State bank reforms

These are policy solutions that improve the management of state banks, helping them become commercially sustainable and meet the needs of clients through governance and incentive structures that restrict political interference and hold banks accountable to performance standards.

Bank Rakyat Indonesia (BRI) provides the best known example of a large state bank to become a successful microfinance provider. A specialized line of business was created, in the form of Rural Banks, which allowed the bank to introduce sustainable microfinance operations. Today, BRI has over 4,000 outlets serving 3.3 million microcredit clients and over 30 million savings clients.

Another example is CrediAmigo of Banco de Nordeste (BdN) in Brazil, which now provides microcredit to 235,000 clients from a total of 160 branches. Finally, the example of BAAC in Thailand shows that gradual reform can be carried out despite directed credit, interest rate ceilings, and mandated agricultural lending quotas. It now has 1,476 branches, serving 2.74 million active borrowers and 9.57 million savings clients.