Indonesia has appointed Bank Rakyat Indonesia (BRI), the country’s largest state-owned lender, as the holding company for “ultramicro businesses” after it acquired two other state enterprises — PT Pegadaian, a pawnshop company, and PT Permodalan Nasional Madani (PNM), a micro-financing firm.
The new structure doesn’t change the state-ownership of Bank BRI.
The government will also continue to hold a golden share in Pegadaian and PNM to exercise control over major decisions.
“It is [aimed at] reviving economic momentum through creation of employment,” Erick Thohir, the minister of state-owned enterprises said in the statement.
The ultramicro holding structure aims to provide low-cost loan facilities with a broader reach. Thohir added that each of the three firms will complement on another in providing integrated financial services for the sustainability of ultramicro business empowerment.
The network services of BRI will eventually be complemented with Pegadaian counters and account officers of PNM Mekaar. The co-location is expected to create efficiencies in operational cost and cost of funds.
BRI CEO Sunarso added that PNM will empower unbanked customers to be more independent ultramicro entrepreneurs.
Then, the PNM customers, having increased their business capacity, will be offered ultra micro products of BRI and Pegadaian. In the final phase, customers who have grown their business can upscale to the micro-segment.
BRI stated that 45 million customers in the ultra micro-segment required more funding in 2018. Yet, only 15 million customers have reached the formal financing institutions.
“The ultra micro-ecosystem will strengthen BRI to be the most valuable banking group in Southeast Asia and champion of financial inclusion,” said Sunarso.
Bank BRI has a $32 billion market cap and is known to have the most customers in the archipelago. The bank also owns a digital bank subsidiary, Bank BRI Agro Tbk.
The bank’s investment arm BRI Ventures launched a tech venture fund, Sembrani Nusantara in 2020, and has invested in 12 portfolios, including the marketplace Bukalapak, fintech platforms PAYFAZZ and Awan Tunai, and several direct to consumer products, including Brodo and Haus!