Inauguration of PKH Pilot Tests for Fund Distribution through a Digital Financial Services Agent

08 October 2014

Pilot tests to electronically distribute financial assistance for the Family Hope Programme (PKH) through the Digital Financial Services Agency (LKD) was inaugurated today (8/10) by the Deputy Governor of Bank Indonesia, Ronald Waas, in South Tugu, Koja, North Jakarta. Pilot tests will be conducted with more than 1,300 people PKH recipients between 8 and 30 October 2014 in Cirebon, West Java and Kupang, East Nusa Tenggara.

“Social assistance payments no longer have to be paid in cash. Now they can be channelled through electronic money that can be withdrawn anytime and anywhere through an LKD agent. This is new for Indonesia, "said Waas. This system not only benefits the government as it boost efficiency, transparency and accountability in aid delivery, but also provides a useful model of how to give millions of poor access to the formal financial sector, which is part of efforts by the National Programme for Inclusive Finance.

Micro and Retail Director at Bank Mandiri, Hery Gunardi, said that PKH beneficiaries will receive their financial assistance instantly as funds are transferred by banks to recipients’ mobile phone numbers. "Beneficiaries will receive information if the financial assistance has been transferred via SMS, or they can check directly through the Mandiri e-cash menu on their mobile phone. After that, beneficiaries can withdrawal cash via the bank of an LKD agent, "said Gunardi.

This process of distributing aid through an LKD agent as part of efforts to support the Cashless National Movement (GNNT) programme launched by Bank Indonesia. This move is also expected to increase public awareness of cashless banking services and transactions that are more efficient and effective.

LKD are payment and financial services that work with third parties (agents) and use mobile- and web-based technology. The services support both the development of inclusive finance and the effective distribution of government assistance funds (G2P). LKD agents help people who do not use banks (“unbanked segment”).

It is being conducted in cooperation with Bank Indonesian and various institutions, namely, the National Team for the Acceleration of Poverty Reduction (TNP2K), National Planning Development Agency (Bappenas), Ministry of Finance, Mandiri Bank and Bank Rakyat Indonesia (BRI).