We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.
10 June 2011
On March 25 2011 Bank Indonesia issued the Regulation on Asset Quality Assessment for Commercial Sharia Banks and Sharia Business Units (13/13/PBI/2011). The regulation has been issued to:
In essence, the regulation requires Sharia-compliant banks and Sharia business units to assess and supervise their own asset activities and to be proactive in ensuring the liquidity of their productive and non-productive assets. The asset assessment must be conducted monthly and reported to Bank Indonesia, along with documents to support the assessment and classification. If supporting documents are not supplied, Bank Indonesia may downgrade the bank's asset quality rate.
The regulation also defines the terms 'productive assets' and 'non-productive assets' and stipulates how these assets are to be treated in the assessment. 'Productive assets' include all investments by the bank, in rupiah or foreign currency, that will potentially gain income, whereas 'non-productive assets' are assets that may cause potential loss to the banks.
Chapter V of the regulation includes provisions on the mechanism and procedures for the write-off of both productive and non-productive assets, the valuation of the securities and the removal of the right to collect. Like most Bank Indonesia rules, the regulation provides for administrative penalties for non-compliance.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.