EN ID
News Updates 15 June 2022
Share: https://www.ptsmi.co.id/cfind/source/thumb/images/icon/cover_w20_h20_share-fb.png https://www.ptsmi.co.id/cfind/source/thumb/images/icon/cover_w20_h20_share-tw.png https://www.ptsmi.co.id/cfind/source/thumb/images/icon/cover_w20_h20_share-link.png

Getting to Know Government-Owned Financial Institutions in Indonesia

What is meant by Government-Owned Financial Institutions in Indonesia? You can find out in this article. So, make sure you scroll through this article to the end to get interesting information about this Indonesian government-owned financial institution. Financial institutions are very important for the Indonesian state, the reason being that the financial activities carried out by the people in Indonesia cannot be separated from the role of financial institutions.

Not only in Indonesia, but people in the world also carry out various kinds of financial activities in financial institutions. Apart from being an intermediary, this financial institution also has a big role in keeping the circulation of money stable. Let's get to know government-owned financial institutions in Indonesia in more detail by reading the following information:

Definition of Financial Institution

So that you can get to know government-owned financial institutions in Indonesia in more detail, it's better if you know what the definition and understanding of financial institutions are first. Financial institutions are institutions that can provide facilities and products in the financial sector. This one institution is also used to rotate financial flows in the economy.

In general, operational activities in financial institutions include the process of collecting public funds and channeling funds to people who need it more. In practice, financial institutions only run one of these operations.

When you hear about government-owned financial institutions in Indonesia, the memory immediately goes to the bank. Even though there are various forms of other institutions that are also included in financial institutions, not only banks.

What is its function?

Those of you who want to get to know government-owned financial institutions in Indonesia are incomplete if you don't know what the functions of these financial institutions are. There are several functions of financial institutions that are important to know, as follows:

  • Financial Institutions as Channels of Funds

The function of financial institutions is to channel funds. Funds that have been successfully collected and collected from the community can be used for funding in various sectors. Both the economic sector and development in a certain period. Through this function, financial institutions are able to manage and develop the funds that have been collected.

  • Giving Loans

The main function of financial institutions is to provide loans. Of course, many know that financial institutions can provide loans to the public. The granting of this loan must be in accordance with the submission of guarantees. The greater the value of the collateral, the greater the value of the loan obtained.

In general, what is used as collateral is electronic goods such as cellphones, computers, gold, house certificates, computers and so on. This also applies to non-bank financial institutions such as cooperatives that provide savings and loan services to members. These loans have lower interest rates compared to borrowing money at the bank.

  • Raising Funds

The next function of government-owned financial institutions in Indonesia is to raise funds. Financial institutions will issue various kinds of valuable documents such as stocks, bonds and other finances. With this function, people can save their funds more safely and with minimal risk. Savings funds can be used as savings for the community, which can later be used to meet needs both in the short and long term.

  • Facilitate Transaction Activities

Is one of the functions of financial institutions that can be felt by the public. All kinds of financial transaction activities are more practical and easier. Especially in this digital era, many institutions are making innovations, especially those related to products and services. Financial transactions are made easier and more hassle free with more sophisticated features. 

  • Liquidity Function

Next is the liquidity function. Financial institutions that function as institutions that are able to provide cash at the right time for the community when needed. This function makes people not have to worry if there is a cash crisis.

  • Asset Transfer

Government-owned financial institutions in Indonesia have the function of transferring assets. This is done by giving a certain amount of funds to other parties for a certain period of time. Sources of loans also come from people's savings in one such institution.

Types of Government-Owned Financial Institutions and Examples

Types of Government-Owned Financial Institutions and Examples

Financial institutions

  1. Commercial Banks
    The first type of government-owned financial institution in Indonesia is Commercial Bank. This institution acts as an intermediary between those who provide funds and those who need funds. Commercial banks also provide banking services, both using conventional and sharia principles.

    Activities that can be carried out by commercial banks are collecting funds in the form of savings and deposits. Commercial Banks also have activities in the form of storage or credit, storing securities and valuables. Commercial banks also have the task of making and issuing debt statements.
  2. Central Bank
    This bank is a national institution or business entity whose function is to maintain the stability of currency values ​​in a country. In Indonesia, the role of the central bank is Bank Indonesia or BI. This institution is a state institution which is independent in nature.

