real financial capacity of customers. Although the interest rate is relatively high, many people are interested. Another reason for the great popularity of KTAs is that the loan application procedure takes only a short time, making this type of loan very helpful to those needing to get money quickly. In short, consumer loans for individual customers remain promising for banks.
The consumer sector is considered a bonanza not only for private banks but also government-owned banks. BI data say consumer loans channeled by private banks in January 2007 amounted to Rp 5.49 trillion, up from Rp 3.40 trillion in the same month last year. Meanwhile, for January 2007, consumer loans distributed by government banks stood at Rp 3.22 trillion in the first month of the year, up from Rp 2.33 trillion in the same period last year.
As the customers will use the loans for consumer purposes, the risk that they will be unable to repay their loans is bigger. That's why the interest rate on these loans is usually higher than loans given for business purposes. As the country's central bank, BI was once worried about the development of these consumer loans. In fact, however, non-performing loans (NPL) in the consumer loan sector is still relatively low, at an average of 3 to 4 percent.
That's why the tough competition among banks in distributing their consumer loans will not lessen in 2007, especially because the consumer banking business is temptingly lucrative. It has come as no surprise, then, that in its 2007 corporate budget work plan (RKAP), for example, Bank BNI, which usually channels more corporate and commercial loans, will not forget to work on consumer loans, the portion of which, according to one of the bank's directors, Achmad Baiquni, stands at 15 to 16 percent.
Meanwhile, Bank Rakyat Indonesia (BRI), which has for years been concentrating on small and middle-sized enterprises, has also been tempted by the consumer banking business. According to Sofyan Basir, president director of BRI, the bank is eying the funds of the urban community in 2007.
"We are ready to collect cheap funds from the consumers' banking. This is something new," he said as quoted in InfoBank magazine.
According to Sofyan, in the past BRI only maneuvered among rural people through its Simpedes (Rural People's Savings), for example. Today, however, BRI has begun to explore urban customers. The determination of BRI to intensify its collection of third-party funds will be realized by improving the quality of its services.
Service is indeed the main key in every type of business, not only, of course, in the consumer banking business. This means that BRI will also be ready to challenge BNI and Bank Mandiri in the consumer banking market, in addition to also challenging private banks, which are surely more aggressive.