The Number of Rural Banks Has Shrunk Over the Last Decade, Decreasing by Hundreds.

The number of People's Business Banks (BPRs) in Indonesia has steadily decreased over the past decade.

According to data from the Financial Services Authority (OJK), in 2014 there were still 1,807 BPR units, comprising 1,643 conventional BPRs and 164 sharia BPRs.

This number then decreased to 1,544 banks in October 2024, consisting of 1,369 conventional BPRs and 175 sharia BPRs.

Cumulatively, the number of BPRs in October 2024 had decreased by 263 banks compared to 2014.

According to Yusuf Wibisono, director of the Next Policy research institution, several factors contributed to the decrease in the number of BPRs.

"Firstly, the merger process, where BPRs consolidate to enhance their competitiveness," said Yusuf, as reported by *CNNIndonesia.com* (30/7/2024).

"Secondly, the failure of BPRs due to losing out to larger commercial banks that have entered the micro-credit segment, just like BPRs. Competition in this micro-credit segment has also intensified with the entry of new players, such as digital banks and fintech lending or online loans," he continued.

Yusuf also noted that several BPRs closed down and went bankrupt due to weak governance, including cases of embezzlement of customer funds by bank owners.

Meanwhile, Myrdal Gunarto, an economist at Maybank Indonesia, cited a lack of capital as a factor.

"Because perhaps they [BPRs] are no longer strong in terms of capital, so this is just a natural selection process," said Myrdal, as reported by *CNNIndonesia.com* (30/7/2024).

To strengthen the presence of BPRs, the OJK issued three new regulations at the end of 2024, namely:

1. POJK Number 23 of 2024 concerning Reporting through the OJK Reporting System and Transparency of Financial Condition for BPRs and Sharia BPRs
2. POJK Number 24 of 2024 concerning Asset Quality of Sharia BPRs
3. POJK Number 25 of 2024 concerning the Implementation of Governance for Sharia BPRs