Bank Indonesia [BI] had released a manual for branchless banking to be
used in a pilot project from May to November 2013. The release of that manual
was delayed for one month; it was originally planned to be released in March
2013.
The guideline for Polot project of the limited Banking Payment System
through Financial Service Units [UPLK] regulated all activities of banks and
telecommunication companies. Branchless banking were categorized into bank-led,
telco-led and hybrid.
BI made it possible for the 3 categories to operate in the try out
period. In case of hybrid, the execution was supported by stronger synergy
between bank and telco. The tryout was carried out the limited way in 8
provinces chosen by the bank.
The 8 provinces were North Sumatra, South Sumatra, West Java, Central
Java, East Java, Bali, East Kalimantan, and South Sulawesi, while choosing of
location by each bank was 2 at the most in each province and for each province
not more than 3 districts.
UPKL or popularly known as banking agent must be registered at the
partner-bank and included in BI data. Therefore banking agents which could be
individual bodies or business units, report to their partner banks, while banks
report to BI.
However, banking agents were in fact side business, so the permitted
banks were banks who had main business at least for 2 years. Therefore over the
tryout period banks were permitted render deposit services ant banking agent.
However such services were only allowed to be exercised by bank personnel who
would regularly visit their partner agents.
Such deposit procedure was rated as to risky, so in the process of trial
and error agents were only permitted to serve payment only. The tryout period
was also a way for BI to firstly judge which agents was qualified.
By recent communication and interaction it was disclosed that there were
already some banks who were interested in becoming branchless banks. In this
case the banks must apply for permit within the ban business plan [RBB] which
could be revised by mid year this year.
To quote the tryout manual of branchless banking, it was written that
were there would be no sanction imposed on during the tryout period. However,
BI could stop the tryout project before the time limit if banks and telco were
rated as not meeting some requirements in the manual, or in case of certain
circumstances which according to judgment of the Central Bank might increase
bank’s and telko’s risk or might disadvantage the public. In regard to this
tryout program, bank and telko were obliged to fulfill duties to customers and
related parties.
To participate in the branchless
banking tryout program, bank and telecommunication companies most meet certain
requirements either on the financial side, institutional or administrative, or
infra-structure readiness. On the management side there were some risk
requirements to comply to. For the bank among others active controlling by the
board of commissioner and directors and working units of other related
management team, policy and procedure adequacy, complete identification
process, measuring, monitoring, risk handling risk managements information
system, and internal controlling system.
As with telecommunication companies, risk managements must encompass the
capability to undertake e-money mechanism to run the run-to-settle in case of
payment failure on the issuer side, to apply proven technology, and application
of risk-mitigation originating from intermediary financial service unit [UPLK]
The products applicable in this tryout project were e-money for
telecommunication companies. Meanwhile in case of banks the products were among
others administration free savings products with interest, also e-banking activities
and micro-credit channeling.
BI felt sure that the people could have banking asset at extremely low
cost through branchless banking services. Similarly the investment spent by
banks would be less expensive rather than opening a branch office.
To illustrate, if a customers living in a certain village wished to
visit a bank he had to use public transportation at the cost of Rp5, 000 but
with branchless banking he only had to spend Rp1, 000 or even free if
communicating by SMS.
Before and throughout the tryout banks and
telco companies were advised to educate banking agents or customers. The
service, which was something new must be fully understood by the public. It was
not enough just to distribute brochures, but education must be intensive so the
public and agents could fully understand their obligations.
Admittedly branchless banking was related to people’s mindset and
behavior. So far many Indonesians, especially those who were unbendable felt
they never had contacted any bank until they physically visit the bank.
Therefore in was necessary to convince them that technology could make banking
very practical. Effective education was the power of repetition so banks and
telkos must be persistent in educating the public whereby to implant to concept
of branchless banking in people’s minds.
Not less important was that BI was highly expectant than banks and telko
would observe the consumer protection aspect in the application of branchless
banking tryout process. Soon the success of this tryout plan would be expanded
and nationalized through massive kick of the final objective of access to
banking industry could be fulfilled. This was supportive to the aim of
financial inclusion which had been publicized for the past 3 years by the
government and BI.
If people’s banking literacy had increased, the intermediary function by
banks could be enhanced because fund raising would be more aggressive and so
was credit pipelining. Eventually the role of banks in economy would be evenly
distributed as access to banking an real sector activities would be widespread,
not just concentrated in over banked areas.
With branchless banking, isolated regions
classified as under banked regions could be energized with banking activities
at this point, economic growth would be wide spread and be evenly
distributed.(SS)
Business News - May 10, 2013
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