MINIMISING THE BAD DEBT

SULASTRI
CODOO6002

Background
Bank is one of the most important institution in financial affairs. Bank has two functions: as a saving agent and as a credit institution. As a saving agent, people can invest money in the bank and they get interest. As a credit institution, bank collects money from the society and distributes it again in the form of loans. The society members, including business people, can use these loans to develop their business scale or to increase their competitiveness. If the business becomes greater and greater, more profits can be obtained, many more people can be hired as workers then, this condition will lead to social welfare.

 Thus, bank can be considered as important institution in financial affairs.

PD. BPR Artha Perwira which is located in Purbalingga is focusing on credit. This company continues to substantially secure its existence as the Purbalingga local governments banking business that has and is still playing a significant role in developing the potential small scale rural businesses. Through its role play and function, PD.BPR Artha Perwira Kabupaten Purbalinggga has proven to contribute 50 % of its profits every year to the money supply of the Purbalingga local government.

 There are many factors supporting the growth of PD.BPR Artha Perwira One of them is to minimising the bad debt. To minimising bad debt is that a Bank must more selective to accept credit application. Bank must check the condition of capital, capacity, condition character and collateral of the customers. Minimising bad debt is very important to reduce the loss and to avoid the risk of credit stagnation. The banking phenomenome and developing of the company and its strategy to minimize bad debt becomes an interesting matter to learn. Therefore, this intership report is entiled Minimising of Bad Debt at PD. BPR Artha Perwira Kabupaten Purbalingga.

Brief History PD. BPR Artha Perwira was established on May 1st, 1986 during the period of the Head Region of Purbalingga (Bupati) in office, Drs. Soekirman. In 1991 business operations were relocated at Jenderal Ahmad Yani street No. 5 Purbalingga, a building that was previously used for scouts.

 In 1997, Bambang Djoko Setyono, SH took over Soewarno, BA possision as director and under his lead PD BPR Kabupaten Purbalingga continued to grow exceptionally well. By 2004, in accordance with Regional Business No. 2 2004, PD. BPR Kabupaten Purbalingga changed its name to PD. Artha Perwira Kabupaten Purbalingga as well as a new logo (the logo that is used up until today). Bambang D. Setyono, SH remains its director and Untung Sugimas, SE as the assistant director.

 Vision
To become a reliable bank in healthy competition and professionalism

Mission
To fight usurer practices in villages and markets To provide capital allowance to small businesses To increase qualified human resource in becoming more prime and professional bankers To maintain a banks well being To become the regions contributing revenue

INTERNSHIP SCOPE
Solutions to minimizing Credit stagnation Processes before a credit is approved: Survey Capital Capacity Condition Character Collateral After a credit has been approved: Monitoring periodical payments Follow up on credit stagnation

Handling Credit Stagnation

By the Account Officer To follow up and take preventive measure upon potential D, SM and L debtors To hold discussion meetings with superiors in order to find solutions To plan and create a letter of conduct as a means to take action to credit stagnation prevention

For the Credit Collection Agency

To create list of debtors with credit stagnation cases This list is then verified with data from branch office To check debtors data by reconfirmation of data with the account officer and credit support department To prepare for the possibility that professional assistance may need to be called upon such as: legal advocates, lawyers and others

Findings
1. Sometimes the debtors face difficulties in paying the debts, because they do not have enough money. This causes the bad debts occurred. 2. The loans service division is less careful in assessing the capability of the prospecting debtors in paying the debts. Often, this causes the non performing loans appear.

Conclusions
1. BPR method of minimilising credit stagnation is through: Surveying
Capital Capacity Condition Character Collateral

Monitoring periodical payments Follow up on credit stagnation

Suggestions
To overcome the occurrence of bad debts, the loan service division should monitor and construct the debtors in running their business. To solve of hardness in non perfoming loan, the loan service division should be more careful in assessing the prospecting debtorsability.

Impressions
PD. BPR Artha Perwira has employees that portray a friendly and professional towards its customers, and student doing internship

PD. BPR Artha Perwira employees always get together to pray before they start working

THANK YOU.