Unofficial Translation
BANK INDONESIA REGULATION NUMBER 8/25/PBI/2006
CONCERNING
AMENDMENT TO BANK INDONESIA REGULATION NUMBER 6/17/PBI/2004 CONCERNING SHARIA RURAL BANKS
GOVERNOR OF BANK INDONESIA,
Considering: a. whereas to enhance the growth of Sharia Rural Banks in order to be able to provide services for a wider coverage of community, it is necessary to adjust policies concerning the expansion of office network and capital;
b. whereas in order to be able to operate favorably, in addition to a strong capital, Sharia Rural Banks also need a professional management;
c. whereas pursuant to the considerations set forth in letter a and letter b, it is deemed necessary to amend Bank Indonesia Regulation Number 6/17/PBI/2004 concerning Sharia Rural Banks;
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Republic of Indonesia Number 182 of 1998, Supplement to the State Gazette of the Republic of Indonesia Number 3790); 2. Act Number 23 of 1999 concerning Bank Indonesia (State
Gazette of the Republic of Indonesia Number 66 of 1999, Supplement to the State Gazette of the Republic of Indonesia Number 3843) as amended by Act Number 3 of 2004 (State Gazette of the Republic of Indonesia Number 7 of 2004, Supplement to the State Gazette of the Republic of Indonesia Number 4357);
HAS DECREED :
To enact : BANK INDONESIA REGULATION CONCERNING AMENDMENT TO BANK INDONESIA REGULATION NUMBER 6/17/PBI/2004 CONCERNING SHARIA RURAL BANKS
CHAPTER I
A number of provisions in Bank Indonesia Regulation Number 6/17/PBI/2004 concerning Sharia Rural Banks (State Gazette of the Republic of Indonesia Number 58 of 2004, Supplement to the State Gazette of the Republic of Indonesia Number 4392) are amended as follows.
1. Provisions in Article 22 are amended to read as follows. Article 22
(1) Number or members of an SRB Board of Directors shall be no less than 2 (two) persons.
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(2) At least 50% (fifty percent) of the members of the Board of Directors including the President Director shall possess operational experience no less than :
a. 1 (one) year as an officer in funding and/or financing in sharia bank;
b. 4 (four) years as an employee in funding and financing in sharia bank;
c. 2 (two) years as an officer in funding and/or credit in conventional bank and possessing knowledge in sharia banking; or
d. 3 (three) years as a member of the Board of Directors or of the same level of the Board of Directors in sharia financial institution licensed by authorized institution.
(3) Any other member of the Board of Directors who has no experience in sharia banking is required to take training in sharia banking. (4) Minimum level of formal education for members of the Board of
Directors is of the same level of Diploma III or Bachelor Degree. (5) Any member of the Board of Directors is required to hold a passing
certificate issued by a certification agency.
(6) The President Director of an SRB shall be appointed from a party independent of controlling shareholder.
2. Article 35 paragraph (1) is amended and paragraph (2) is revoked Article 35 to read as follows.
Article 35
(1) New products and services to be launched by an SRB must have prior approval of Bank Indonesia.
- 4 - (2) Revoked.
3. Between Article 35 and Article 36 is inserted 1 (one) Article, namely Article 35A, to read as follows.
Article 35A
Any SRB is required to maintain Fixed Assets and Inventory at a maximum of 50% (fifty percent) of the SRB paid up capital.
4. Provisions in Article 37 are amended to read as follows. Article 37
(1) Any SRB Branch Office may only be opened with a license of Bank Indonesia.
(2) Any SRB may open Branch Office only in the same provincial area as its head office.
(3) Any SRB which its head office is located in the areas of the Capital City Territory of Jakarta and Regencies/Municipalities of Bekasi, Bogor, Depok, and Tangerang may open branch offices within these areas.
(4) Any plan for opening of Branch Office as referred to in paragraph (1) must be stated in SRB annual work plan.
(5) To open a Branch Office an SRB shall meet requirement for rating as Sound during the last 6 (six) months.
(6) The opening of any Branch Office shall meet the following requirements.
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a. An SRB with a paid up capital of less than Rp5,000,000,000.00 (five billion rupiah) is required to add the paid up capital at a minimum of 25% (twenty five percent) of the amount required for SRB establishment as referred to in Article 4;
b. An SRB with a paid up capital of Rp5,000,000,000.00 (five billion rupiah) or more is not required to add its paid up capital. 5. Provision in Article 41 paragraph (2) letter b is amended to read as
follows.
