Strengthening BPRS’ Role for SMES in Indonesia

Islamic Rural Bank (BPRS/Bank Pembiayaan Rakyat Syariah) as part of banking ecosystem in Indonesia has niche characteristics and market segmentation in playing their role as financial intermediary. This study aims to explore the existing role of BPRS for Small and Medium Enterprises (SMEs), especially in new normal era. This study conducts three in depth interviews with practitioners in the sector and thematically analysed. Furthermore, Systematic Literature Review (SLR) regarding to community banks across countries, especially in the developed countries are thematically analysed to identify area for improvement for BPRS according to priority as stated in roadmap issued by The Financial Services Authority (OJK/Otoritas Jasa Keuangan). This study elaborates alternate sources of funds, inclusiveness of access, usage of technology, market segmentation and risk management and they are proposed for Indonesian context to scale up the intermediary roles of BPRS for SMEs. This study provides lesson learned from two BPRS in Indonesia. In addition, main takeaways from community/rural bank practices across countries have been provided.