Banking, Indonesia updates

OJK issues umbrella regulation for fintech development and establishes regulatory sandbox regime
Ali Budiardjo, Nugroho, Reksodiputro
  • Indonesia
  • 05 October 2018

Until recently, the Financial Services Authority (OJK) had never issued an overarching regulation governing the development of the fintech sector as a whole or replicating the sandbox regime and pre-audit mechanism established by Bank Indonesia for fintech in the payments arena. This gap has now been filled by OJK Regulation 13/POJK.02/2018 on Digital Financial Innovation in the Financial Services Sector.

New regulation has significantly changed e-money landscape
Ali Budiardjo, Nugroho, Reksodiputro
  • Indonesia
  • 27 July 2018

After nine years of regulating e-money transactions, the Indonesian Central Bank has responded to changes in technology by replacing the previous e-money regulation. The issuance of the new regulation has significantly changed the e-money landscape, as it applies to all licensed e-money players and prioritises consumer protection by requiring minimum capital and the placement of floating funds.

New OJK regulation on single presence policy
Ali Budiardjo, Nugroho, Reksodiputro
  • Indonesia
  • 23 February 2018

The new Financial Services Authority Regulation on the Single Presence Policy in Indonesian Banking was issued in July 2017. The policy aims to ensure that a single entity does not simultaneously hold a controlling interest in more than one bank. Therefore, a controlling shareholder of more than one bank is required to merge or consolidate its controlled banks, establish a bank holding company or establish a holding function.

New rules on employment of expatriates in banking sector
Ali Budiardjo, Nugroho, Reksodiputro
  • Indonesia
  • 09 February 2018

The Financial Services Authority (OJK) has introduced rules for the employment of expatriates and the transfer of knowledge in the banking sector, pursuant to which it has taken over the supervisory role previously performed by Bank Indonesia. Therefore, in order to employ an expatriate, a bank must now obtain OJK approval and submit reports on its expatriate staff. An expatriate's work permit will be processed by the Ministry of Manpower only after having been approved by the OJK.

New regulations to prevent financial crises and improve financial stability
Ali Budiardjo, Nugroho, Reksodiputro
  • Indonesia
  • 08 September 2017

New regulations require the banking and finance industries to comply with heightened supervision by financial authorities and will be welcomed by foreign investors and customers concerned with Indonesia's financial stability. Key developments include intensifying reporting obligations for systemically important banks, introducing tiered supervision and raising safeguard measures.

OJK's regulation on fintech-based lending services
Ali Budiardjo, Nugroho, Reksodiputro
  • Indonesia
  • 19 May 2017

To support the development of a technology-based financial industry in Indonesia, the Financial Services Authority recently issued Regulation 77/POJK01/2016 regarding technology-based fund-lending services. The regulation is designed to protect consumer and national interests, while at the same time provide opportunities for local providers of financial technology to grow and contribute to the national economy.

Regulation on mandatory use of rupiah and prohibition on dual price denomination
Ali Budiardjo, Nugroho, Reksodiputro
  • Indonesia
  • 09 October 2015

Bank Indonesia (the Indonesian central bank) has issued a regulation and accompanying circular letter governing the mandatory use of rupiah for all cash and non-cash transactions. In prescribing the mandatory use of rupiah – with certain exemptions and special considerations – the regulation and circular letter apply the territoriality principle that underlies many of Bank Indonesia's other regulations.

Mandatory use of the rupiah in Indonesia
Ali Budiardjo, Nugroho, Reksodiputro
  • Indonesia
  • 03 July 2015

Bank Indonesia has issued a regulation concerning the mandatory use of the rupiah within Indonesian territory, which applies to cash transactions as of March 31 2015 and non-cash transactions as of July 1 2015. However, there are a number of issues on which the regulation is less clear than might have been hoped.

Draft banking law proposes big changes
Ali Budiardjo, Nugroho, Reksodiputro
  • Indonesia
  • 13 February 2015

With the introduction of the new Banking Bill in Parliament, the Indonesian banking industry is set to enter a new phase. Unlike the existing law, the new bill is clearly underpinned by a spirit of nationalism, stressing reciprocal treatment of Indonesian banks operating in other countries and requiring the financial authorities to ensure this reciprocity at home.

New risk management regulations for financial services conglomerates
Ali Budiardjo, Nugroho, Reksodiputro
  • Indonesia
  • 16 January 2015

The newly established Financial Services Authority recently issued a set of regulations governing the financial services industry. The regulations are intended to promote sustainability, stability and competitiveness in light of the increasing complexity of transactions and interactions between financial institutions, as well as between companies within a financial conglomerate.

