Indonesia's Koperasi Kredit Borromeus

The Borromeus Credit Union was created in 1972 with a view to enable its members, staff at Borromeus Hospital in Bandung (Indonesia) to become home-owners.


The Union has 194 members, each with average savings of US$25. The goal of the credit union is to improve the welfare of its members by:

- creating a capital fund using savings
- granting quickly-obtainable loans under reasonable terms
-developing inter-employee relations
- enabling its members to become more assertive

The organizations's funding comes from members contributions, a private foundation of the hospital, private organizations with headquarters in the Netherlands, and a loan from the State-controlled National Savings Bank.

Loans are granted first and foremost for housing. The Credit Union offers three possibilities:

  1. members can borrow a fixed multiple amount of their total savings, with a view to purchasing land or housing, or for rebuilding or renovating their house;
  2. they can purchase a house built by the Credit Union;
  3. low-income staff can benefit from a special housing programme.
Members are asked to contribute to two savings schemes, one of which is voluntary and the other compulsory.

Credit Programme

Houses constructed under the credit programme are referred to as "rumah tumbuh" or "growing house"". The basic construction is simple, with only rudimentary furinshings. This can be added to in accordance with the family's needs and financial resources. Much emphasis is placed on team spirit and cooperation during the construction phases.

Three types of support offered

  1. Housing Loans. These loans are quickly-obtainable and may be equal or les than five times the total savings available. They are granted for the purpose of purchasing land, housing, carrying out repairs or reconstruction. The maximum loan possible is US$ 1,100, which must be repaid in under a year, with a monthly interest rate of 1.5%.

  2. Housing Building Pilot Project. The St-Borromeus Foundation granted a soft loan of approximately US$ 100,000 for the house-building project. The loan is granted to members interest-free. The Government is also assisting via their "Housing Ownership Credit" scheme. 142 houses have been built to date.

  3. Simple Housing Development Programme. Funded by the Dutch Housing Commission, this programme has enabled the construction of 10 houses, although forty were needed. Zero-Kap (Netherlands) has recently contributed to this programme through a grant and soft loan which will enable the construction of 18 more houses on the site.
The beneficiaries of this programme must have been employed by the hospital for at least five years; have a sense of cooperation; be loyal Credit Union clients; be in urgent need of housing; and adhere to the programme's regulations. In addition, active participation in the project is encouraged - finding a site, preperation and actual construction. Approximately 20% of the initially-invested capital comes from the credit union's existing capital resources.

Terms for obtaining a credit loan

No initial payment is required for either the Housing Building Pilot Project or the Simple Housing Development Programme, due to the fact that low-income communities are rarely able to accumulate any form of savings. The total cost of the building and furnishings is calculated in liason with the purchaser, so that monthly repayment amounts are realistic. The fact that everyone assists in the construction process helps to keep costs fairly low. Sites are selected near to workplaces and schools in order to minimise transportation costs.

In order to qualify for a loan, the borrower has to agree tomove into the house less than a month after signature of letter of consent, and must also take out insurance to ensure that repayments will be covered in the event of death.

Funding Sources

There are various sources - each members savings contribution amount to an average of approximately US$25. The Borromeus Foundation, based at the hospital, contributed US$ 100,000 to the Credit Union in the form of a long-term interest-free loan. The Dutch Housing Commission gave a grant of US$ 26,000 and another Dutch organization added more funds, which enabled the construction of 18 more houses. Lastly, the government, through the "Housing Ownership Credit/National Savings Bank" gave a loan of US$ 265,000 at an interest of rate of 9%.

Members repay the capital cost of the house to the Credit Union. The borrower pays an interest rate of 6% (based on the 9% mentioned above and the free-interest loan from the Borromeus Foundation). This money is paid into a revolving fund to enable further investments.

The capital fund currently managed by the Credit Union amounts to US$ 8,730 and is expected to increase by $1,000 monthly. Yet despite the apparantly large scale of the institution, it is far from its goal of satisfying all of its members' needs.

Future Plans

The Credit Union hopes to be able to increase its capital through grants and low-interest loans. It also belives that the local Government has a role to play in facilitating the allocation of the building construction allowance and land certificate. The National Savings Bank should also drop its interest rates. The Union plans to extend its range of services, in particular extending into education, health and income-generating activities.
Hari Srinivas -
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