REPUBLIKA.CO.ID, KUPANG -- President Director of Bank NTT, Daniel Tagu Dedo , the bank, which is owned by the East Nusatenggara provincial administration would enter the capital market with target to issue bonds valued at Rp1 trillion-Rp2 trillion.
"This year, Bank NTT hopes to go to the capital market with initial target of issuing bonds valued up to Rp2 trillion to finance expansion and to funnel in funds into East Nusa Tenggara. The bank could not rely only on local third party fund (DPK)to finance busienss expansion," Daniel said here on Wednesday.
The Financial Service Authority (OJK) has a program in 2016 allowing the regions to issue bonds to raise fund to finance regional projects mainly infrastructure projects.
Earlier OJK said it hopes that the regional bond program could be launched in 2016.
OJK chief commissioner Muliaman D Hadad said OJK in cooperation with other stakeholders was seeking to wrap up drafting new regulation and removing all hurdles hampering implementation of the program.
Currently a regional administration almost certain to issue bond is the West Java administration that needs Rp3 trillion to resume construction of an airport in Sumedang.
A number of other regional administrations are also reported planning to issue bonds including South Sulawesi, North Sumatra and Central Java regional administrations.
Daniel said in 2015, DPK held by all banks in East Nusa Tenggara totaled only Rp23 trillion including Rp7.54 trillion by Bank NTT.
"We could not rely only on the DPK . We need a breakthrough by raising funds from capital market. This is efficient and effective to boost the region's economy," he said.
He said the shareholders of the bank have sanctioned the bank management's plan to issue bonds in 2016.
He said the third party fund of Rp7.54 trillion with credit Rp6.6 trillion or a balance of less than Rp1 trillion, would not be enough to finance the bank business expansion in 2016.
Therefore , entering the capital market would be the right choice to raise fund, he said.
He said he is optimistic Bank NTT would succeed in raising fund from capital market this year enough to support financing its business expansion.
Among the strategic programs of the bank include branch less banking with 300 agents, increasing its authorized capital to Rp2 trillion and building synergy for development of information technology through core banking migration.
Bank NTT has recorded outstanding performance over the past several years for which it has been granted a number of citations such as Infobank Award , Annual Report Award (ARA) and the award of Anugerah Perbankan Indonesia (APBI).
Bank NTT and Bank Kalimantan Barat (Kalbar) have been selected among 26 development banks (BPDs), owned by regional administrations, to take part in channeling subsidized people's business credits (KUR) for micro and small enterprises in 2016.
Daniel said Bank NTT hopes to funnel Rp127 billion in KUR for micro and retail businesses in 2016.
"The ceiling credit is set at Rp15 million for micro enterprises and Rp500 million for retail business with interest rate to be slashed n from 12 percent to 9 percent," he said.
He said Bank NTT is ready with the assignment, adding it is not easy to win the trust to channel KUR.
He said the selection was based on the bank performance including its record of non performing credit (NPL).
Bank NTT has a low NPL of only 2 percent, and it already has long experience in channeling productive credit for small businesses.
The bank has provided credits to 9,000 small and medium scale enterprises without collateral.
"Going public also is an open alternative but he doubted that the bank is ready to float part of its shares with the consequence that the share ownership would change," he said.
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