BPR Arta Kencana – Loan Product Development for Onion Cultivators
MicroSave Briefing Note No. 132 describes MicroSave's collaboration with BPR Arta Kencana (KBPR) in Indonesia to design a loan tailored to the needs of onion cultivators. KBPR is a rural bank in Indonesia that aims to develop micro, small, and medium entrepreneurs in rural, sub-urban, and urban areas. Lukewarm response from target clientele to one of its new branches spurred KBPR to seek MicroSave's support in developing a product specifically suited to farmers growing onions. MicroSave conducted a study that included market research, prototype designing, field testing, and developed a product pilot plan. The study revealed that clients preferred attributes included:
- Competitive interest rate;
- Easy collateral requirements;
- Flexible repayment terms;
- Simplicity in documentation;
- Swift processing of loan applications;
- Having a savings component with an option for life insurance cover.
The prototype that MicroSave designed also addressed situations of financial distress and crop failure. The brief concludes that the design and testing process, as well as the final product itself, holds lessons for stakeholders in agricultural financing.