Article 41
(1) Any plan for opening of Cash Units and Outdoor Cash Services shall be included in SRB annual work plan.
(2) The opening of any Cash Unit and Outdoor Cash Services shall be permitted only in :
a. the same Regency/Municipality area as the parent SRB office; and/or
b. one Regency/Municipality area bordering directly on that of the parent SRB office either in the same province or different province.
(3) Any SRB intending to open a Cash Unit shall meet the requirement for rating of at least Fairly Sound during the last 6 (six) months. (4) Any Cash Unit may only open for business after receiving a letter of
confirmation from Bank Indonesia.
(5) The letter of confirmation as referred to in paragraph (4) shall be issued no later than 30 (thirty) days after the receipt of a complete application.
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6. Provision in Article 54 paragraph (3) is revoked to read as follows. Article 54
(1) Any Rural Bank conducting conventional business may only convert to a Rural Bank conducting business based on sharia principles pursuant to a license of business conversion granted by the Board of Governors of Bank Indonesia.
(2) The conversion of the business of a Rural Bank as referred to in paragraph (1) may only proceed if it is included in the Rural Bank annual work plan.
(3) Revoked.
7. Provisions in Article 55, Article 56, and Article 57 are revoked.
8. Provisions in Article 58 are amended and added with 1 (one) paragraph, namely paragraph (2), to read as follows.
Article 58
(1) Application for license of business conversion as referred to in Article 54 shall be submitted by the Board of Directors of Rural Bank to the Board of Governors of Bank Indonesia enclosing : a. bank statutes;
b. draft deed of amendment to the statutes in Indonesian language expressly stipulating that the Rural Bank shall conduct business based on sharia principles and the position and duties of the Sharia Supervisory Board approved by shareholder general meeting and witnessed by notary public;
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c. draft organizational structure and personnel;
d. plan of settlement on entire Rural Bank assets and liabilities to customers not willing to become SRB customers;
e. Rural Bank annual work plan including the first year work plan which includes at least :
i. Business plan covering the collection and distribution of funds and measures to be taken in realizing the plan;
ii. Employment plan;
iii. Monthly cash flow projection for 36 (thirty six) months since the beginning of SRB operations and projected balance sheets and profit/loss calculation;
f. feasibility study on the establishment of SRB including but not limited to analysis result on market opportunity and economic potentials of the Regency/Municipality area where the SRB resides and SRB operational area;
g. ownership data as referred to in Article 6 paragraph (1) letter b, enclosing documents as referred to in Article 6 paragraph (2) in the event of any replacement and/or addition of owner;
h. list of members of the Board of Directors and the Board of Commissioners and/or prospective members the Board of Directors and the Board of Commissioners in the event of any replacement, meeting the requirements as referred to in Article 21, 22, 23, and 24, enclosing documents as referred to in Article 9 paragraph (1) letter c, letter h, letter i, letter j, and letter k;
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i. list of members of the Sharia Supervisory Board meeting the requirements as referred to in Article 28 and 30, enclosing documents as referred to in Article 9 paragraph (1) letter c;
j. personal statements from members of the Board of Directors and the Board of Commissioners as referred to in Article 9 letter h, letter i, and letter k;
k. proof of operational preparedness as referred to in Article 9 letter f.
(2) Any SRB applying for a license of business conversion is required to deliver a presentation to Bank Indonesia on its entire business conversion plan.
9. Provision of Article 59 paragraph (2) is amended and paragraph (3) is revoked to read as follows.
Article 59
(1) Any approval or rejection of an application for business conversion as referred to in Article 58 shall be issued no later than 60 (sixty) days after the receipt of a complete document of application.
(2) With regard to the approval or rejection as referred to in paragraph (1), Bank Indonesia shall conduct :
a. examination and verification on the completeness and reliability of the documents of application;
b. interviews for owners and members of the Board of Directors, Board of Commissioners, and Sharia Supervisory Board;
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c. analysis including but not limited to bank rating, sound competitiveness level, and market fullness level between banks conducting business based on sharia principles and the SRB. (3) Revoked.
10. Between Article 59 and Article 60 is inserted 2 (two) articles, namely Article 59 A and Article 59 B, to read as follows.
Article 59 A
In the event that amendment of Rural Bank statutes needs approval of an authorized institution as referred to in Article 58 paragraph (1) letter b, the application of approval on amendment to statutes to the authorized institution shall be submitted together with the submission of the application of license of business conversion.
