Microfinance: The Analysis of the Effectiveness of Risk Mitigation and Sustainability Strategies in Islamic Rural Bank (BPRS)

Financing at Islamic banks carries high risks, in the form of problematic financing and can reduce public trust. Risk management capabilities are needed, so that negative effects can be overcome immediately. The Covid 19 pandemic has left financial problems, namely high financing risks. This research analyzes the effectiveness of financing risk mitigation and sustainability strategies at Islamic Rural Bank (BPRS). The data analyzed is primary and secondary data. Primary data was obtained through in-depth interviews with bank administrators and supervisors, while secondary data was obtained through official financing risk management policy documents. The data analysis uses a qualitative descriptive approach and correlates it with relevant theories. The results of this research indicate that implementing financing risk management at BPRS has not been effective, which can be seen from the high level of financing relaxation, problematic financing, and decreasing financing ratios. However, this condition does not reduce the profitability ratio. The Islamic bank's ability to survive is influenced by implementing internal sustainability strategies such as strengthening employee morale, changing standard financing procedures, assisting customers, and tightening financing distribution policies.