Changes to the legislation overseeing microfinance in Indonesia has meant that TLM need to restructure to ensure it meets Indonesian legal requirements, positions itself well for growth in the future and maintains its focus on its vision.
The decision to establish the cooperative was made to allow TLM to meet the regulatory restrictions as TLM expanded its client base. TLM will continue to also expand through its BPR and will use this to provide a wider range of services however the speed at which the central bank is allowing the BPR to establish new branches is too slow to allow TLM to achieve its overall expansion targets.
The umbrella organisation is still known as “TLM” and remains a Foundation structure known as a ‘Yayasan’. The Cooperative house the entire branch structure and loan portfolio that previously sat under TLM.
To avoid competing with the BPR the Cooperative will be restricted to serving clients that can only utilise loans less than 15 million Rp. Clients that require loans above this will be served through TLM’s BPR. While it is recognised that these clients are relatively ‘profitable’, the alignment of ownership across all 3 structures will ensure that this transfer of clients is seen as a Key Performance Indicator and a way of providing retaining the clients with larger loans by providing them with products and services which are more price competitive.