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7. Developing macro-prudential policy frameworks and tools
8. Harmonizing regulations on markets and inancial institutions Diferentiated nature and scope of
regulation 9. Regulation on Hedge Funds
10. Regulation on Credit Rating Agencies 11. Establishment of Supervisory Colleges
12. Reactivating securities markets with a stronger
prudential base Re-launching securitization on sound basis
F. BPD as Regional Champion BRC
The manifestation of Indonesia’s Banking Architecture requires a bigger role of BPD Regional Development
Bank. This is considering that there is still some space for BPD to develop more optimally. From the total assets
side, BPD segment has reached 9.62 from the national banking total assets, while from the sides of credits and
portion funds collection, BPD just reached 8.47 and 11.14 respectively from the total credits and funds
collected by National Banking Third Party Funds. Based on the parameter, at a glance, it can be concluded that
in terms of scale, the role of BPD will be sharper if the bank focus its operations in each region as the Agent of
Regional Development. Program on the strengthening of BPD covered in BPD
Regional Champion BRC program which is a program to motivate BPD in order to be more efective in implementing
its function as agent of development in the regions, including its implementation strategy. The formulation of
BPD blueprint to become Regional Champion is based on several considerations, among others:
1. The condition of BPD capital which is still low
compared with the average capital in banking industry that potentially weaken BPD resilience in facing
competition with other bank groups in the region. 2. BPD services that do not meet public expectations and
the low awareness of BPD Brand can cause products and services ofered by BPD less attractive and might
lead to the decrease of customers’ trust.
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3. Quality and competency of the human resources that still do not meet expectations in anticipating
market developments, and therefore cannot optimize regional economic potentials.
4. Distribution of credits to productive sectors is still relatively low and tends to provide consumption
credits to the staf of regional governments leading to an unoptimal role of BPD
in the inancing of real sector in the regions. This shall potentially result in inancing
of productive sector by other banks, making it more diicult for BPD to become the hosts in the regions.
In general, implementation of BRC program in its development is an efective media to motivate banks to
transform themselves in order to be more competitive and have bigger role in the society and in the regions.
Nevertheless, the success of BRC program will determined by the awareness and strong commitment of the
Shareholders including DPRD, Management Board of Directors and Commissioners and human resources of
BPD to transform themselves from the comfort zone to the competition.
Several Agenda to sharpen BRC program among others: 1. Agenda of BPD Capital Strengthening
The strengthening of BPD capital should become one of the main priorities given the majorities of BPD 16
out of 26 BPD have not achieved minimum target of core capital of Rp. 1 Trillion. The fulillment of core
capital can be achieved either organically or non organically. For any BPD that its core capital is near
the threshold range, organic fulillment might be possible to be reached. However, for any BPD which
core capital is quite far from the threshold, it requires a non-organic capital fertilization, i.e. additional paid-up
capital from the owner or strategic investors.
2. Agenda of Expansion of Public Financial Access
Expansion of public inancial access is one of the real deal of BPD role in serving the public needs. In many
Regional Development Banks located in provinces that have big remote areas this is more relevant.
Therefore, it requires eforts in increasing penetration
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of bank oices network. In the event penetration of bank oice networks is not possible, it is important
to consider strategic alliance of banking services with other institutions that have an extensive network. In
this context, the concept of branchless banking that promoting synergi of cooperation between BPD and
Rural Banks can be considered as one of the alternative solutions.
3. Agenda of BPD Funding Structure Strengthening
As it is known, the majority of BPD funding structure comes from the regional government PEMDA. This
might give negative implication at least from two 2 aspects, irst, there is a high dependency of BPDs to
the local PEMDA so that this thing might inluence BPD policy professionally; second, less diversiied
funding tends to increase liquidity risks due to BPD lack of suicient other funding sources in case big
fund withdrawal occurs. At this time DPK BPD are still dominated by funds
from PEMDA, where its position of September 2012 recorded 35.1 of the DPK BPD. This number is very
far from the criteria of BRC expected for BPD which is to reach 70. Therefore, eforts to increase customer
based retail are required for BPD, given retail funds are source of funding which are relatively stable and
diversiied.
4. Agenda of BPD Quality Enhancement
Distribution of BPD Credits is still dominated by credits for consumption needs, in which the range of
BPD productive credits was at the level of 33.4 in September 2012 position. This percentage naturally
causes a question mark toward the role of BPD in supporting the regional economy. Therefore, eforts to
increase productive credits through a comprehensive business plan are required. In the event of constraints
due to inadequate analysts in BPD to increase productive credit portion as conveyed by several
BPD in various forums, it needs to be followed-up by the process of human resources fulillment either
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internally or through external recruitment. In this relation, synergy of cooperation between BPD and
Rural Bank should be pursued in the establishment of APEX Bank and program linkage, as well as BPD
supports in regional leading sector.
5. Agenda of BPD Governance Implementation Enhancement
The implementation of good corporate governance is the main key for the eforts of BPD achievements as the
leading bank in the regions. Therefore, enhancement of BPD governance implementation should become
the priority, which implementation among others is to be conducted at the time of nomination and
appointment of the Board of Commissioners and Directors of BPD.
6. Agenda of BPD Role Enhancement in Creative Industry Development
As it is known, creative industry sector is the new economic power capable to absorb many labors and
give added values to the country economic growth. Besides, the Indonesian as a nation that has cultural
diversities certainly has a great potential in developing creative industry. The potencies of creative industry
in each region certainly needs to be utilized optimally by BPD which naturally understand the characteristic
of their respective region better, including aspects of culture and potential of their creative industries.
Eforts in improving BPD role has been initiated through the signing of Memo of Understanding i between
Asbanda Association of Regional Development Bank and Ministry of Tourism and Creative Industry; ii between
Asbanda and Perbarindo Association of People Credit Bank, in the eforts to expand access of BPD to the society
and supports of BPD to creative industry sector as the new economic power that is capable to absorb many
labors and provides added values to the nation economic growth.
