The Asian Development Bank loaned $60 million to Bank Pembangunan Indonesia (BAPINDO), the development bank of Indonesia, and granted the bank $90,000 in technical assistance to help it increase its loan-recovery rate.
The ADB did not disclose BAPINDO's current loan recovery rate, but it conceded that the bank needs to shift away from investments in capital-intensive industries to a more diversified industrial base.
BAPINDO was established in 1960 with the assistance of the World Bank Group, ADB and the Federal Republic of Germany. It is now the largest financial development institution in Indonesia.
The ADB said one of the reasons for the $60 million loan is to enable the bank to boost its foreign exchange resources so that the country can afford to undertake new development projects.
The loan will help BAPINDO restructure its financial position, improve the quality of its portfolio and carry out various bank building programs. It also will pay for needed factory renovations, as well as to encourage small- and medium-sized businesses to grow and boost exports.
The technical assistance grant will pay for a study that will critically assess BAPINDO's present loan policies and procedures. The six-month study will recommend improvements in the state's banking structure.
The loan has a term of 15 years with a three-year grace period. The interest rate will be determined by ADB's pool-based variable lending rate system.