Article 59 B
(1) The license of business conversion as referred to in Article 54 paragraph (1) shall be in force since :
a. the date of approval on amendment to statutes or deed of establishment including statutes from authorized institution; or b. the date of registration of deed of amendment to statutes in the
list of companies if the amendment to statutes does not need approval of any authorized institution.
(2) Any Rural Bank which has obtained a license of business conversion from the Board of Governors of Bank Indonesia is required to conduct business based on sharia principles no later than 60 (sixty) days since the enforcement of the license of business conversion.
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11. Between CHAPTER XI and CHAPTER XII is inserted 1 (one) chapter, namely CHAPTER XI A, to read as follows.
CHAPTER XI A CERTIFICATION AGENCY
Article 65A
(1) Certification Agency as referred to in Article 22 paragraph (5) is an agency which regulates and stipulates certification system for members and prospective members of the Board of Directors meeting minimum requirements stipulated by Bank Indonesia.
(2) The minimum requirements as referred to in paragraph (1) shall be as follows.
a. Possessing vision and mission, especially in SRB human resource development aimed at the achievement of a sound, strong, and efficient SRB industry.
b. Possessing organs comprising certification council, national curriculum committee, and management.
c. Competent and committed to implement SRB human resource development policy; and
d. Not oriented on profit.
(3) Any Certification Agency as referred to in paragraph (1) may only be active under permission of authorized institution based on a recommendation of Bank Indonesia.
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(4) Bank Indonesia shall not grant recommendation as referred to in paragraph (3) if the need of certification agencies is considered fulfilled.
(5) Implementation of provisions concerning the certification as referred to in paragraph (1) shall be further stipulated in Bank Indonesia Circular Letter.
12. Provisions in Article 66 are amended to read as follows. Article 66
(1) Any SRB failing to comply with the provisions in Article 4, Article 12, Article 13, Article 14, Article 15, Article 16, Article 17 paragraph (2), Article 20, Article 21, Article 22, Article 23, Article 24, Article 26, Article 27, Article 28, Article 29 paragraph (1), Article 30, Article 31 paragraph (1) and paragraph (2), Article 33 paragraph (1), Article 34, Article 35, Article 35A, Article 36 paragraph (2), Article 41 paragraph (4), Article 43, Article 45, Article 49 paragraph (2), Article 50 paragraph (1), Article 53 paragraph (1), Article 54 paragraph (1), Article 59 B paragraph (2), Article 60 paragraph (2) and paragraph (3), Article 61, Article 62 paragraph (1), Article 64 paragraph (1), and Article 65, shall be liable to administrative sanctions as referred to in Article 52 Act Number 7 of 1992 concerning Banking as amended by Act Number 10 of 1998.
(2) Any SRB failing to comply with the provisions in Article 11 paragraph (2), Article 17 paragraph (1) and paragraph (4), Article 18
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paragraph (1), Article 19, Article 25, Article 33 paragraph (2) and paragraph (3), Article 40 paragraph (2) and paragraph (3), Article 42 paragraph (2), Article 44, Article 48 paragraph (1) and paragraph (3), Article 49 paragraph (3) and paragraph (5), Article 53 paragraph (2), Article 60 paragraph (1), Article 62 paragraph (4) and paragraph (5), Article 63 paragraph (2), and Article 64 paragraph (4) shall be liable to administrative sanctions as referred to in Article 52 Act Number 7 of 1992 concerning Banking as amended by Act Number 10 of 1998 in the form of :
a. Written warning and a fine of Rp100,000.00 (one hundred thousand rupiah) for each delay of report;
b. Written warning and a fine of Rp250,000.00 (two hundred and fifty thousand rupiah) if SRB does not submit report.
(3) Any SRB shall be declared not submitting report as referred to in paragraph (2) letter b if the SRB has not submitted the report after 30 (thirty) days since the report submission is overdue.
(4) Any party failing to comply with the provisions in Article 3 paragraph (1), Article 8 paragraph (2), and Article 37 paragraph (1) shall be liable to criminal sanctions as referred to in Article 46 Act Number 7 of 1992 concerning Banking as amended by Act Number 10 of 1998.
13. Provisions in Article 68 paragraph (1), paragraph (2), and paragraph (3) are amended and added with 1 (one) paragraph, namely paragraph (4), to read as follows.
- 13 - Article 68
(1) Any SRB failing to meet requirements as referred to in Article 35A shall bring itself into compliance with the provisions no later than December 31, 2007.
