JAKARTADAILY.ID – Indonesia Financial Group (IFG), Indonesia's state-owned strategic holding company of insurance and underwriting companies, has secured an approval from the country's lawmakers to get Rp 6 trillion ($400.4 million) worth of capital injections from the government.
In a statement sent to JakartaDaily.id on Friday, July 8, 2022, IFG said Commission VI of the House of Representatives (DPR) has approved the proposal from the government to inject the needed capital to the company in the form of State Equity Participation (PMN).
IFG is the holding company for state-insurers PT Asuransi Kerugian Jasa Raharja (Jasa Raharja), PT Jaminan Kredit Indonesia (Jamkrindo), PT Asuransi Kredit Indonesia (Askrindo), PT Asuransi Jasa Indonesia (Jasindo), PT Asuransi Jiwa IFG (IFG Life).
It is also the holding for state-owned underwriting companies PT Bahana Sekuritas, PT Bahana TCW Investment Management, PT Bahana Artha Ventura, PT Bahana Kapital Investa and PT Grahaniaga Tatautama
The capital injection will be used to strengthen the capital structure of its two subsidiaries, Askrindo and Jamkrindo in order to level up their capacity as guarantors for loans to MSMEs, known as KUR.
To date, the government through the KUR guarantee has helped 50.2 million MSMEs and created jobs for 78.9 million workers.
IFG President Director Robertus Billitea said half of the Rp 6 trillion capital injection, which had been approved by Commission VI of the House, would be passed on to Jamkrindo and the remainder to Askrindo.
"This state-capital injection is to anticipate the target of increasing the volume of KUR guarantees where the additional capital is expected to support the capital of these two subsidiaries in carrying out assignments from the government to guarantee MSME loans," said Robertus, through a press release, Friday, July 8, 2022.
The strengthening of the capital structure is to maintain a productive gearing ratio, which is in accordance with the provisions of the Financial Services Authority (OJK), as regulated in POJK No. 2/POJK.05/2017, requires the gearing ratio of productive business guarantees not to exceed 20 times the existing capital capacity.
The gearing ratio is a comparison between the total value of the guarantee that is borne by itself and the equity of the guarantee institution at a certain time.
Based on an internal IFG study, the state-holding company assessed that if Askrindo and Jamkrindo did not have additional capital of Rp 3 trillion each and by taking into account the KUR guarantee target, the gearing ratio position at Jamkrindo would reach 20.27 times in 2024, while for Askrindo it would exceed the maximum gearing ratio. in 2025 at the level of 20.76 times.