In focus: Bank Rakyat Indonesia

Bank Rakyat Indonesia (BRI) is a holding in our Positive Impact strategy. The company specialises in the provision of financial services to micro, small and medium-sized enterprises (MSMEs).

Promoting financial inclusion in Indonesia

With a history of over 120 years, it is the oldest bank in Indonesia; it is also one the country’s largest commercial banks. BRI has developed considerable expertise in microfinancing, offering loans, insurance and savings facilities to its customers. Its focus on MSMEs enables it to reach typically underserved markets; it is therefore a key proponent of financial inclusion in the country, supporting the nation’s drive for economic prosperity.

BRI’s largest business segment is microloans. These are small loans disbursed to customers at the lower end of the income spectrum: some of these customers exist at or below the poverty line. In recent years, BRI has expanded its micro business, acquiring both Pegadaian, a pawn shop, and PNM, a microlending company in 2021. As a result, it has broadened its micro offering, entering the ‘ultra micro’ space. As the name suggests, ultra micro financing targets those businesses too small to be classified as micro. BRI, Pegadaian and PNM have collectively formed Ultra Micro Synergy (UMi). UMi aims to facilitate financial inclusion, as exemplified by its SenyuM app which allows ultra micro customers to access the services of BRI, Pegadaian and PNM anywhere and at any time.

Many of BRI’s customers reside in villages and small communities in which locals act as loan officers. This offers a dual benefit. Not only is the bank furthering social inclusion, but customers are also easier to reach: personal relationships mean customers are much more likely to repay their loan.

As well as providing much-needed financing, BRI has taken an innovative approach to improving financial inclusion in remote areas. For example, in 2016 it launched a dedicated satellite to improve digital communications across the country. BRI also launched the world’s first floating bank to improve access to its products for people living across Indonesia’s islands and coastal areas. 

A financial education

Outside of its core offering, BRI has delivered financial literacy programmes to students, helping to improve understanding of financial products. The bank also conducts training sessions for MSMEs so that they recognise the risks involved in taking out loans. Furthermore, the bank aims to reach underprivileged and vulnerable women, seeking to ensure they have both access to and an understanding of key financial services. In 2023, its PNM Mekaar programme helped 15.1 million disadvantaged women, supporting UN SDG 5: Gender equality.

With other Indonesian banks focusing on larger corporate businesses, BRI plays an important role in fostering financial inclusion among small and medium-sized businesses. It remains committed to this work, and is planning to release an impact report in 2024. We have encouraged BRI to report on its progress in this area annually, so that we can better track its positive impact.

The information provided should not be considered a recommendation to purchase or sell any particular security.
 

Source: Bank Rakyat Indonesia, ‘Sustainability Report 2023’, (ir-bri.com). BankTrack, ‘Bank Rakyat Indonesia’, (banktrack.org). N2YO, ‘BRISAT’, (n2yo.com). Gulf Times, ‘Bank Rakyat connects the unbanked with floating banks’, (gulf-times.com).

Impact area: Better work and education
Primary SDG: SDG 8: Decent work and economic growth