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Financial Identity Number


Financial inclusion programs contribute to the poverty reduction, especially in developing countries. Having a higher financial inclusion could help households or enterprises to smooth their incomes, expand their business and investment opportunities, and provide buffer from shocks and unexpected risks (building financial security). Financial inclusion will enable the community to have more stable financial condition and more productive economic activities that will contribute to the improvement of their welfare.

A higher financial inclusion level will improve the domestic savings and widen the outreach of financial market. This could reduce the dependency on foreign investments and shape a more self-reliance economy, which will be less prone to contagious crises. By including the informal savings into the formal financial system and having more diversified financial providers, the financial capacity of an economy will significantly improve.

The result of World Bank survey (2010) shows that roughly one-third of Indonesia’s population does not have saving accounts at any formal or informal financial service providers and around 79 percent of the poor population are financially excluded. The survey also suggests that approximately 40 percent of the population do not have any access to credits. The number of population who could borrow from banks is particularly very low, only less than 20 percent of the total population.

Various financial inclusion programs have been implemented in order to improve the level of financial inclusion in Indonesia, especially for the productive poor households and micro, small, and medium enterprises (MSMEs). Some of those programs are Income Generating Program for Small Farmers and Fishermen (Pembinaan Peningkatan Pendapatan Petani-Nelayan Kecil-P4K), Center for Small and Medium Enterprise Assistance Program (Pusat Pengembangan Pendampingan Usaha Kecil dan Menengah-P3UKM), People’s Business Credit (Kredit Usaha Rakyat-KUR), and the National Program for Community Empowerment (Program Nasional Pemberdayaan Masyarakat-PNPM).

Some of the financial inclusion programs in Indonesia are subsidized or guaranteed by the government. It seems that this mechanism would only provide short-term solutions for the financial inclusion problems in Indonesia and this does not seem to have long-lasting impact on the improvement of formal financial accesses. The inherent issue of this subsidized credit mechanism is the access sustainability, especially when the government decides to cut the subsidies or no longer guarantee the credits. There is a high chance that some of the recipients of the subsidized credits will not be able to access the credits under pure market mechanisms. In addition, banks might be reluctant to approve the credit applications without the government guarantee.

Bank Indonesia as the central bank of Indonesia has taken various initiatives in developing financial inclusion programs, ranging from Let's Go to the Bank (Ayo ke Bank) program to Indonesia Saving Movement (Gerakan Indonesia Menabung). The financial inclusion programs developed by Bank Indonesia are implemented under the National Strategy for Financial Inclusion (NSFI) framework, which consists of five pillars, i.e. financial education, financial eligibility, supportive regulation, facilitating intermediation, and policy reform.

Bank Indonesia as the central bank of Indonesia has taken various initiatives in developing financial inclusion programs, ranging from Let’s Go to the Bank (Ayo ke Bank) program to Indonesia Saving Movement (Gerakan Indonesia Menabung). The financial inclusion programs developed by Bank Indonesia are implemented under the National Strategy for Financial Inclusion (NSFI) framework, which consists of five pillars, i.e. financial education, financial eligibility, supportive regulation, facilitating intermediation, and policy reform.

The Financial Identification Project (FIP) is a new innovative breakthrough carried out by Bank Indonesia in building a more systematic and promising pathway to a higher level of financial inclusion in Indonesia. This includes developing a mechanism to provide unique financial identity number (FIN) to the society, including the unbanked ones.

The FIP is expected to produce a more effective and efficient approach to facilitate a better and easier financial access for the society, especially to those who do not have any access to banking services (the unbanked society), micro, small, and medium enterprises (MSMEs), and the productive poor households. The improved financial inclusion is important for these groups to provide them more opportunities to run and expand their businesses, improve their investments, accumulate assets, smooth their income and consumption and manage shocks and unanticipated risks. The final objective of the financial inclusion program would be a significant improvement in the welfare the society as a whole.

PT. Arah Cipta Guna (ACG) and PT. DEFINIT (DEFINIT) appointed by Bank Indonesia to conduct a consulting work for this program. This consulting work is assigned to built and implement a pilot project of the FIP that is expected to provide a stepping stone for a larger scale implementation.

The consulting work also includes a survey "Financial Identification Number" in 6 provinces (West Java, Banten, Jakarta, Central Java, East Java, and Yogyakarta). The objective of this survey is to collect data of individuals and households that have potential access to banking sector. The result is expected to describe the financial condition and financial activities of respondents, and to gain more relevant information. It is expected that the data collection could be used in improving financial access of the society to banking sector.

The following pictures show the training process of DEFINIT’s surveyors who conducted the pilot interviews of the FIN Survey.

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