Bank Central Asia has signed a deal that makes it the preferred bank of Nahdlatul Ulama in a move expected to boost its lending business while financing the projects of the country’s largest Islamic organization.
Jahja Setiaatmadja, BCA’s president director, signed the deal on Wednesday with officials from NU, which has about 70 million members nationwide.
Securing the agreement, he said, would help the bank reach its medium- and long-term goals, including boosting remittances and expanding mortgage loans.
“We [will] focus on growing housing loans as high as possible,” Jahja said on Wednesday.
BCA, the country’s biggest bank by market value, aims to raise mortgage lending by 35 percent this year.
Last year, its mortgage lending business increased by 39 percent to Rp 18.3 trillion ($2.1 billion) from Rp 13.2 trillion a year earlier. The 2010 figure represented around 13 percent of the country’s total mortgage market. The Jakarta-based lender, partly owned by American equity firm Farallon Capital Management, also aims to clinch NU customers who are working abroad, the backbone of the lucrative remittance market.
Jahja said the partnership with NU could increase remittances by more than 16-fold to 500,000 transactions per month. BCA typically handles 30,000 remittances a month and charges Rp 40,000 per transaction.
BCA also said the NU deal would be a good opportunity to establish microfinance services, or loans as low as Rp 500,000.
“Currently, we don’t have microfinancing because its costly,” Jahja said. “It needs huge investment in employees and branches, because each request has to be evaluated individually.
“It’s a different story if we can work out a scheme to channel the financing to a community, a scheme we are seeking with NU,” he added.
BCA expects lending to increase by 25 percent this year, higher than the central bank’s target of 24 percent for loans.
In return, Marsudi Syuhud, NU’s secretary general, said on Wednesday that the bank would finance health, education and entrepreneurship programs for its Muslim membership.
“First, BCA can provide entrepreneurship training in our 28,000 Islamic boarding schools and 400,000 Islamic schools,” Marsudi said. “And then it can also channel funds for those entrepreneurs and through our 22,000 cooperatives.”
According to a World Bank survey, less than 50 percent of rural households in the country have access to banking services and less than 50 percent own basic savings accounts.
BCA is planning to launch a computer literacy program for residents in rural areas to facilitate remittance claims.
“[We will] teach them how to operate a simple computer program for sending and receiving money,” Jahja said. “It’s cheap for us and for the customers because they don’t have to go to cities to receive remittances [from family members abroad].”