Comprehensive support from financial institutions is required in effort
to drive community empowerment, particularly middle to low-income
society and micro, small and medium enterprises (UMKM). This group of
enterprises has limited access to formal financial institutions so far.
Therefore, in order to deal with such problems, many non-bank financial
institutions have grown and developed in society, running services in
business development and community empowerment, and are established by
government or society. Those institutions are well-known as microfinance
institution (MFIs). However, many of the MFIs still do not have legal
entity or business license yet. In order to provide a strong legal
groundwork for MFIs` operation, Law Number 1 of 2013 on MFIs has been
issued on January 8, 2013.
Definition of MFI
Microfinance institution (MFI) is a financial institution that is
especially established to provide services in business development and
society empowerment by giving loans or financing for micro-scaled
business of MFI members and society, providing deposit management, or
giving consultancy services in business development that is conducted
not merely for profit.
MFI`s Business Activities
Objectives of MFI
Obligation to Gain Business License as MFI
Legal Entity of MFI
An MFI can be owned by:
Business Area Coverage and Capitalization of MFI
MFI is obligated to transform into rural bank or Sharia rural bank if:
MFI Financial Report
Prohibition for MFIs
In carrying out business activities, MFIs are prohibited from:
Fostering, Regulation and Supervision of MFIs
Business Licensing for MFIs
FAQ (Frequently Asked Questions)
Regulations associated with MFIs
- Law Number 1 of 2013 on MFIs.
- Government Regulation Number 89 of 2014 on loan interest rate or yield of financing and MFI`s business coverage.
- OJK Regulation Number 12/POJK. 05/2014 on business licensing and institutional matters of MFIs.
- OJK Regulation Number 13/POJK.05/2014 on business management of MFIs.
- OJK Regulation Number 14/POJK.05/2014 on fostering and supervision of MFIs.