LPS issues regulation on procedures to sell shares of failing banks
Ali Budiardjo, Nugroho, Reksodiputro
  • Indonesia
  • 08 August 2014

The Indonesia Deposit Insurance Corporation (LPS) recently issued the new Regulation on Procedures to Sell Shares of Failing Banks, which replaces the previous regulation. The new regulation provides clearer and more thorough information regarding procedures to sell shares of failing banks. Among other things, the new regulation requires the LPS to sell all shares of rescued banks.

Bank Indonesia issues regulation on hedging transactions
Ali Budiardjo, Nugroho, Reksodiputro
  • Indonesia
  • 09 May 2014

As a reaction to the volatility of the rupiah over the past year, Bank Indonesia has issued a new regulation on hedging transactions. The regulation is expected to encourage the use of derivatives as a tool to hedge foreign currency exposure, and subsequently to reduce foreign currency spot transactions and ease pressure on the rupiah.

New bank regulations on minimum capital requirements and multiple licensing
Ali Budiardjo, Nugroho, Reksodiputro
  • Indonesia
  • 31 January 2014

The Indonesian central bank, Bank Indonesia, has issued two regulations that will change the way in which banks in the country do business. The regulations govern the business activities of banks on the basis of their capital. As a result, commercial banks which in the past had more freedom in their operations are now limited to undertaking business transactions that are in line with their capital strength.

Bank Indonesia updates regulation on single presence policy
Ali Budiardjo, Nugroho, Reksodiputro
  • Indonesia
  • 23 August 2013

Bank Indonesia has issued the updated Regulation on Single Ownership in Indonesian Banks in an attempt to improve the competitiveness of Indonesia's banking industry in light of economic development at regional and global levels by reducing the number of Indonesian banks through consolidation. This policy is commonly known as the 'single presence policy' and was first introduced by Bank Indonesia in 2006.

Regulation issued on bank ownership
Ali Budiardjo, Nugroho, Reksodiputro
  • Indonesia
  • 25 January 2013

After heated debate among regulators and politicians on what was seen as unhealthy concentrated ownership of banks by groups of companies – particularly foreign groups of companies – Bank Indonesia, the country's central bank and industry regulator, has issued the Regulation on Ownership of Shares in Commercial Banks, which restricts ownership of banks by individual shareholders.

Landmark legislation on new financial regulator
Ali Budiardjo, Nugroho, Reksodiputro
  • Indonesia
  • 20 January 2012

Parliament's long-awaited approval of the Bill on the Financial Services Authority is one of the most significant developments in the history of Indonesian law and will change the landscape of the country's financial industry. It not only establishes a new financial services authority, but also positions this new body as the main regulator and supervisor of Indonesia's financial sector.

New Bank Indonesia regulations on foreign exchange
Ali Budiardjo, Nugroho, Reksodiputro
  • Indonesia
  • 18 November 2011

In light of the current financial instability, Bank Indonesia has recently issued three regulations in an effort to make Indonesian exporters deposit their export revenues into banks in Indonesia. They include the requirement that stipulates that all foreign exchange export proceeds be received and deposited by the exporter in a foreign exchange bank.

Currency Law uncertainty over foreign currency payments
Ali Budiardjo, Nugroho, Reksodiputro
  • Indonesia
  • 12 August 2011

The new Currency Law is likely to have a major impact on Indonesia's payment systems and in the fields of trade and finance due to its requirements regarding the use of rupiah for payments. Its controversial prohibition of foreign currency for domestic payments appears to catch Indonesian subsidiaries and branches of foreign companies, including foreign-owned companies and bank branches.

Asset quality assessment of Sharia banks
Ali Budiardjo, Nugroho, Reksodiputro
  • Indonesia
  • 10 June 2011

Bank Indonesia has issued the Regulation on Asset Quality Assessment for Commercial Sharia Banks and Sharia Business Units. It 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.

Submitting reports on suspicious financial transactions
Ali Budiardjo, Nugroho, Reksodiputro
  • Indonesia
  • 11 March 2011

The head of the Indonesian Financial Transactions Report and Analysis Centre has issued a new regulation on the procedure for the submission of reports on suspicious financial transactions. Among other things, the regulation is intended to prevent and eventually abolish money laundering, and to improve the reporting system used by financial providers.

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