JAKARTA: Bank Indonesia puts 138 People's Credit Bank (BPR) under special supervision since those banks having unhealthy and less healthy financial indicators.Such number is equivalent to 8.25% of the total 1,679 BPR across Indonesia, Bank Indonesias Director of Credit, Peoples Credit Bank and Micro, Small and Medium Enterprise Edy Setiadi said.Micro bank is considered unhealthy because of external factor as a result of competition with microfinance institution and public bank.There is also an internal factor such as lack of competency in human resources and good management, he told Bisnis, yesterday.BPR that under special supervision are those having Capital Adequacy Ratio less than 4% and the average cash ratio less than 3% in the last 6 months.Such BPR should make improvement for 6 months at maximum. During supervision, Central Bank could order those banks or shareholders to recover by increasing its capital.In term of management, 60% of those BPR are under special supervision since there is fraud within them while the rest due to mismanagement.Most of the BPR that under supervision cant be recovered and its license should be revoked and closed. Almost 70% closed due to fraud, he said recently.Good strengthening in management and human resources becomes important issue for BPR improvement onwards. Fraud that occurs in several banks has created negative image against BPR industry and will potentially lower the public trust in BPR.Infobanks Research Bureau Director Eko B. Supriyanto estimates 8.6% of BPR that currently operated are unhealthy because of negligence from the board director in managing the bank and fraud committed by the owner.On the other hand, the closing down of unhealthy BPR is actually burden Deposit Insurance Company. In fact, BPR that closed and then sold only gained 7% recovery from Deposit Insurance Companys expenses that disbursed to pay customer fund.Therefore, BI should tighten supervision against BPR since each day there is unhealthy BPR, which later closed, he affirmed.BPRs growth rate continues to shrink each time. There are 1,679 BPR as of March 2011, which means the number has been reduced by 27 BPR from the total amount in December 2010. It amounts shrunk 303 BPR in last 6 years because some of them were closed and the rest did not announce its financial report. BPR is microfinance bank that operates into rural areas. (t06/msw)

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