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Bank Andara Talking Points.

Microfinance is a proven way to help people move permanently out of poverty, but it hasn’t yet realized its full potential or scale in reaching enough people with the services that they really need. The Indonesian Microfinance sector is one of the largest in the world, with more than 50,000 active MFIs. However, the sector is still highly fractured and poverty remains persistently high, with nearly half the population living on less than $2 a day. While MFI’s currently offer services to more than 45 million low-income Indonesians, 40 million still lack access to basic financial services. In Indonesian Microfinance, a variety of technical and financial constraints have held the sector back.

·         Indonesian microfinance institutions (MFIs) consistently cite a lack of access to affordable financing as their key constraint for growth. Commercial banks usually don’t want to take risks on MFIs.

·         The majority of MFIs are not audited and lack strong management information systems, another constraint on growth as commercial banks are often reluctant to lend to them without greater transparency.

·         A majority of MFIs have weak liquidity management skills, holding as much as 30% of their total assets in cash. This limits their profitability and their ability to expand their outreach.

·         Finally, most MFIs offer only the most basic savings and loan products and are constrained by regulation and lack of access to capital and expertise to grow their offerings.


Bank Andara is the first wholesale commercial bank of its kind in the world, it exclusively serves as the strategic banking partner to the Indonesian microfinance sector. Andara was created with the objective of realizing poverty alleviation goals through the sound and profitable operation of a wholesale banking institution.

  • In order to establish Andara, its investor consortium, led by Mercy Corps, acquired a small Balinese retail bank (Bank Sri Partha) specialized in serving micro and small enterprises. The founding investors include IFC, Hivos-Triodos Fund, Cordaid, and Mr. I Wayan Gatha. 
  • The Andara shareholder group shares an objective of realizing poverty alleviation goals through the sustainable operations of a wholesale banking institution supporting the Indonesian microfinance industry, namely Andara. The members of the shareholder group bring strong technical abilities and financial and social experience to the venture which will be utilized to guide and ensure the success of Andara
  • Andara is legally structured as a limited liability company, or “PT”, incorporated in Indonesia, with a commercial banking license under the auspices of Bank Indonesia, with direct oversight by Bank Indonesia Bali.


The vision of Andara is to be the premier, pioneering financial partner of the Indonesian microfinance sector, promoting innovation and massive outreach to those lacking access to financial services. Andara’s primary business objectives are twofold:

1)      To catalyze large-scale outreach to millions of Indonesians lacking access to the financial sector by providing innovative financial products and services to and through existing unbanked and challenged MFIs.

2)      To maximize the value of its shareholders’ investments, while creating a long-term, profitable financial institution.


Bank Andara partners with existing MFIs providing responsive and innovative financial products, services and technology at affordable rates, to enable the MFIs to significantly improve their outreach, capacity and services. Additionally, Andara works with strong external rating and technical assistance providers, such as Micra Indonesia & Ukabima to support MFI with quality business and capacity improvements.

  • Due to legal constraints, limited scale and lack of expertise, the vast majority of Indonesian microfinance institutions presently offer only the most basic savings and loan products to clients.
  • Andara offers a range of products such as a medium term working capital loans, short-term placement and liquidity management products, term deposit products, installation of a system called “Andara-Link” to provide payment services and a compact shared core banking system specifically configured for the individual MFI.
  • Andara also offers social responsibility deposit products targeted to companies (including CSR activity) and individuals interested in investing in improving financial access in Indonesia in a sustainable manner. Currently, the Andara’s time deposit products are differentiated in two segments: commercial deposits (Deposit Andara and Deposit MFI) and social deposits (Deposit Pro Farmer, Deposit Pro Women’s Empowerment, and Deposit Pro Poverty Alleviation).
  • The Bank’s primary target market includes the BPR sector, as well as the top tier of the cooperative, credit union and non-bank financial institution markets.


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