BRI Unit--a Micro-finance Bank.


Microfinance practice in Indonesia has long historical root at community level since its colonial period (Rudjito, 2003). One best recorded of such practice is the existence of what now famous world class microfinance institution of Bank Rakyat Indonesia Unit Desa or BRI Unit Desa. The history was rooted since 1895 when Lumbung Desa or literally means Village Rice Barn, founded by community self-help group in Banyumas Central Java; facilitated by Aria Wirjaatmadja--a Javanese aristocrat and De Wolff Van Westerrode--an Asisten Residen or Dutch District Colonial Administration. The bank was first founded in the name of De Poerwokertosche Hulp-en Spaarbank der Inlandsche Hoffden. The date of the bank’s development—16 December 1895, then recognized as the BRI anniversary (www.bri.co.id).

The concept of Lumbung Desa was to help farmers with financial services during distress seasons like occurrence of flood, long drought, famines or crops failure because of widespread pests. The practice of the financial services continued and in 1905 a Bank Desa or Village Bank was developed from accumulated asset of Lumbung Desa to assist rural people with capital and prevent from money lenders and traders. From the Lumbung Desa and Bank Desa practices the micro-finance institution was recognized as services that provided for people. The institutions are formalized by the Dutch Colonial Administration as BKD (Badan Kredit Desa or literally means Village Credit Board). The Dutch Colonial Administration regulated the BKD in 1908 on how to develop, manage and supervise BKD. The regulation then formalized with Ordonantie BKD in Staatsblad No.357 1929 for Java and Madura and Rijksblaad No.9 1937 for districts in Pakualaman kingdom (Susuhunan or King of Surakarta) and Rijksblaad No.3/H 1938 for districts under sultanate authority (Sultan of Yogyakarta).

The bank’s name was changed several times. First was De Poerwokertosche Hulp-en Spaarbank der Inlandsche Bestuur Ambtenaaren, De Poerwokertosche Hulp-en Landbouw Credietbank (Volksbank), Centrale Kas Voor Volkscredietwesen in 1912 and Algemene Volks Credietbank (AVB) in 1934. During the Japanese occupation, the bank become Syomin Ginko. After the Indonesian independence, the bank was again changed into Bank Rakyat Indonesia in 22 February 1946. BRI was declared as the first state bank of Indonesian Republic through the Government Regulation No. 1 1946. As the state’s bank, BRI play a key role in realizing the government’s vision to improve the people’s economy. The government changed the BRI into Bank Koperasi Tani dan Nelayan (BKTN) in 1960. Based on Law No.21 1968, the government renamed the bank BRI and regulated it as public bank. Later based on Banking Law No.7 1992, BRI has its name and legal status as entity PT Bank Rakyat Indonesia (Persero). Consistent with focus on micro, small and medium businesses; BRI has inspired many institutions to empower the business in that sectors that become backbone of the Indonesian economy.

In 10 November 2003, BRI became publicly listed company and the government divested 30% of the share to public. Since then the BRI’s shares are increased and included in the Blue Chips share belonging to LQ45 Group. With the public controlling 43% of shares, BRI shares are actively traded in the capital market. To date, BRI become a strongest bank with 4,407 working units, of which are 3,705 BRI Unit Desa serving micro, small and medium business with more than 24.2 million clients positing the bank as the biggest micro banking institution in the world.