    The Central Bank is free to carry out its powers and duties without any interference from the government or from other parties. Therefore, it is not surprising that BI has a big role in maintaining the country's economy. The contribution is to keep the value of the rupiah stable, be it against goods, services or the exchange rate.
  3. BPR or Bank Perkreditan Rakyat
    BPR is also a financial institution that carries out conventional and sharia business activities. For every business activity, BPR does not provide services in transferring funds between the sender and recipient of funds.

    The scope of activities or activities of BPR is narrower than that of commercial banks. The reason is because BPRs are not allowed to accept deposits such as foreign exchange, demand deposits or insurance. This is the difference between BPR and commercial banks.

    In its business activities, BPR has the function of collecting funds originating from the public in the form of deposits such as savings, time savings such as time deposits and other forms.

    BPR also has a credit function like a commercial bank. BPR activities also take the form of financing and placing funds in the form of SBIs, certificates of deposit, savings with other banks, and time deposits.

Non-Bank Financial Institutions

There are government-owned financial institutions in Indonesia that are non-banks. In society, there are five types of non-bank finance, as follows:

  1. Leasing
    Leasing is a financial institution that rents out goods to people who want to rent it within an agreed period of time. If in the middle of the road the lessee is unable to make payments, the lessor does not have the right to take back the leased goods.

  2. Capital Market
    The capital market is a means or a place to meet institutions such as companies or other institutions that require funds from the public with people who have a number of funds that are used as capital for investment. Investment funds are used to develop the business, increase business expansion, increase capital for businesses and so on. The business activities carried out in the capital market include trading or buying and selling of shares. In addition, other businesses that will be carried out in the form of bonds, mutual funds, debt statements and so on.

  3. Cooperatives
    This financial institution has the task or function of running a business in the form of receiving deposits and loans. Like other types of cooperatives, savings and loan cooperatives apply the principle of kinship by conducting various kinds of business activities. Where does the capital come from? Well, the cooperative will get capital from principal savings, mandatory savings and voluntary savings from each member of the cooperative. The second source, cooperatives will get loan capital from other business entities.

  4. Insurance Institution
    This non-bank non-bank financial institution in Indonesia offers a variety of insurance products that are selected according to needs. There is life insurance, education insurance and so on. With this insurance institution, people can get guarantees in the midst of uncertainty. The guarantee can be in the form of protection in the form of financial compensation if the insured risk actually occurs.

  5. Pegadaian (Pawnshop)
    This non-bank financial institution offers money lending services to the public by including goods or securities as collateral. Therefore, it is called a Pegadaian (pawnshop) because it pawns the goods or securities.

    If you want to borrow money at this institution, it is mandatory for you to submit valuables as collateral. After paying off the loan money, you can redeem the goods that have been pawned. Of course with interest as an additional cost. This interest will be the source of the pawnshop's profits.

    Not all items can be pawned at this pawnshop, you know. Pegadaian only accepts house certificates, motor vehicles, electronic goods and gold. Many students make Pegadaian a quick and practical financial solution because they don't have to sell goods to earn some money.

Differences between Bank and Non-Bank Financial Institutions

The main difference between bank and non-bank financial institutions is their role and function. Bank financial institutions have the function to receive, collect funds and provide loans to the public in the form of demand deposits, deposits and savings. Meanwhile, the function of non-bank financial institutions is to collect and distribute funds to the public not in the form of savings but in the form of securities.

The next difference lies in business activities. Bank financial institutions will carry out activities such as opening savings accounts, time savings, credit card payments and so on. Non-bank institutions serve the sale of securities such as shares. The purpose of lending is also different. Bank financial institutions provide loans for the purpose of education costs and so on, while non-banks are more of a business nature.

The Role of PT SMI (Sarana Multi Infrastruktur) as a Non-Bank Financial Institution in Indonesia

As the best and most trusted financial institution in Indonesia, PT SMI has an important and crucial role. PT SMI acts as an institution that will provide infrastructure financing in Indonesia, most of which are of fantastic value.

Not only financing and investment, but PT SMI also offers consulting and project development services that can be tailored to each individual's needs. Why choose PT SMI? This is because PT SMI has advantages that you will not get at other institutions such as a tenor of more than 5 years, flexibility, innovation, and competitive interest rates.

PT SMI (Sarana Multi Infrastruktur) as a trusted non-bank financial institution owned by the Government of the Republic of Indonesia that provides solutions for financing development in Indonesia, please click this link to get more detailed information on PT SMI's products.

 

Back to News

Other News Updates