This summary describes a proposed investment by The Hongkong and Shanghai Banking Corporation Ltd, Singapore Branch; and/or any of its group holding companies, subsidiaries, or affiliates; and other lenders yet-to-be identified (the Guarantee Holder(s)) to provide up to US$750 million of non-shareholder loans to PT Bank Mandiri (Persero) Tbk. (Bank Mandiri), an Indonesian majority state-owned bank. The proceeds of the loan will be directed to finance and/or refinance a portion of Bank Mandiri’s portfolio of Micro, Small and Medium Enterprise (MSME) loans which may include loans under the People’s Business Credit (Kredit Usaha Rakyat, KUR program) (the “Project”). KUR is a key government loan and financing program to expand access to finance for MSMEs.  

The commercial loan will benefit from a MIGA guarantee for up to US$948 million, comprising 95% cover for loan principal and interest payments (including MIGA premia, if required), for a term of up to 3 years, against the risk of Non-Honoring of Financial Obligations by a State-Owned Enterprise (NHFO-SOE). 

Bank Mandiri is Indonesia’s largest state-owned bank with a dual role of fulfilling public-policy obligations in support of the country's national development agenda whilst operating as a commercially viable bank. Its public service function mandate includes acting as an agent of national development to provide essential goods or services to boost economic growth and generate revenue. 

Environmental Categorization 

Mandiri Bank provides financial services to individuals and companies across various sectors in Indonesia. The MIGA guarantee involves loans to finance Bank Mandiri’s MSME portfolio, specifically loans under the KUR program. ¹

 These transactions are mostly considered to have potentially limited adverse environmental and social (E&S) risks or impacts that are site-specific, reversible, and can be addressed through mitigation measures. The Project portfolio is thus considered medium risk, and the Project is categorized as FI-2 under MIGA’s Policy on Environmental and Social Sustainability (2013).     

The main E&S aspects of this Project relate to Bank Mandiri’s ability to identify, assess, and manage E&S risks and impacts associated with its MSME lending activities and the management of labor matters at the bank. MIGA analyzed Bank Mandiri’s portfolio and the Project portfolio by types of transactions, tenor, size, industry sectors, and exposure to MIGA’s Exclusion List. MIGA also assessed Bank Mandiri’s E&S risk management procedures in line with the requirements of MIGA’s Performance Standard 1: Assessment and Management of E&S Risks and Impacts (PS1), and also assessed the bank’s labor practices in line with MIGA’s Performance Standard 2: Labor and Working Conditions (PS2).   

As of December 2025, Bank Mandiri’s portfolio included the following business segments - corporate finance 60%; MSME loans 19%; project finance 12%; retail banking 8%; and financial intermediaries 1%. The main sectors in the bank’s portfolio include consumer loans, construction, fast-moving consumer goods, government, transportation, palm related, energy and water, mining and mortgage. Key sectors in the Bank Mandiri MSME KUR portfolio include retail trade, services, street vendors, and accommodation, as well as food crops, plantation, agriculture, apparel, and food and beverage, among others. Bank Mandiri currently has no exposure to activities on the MIGA Exclusion List with respect to the Project. 

For the purposes of the MIGA guarantee, the applicable E&S requirements for the MIGA Project portfolio will be: (i) the MIGA Exclusion List; (ii) applicable E&S laws in Indonesia; and (iii) sector specific screening for agribusiness where applicable. 

In relation to E&S risk management, Bank Mandiri has a risk management unit responsible for providing independent oversight into the measurement, monitoring, and management of environmental and social risks. Bank Mandiri applies an E&S risk management approach (ESRM) to all credit services, including SMEs. The bank screens eligible sub-borrowers against Bank Mandiri’s exclusion list and require them to comply with applicable E&S regulations and Industry Acceptance Criteria (IAC) via a credit risk scorecard. Bank Mandiri has established a credit policy for priority sectors within the IAC, which requires sector specific screening, including agriculture. In line with MIGA’s requirements for financial intermediaries, Bank Mandiri will incorporate MIGA’s Exclusion List and broaden the scope of implementation of the ESRM approach in the lending activities covered by the MIGA Project to ensure that these activities are assessed in line with the E&S requirements for this Project. 

MIGA’s review of the bank’s emergency preparedness and response plan and life and fire safety measures revealed that the plan and the measures are in line with the requirements under MIGA PS1.   

In relation to PS2, MIGA’s assessment revealed that Bank Mandiri’s labor policies are in line with the requirements of PS2. The bank’s policies cover amongst other aspects, terms of employment, recruitment, renumeration, benefits, training, disciplinary process, non-discrimination and grievance management.  

For the issued guarantee, Bank Mandiri will report annually to MIGA regarding the implementation of the E&S procedures for the Project portfolio, as well as its labor practices. 

Development Impact 

The Project’s expected development impact includes improved access to finance for Indonesia’s MSMEs, particularly those led by women. With MSMEs representing the majority of Indonesian businesses and employing a large share of the labor force, their role as the backbone of the economy is clear, yet they continue to face financing constraints. Bank Mandiri supports Indonesian MSMEs though working capital loans, investment loans, and micro business loans. The Project will help bridge an estimated $235 billion MSME financing gap, which amounts to over 22% of GDP. By promoting financial inclusion and supporting government efforts to strengthen access to finance, the Project has the potential to contribute to the resilience and overall development of the MSME sector through demonstration effects. The Project is aligned with the WBG’s Country Partnership Framework (CPF) FY21-25, as adjusted by the Performance and Learning Review issued in July 2024.  

¹MSME loans below US$30,000 for individual debtors.