“Village funds are not to be placed as collateral,” he reiterated at a press conference on the harmonization of regulations concerning the Red and White Village Cooperatives program at his office in Jakarta on Tuesday.
He elaborated that instead of relying on those funds, village cooperatives should use the items they procure with the loans as collateral.
“For instance, loans used to obtain staple goods will be guaranteed by the staple goods, while those used to purchase cars will have cars as collateral,” he explained, adding that village funds can only be used as collateral as a last resort.
Related news: Ministries discuss Red and White Village Cooperatives' financing
Meanwhile, Minister of Villages and Development of Disadvantaged Regions Yandri Susanto highlighted that his office is currently working on a ministerial regulation to provide clear provisions regarding losses experienced by village cooperatives.
“Village cooperatives do not receive money directly from state-owned banks — they simply obtain goods on which they capitalize. In essence, it is impossible for these cooperatives to suffer losses. Nevertheless, we are working on anticipatory measures,” he informed.
The Indonesian government has announced its plan to use part of its state budget surplus to provide low-interest loans to village cooperatives through four state-run banks: BNI, BRI, BSI, and Bank Mandiri.
At a press conference on July 29, 2025, Finance Minister Sri Mulyani Indrawati said that banks will use the funds to offer productive loans, with interest rates capped at six percent, repayment tenors of up to six years, and grace periods ranging from six to eight months.
To formalize the process, she signed the Finance Ministerial Regulation Number 49 of 2025, which was enacted on July 21. The regulation outlines the legal procedures for Red and White Village Cooperatives to secure loans.
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Translator: Maria C, Tegar Nurfitra
Editor: Rahmad Nasution
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