(2) Any member of the Sharia Supervisory Board failing to meet requirements as referred to in Article 30 shall bring himself into compliance with the provisions no later than July 1, 2007.
(3) Any SRB which has not met minimum paid up capital requirement as referred to in Article 4 shall meet the minimum paid up capital requirement :
a. No less than 50% (fifty percent) of minimum paid up capital by December 31, 2008;
b. No less than 70% (seventy percent) of minimum paid up capital by December 31, 2010;
c. 100% (one hundred percent) of minimum paid up capital by December 31, 2012;
(4) Requirement for member of the Board of Directors to hold a passing certificate as referred to in Article 22 paragraph (5) shall be met as follows.
a. At least 1 (one) member of the Board of Directors shall hold a passing certificate no later than December 31, 2007;
b. Other member of the Board of Directors shall hold a passing certificate no later than December 31, 2008.
- 14 - CHAPTER II
This Bank Indonesia Regulation shall be in force since its enactment.
Enacted in Jakarta Dated October 5, 2006
GOVERNOR OF BANK INDONESIA,
BURHANUDDIN ABDULLAH
STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 82 OF 2006
ELUCIDATION TO
BANK INDONESIA REGULATION NUMBER 8/25/PBI/2006
CONCERNING
AMENDMENT TO BANK INDONESIA REGULATION NUMBER 6/17/PBI/2004 CONCERNING SHARIA RURAL BANKS
GENERAL REVIEW
To enhance Sharia Rural Banks’ services in order to reach a wider coverage of community in need it is necessary to provide facilities in licensing and requirements for the opening of Sharia Rural Bank offices and the conversion of conventional Rural Banks to Rural Banks Based on Sharia Principles.
The facilities for the expansion of office network may only be provided taking into considerations on factors of adequate capital and management which is supported by competent executives.
Referring to the aforementioned considerations, it is deemed necessary to adjust the prevailing stipulations concerning conversion of business, capital requirements for the opening of offices, requirements for the management, and some other provisions.
ARTICLE BY ARTICLE Chapter I
Number 1
- 2 - Article 22
Paragraph (1)
Self-explanatory. Paragraph (2)
Letter a up to letter c Self-explanatory. Letter d
Sharia financial institutions include but not limited to sharia lending-borrowing cooperative and Baitul Maal wa Tamwil (BMT).
Paragraph (3)
Self-explanatory. Paragraph (4)
“Of the same level of Diploma III or Bachelor Degree” shall be confirmed by a written statement issued by the concerned university.
Paragraph (5)
Self-explanatory. Paragraph (6)
Assessment on the independence is based on relationship in management, ownership, and/or financial relationship with Controlling Shareholder’s business group.
Number 2
Article 35
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Bank Indonesia shall assess new products and services from the view points, among other things, of prudence and conformity of the sharia aspect and applicable banking stipulations.
New products and services shall include :
a. new products and services which have not had any license at the moment of extension of SRB business license by Bank Indonesia;
b. new products and services containing different characteristics to prevailing products and services of other SRBs; or
c. derivative products and services of prevailing products and services.
Number 3
Article 35A
Fixed assets and inventory are defined as tangible assets obtained ready to use or need to be made/built, which are used in SRB operations and not intended for sale/leasing in the SRB business.
Number 4
Article 37
Paragraph (1)
Self-explanatory. Paragraph (2)
Self-explanatory. Paragraph (3)
- 4 - Self-explanatory. Paragraph (4)
Self-explanatory. Paragraph (5)
Self-explanatory. Paragraph (6)
Self-explanatory. Number 5
Article 41
Paragraph (1)
Self-explanatory. Paragraph (2)
Letter a
Self-explanatory. Letter b
Example : an SRB which is located in Depok Municipality (included in the area of West Jawa Province) may open Cash Unit/Outdoor Cash Services in Ciputat (included in the area of Tangerang Regency, Banten Province) because Depok Municipality borders directly on Tangerang Regency, Banten.
Paragraph (3)
Self-explanatory. Paragraph (4)
Self-explanatory.
- 5 - Paragraph (5)
Self-explanatory. Number 6
Article 54
Paragraph (1)
Self-explanatory. Paragraph (2)
Self-explanatory. Number 7
Self-explanatory. Number 8
Article 58
Paragraph (1)
Self-explanatory. Paragraph (2)
Self-explanatory. Number 9
Article 59
Paragraph (1)
Self-explanatory. Paragraph (2)
Letter a
For confirmation of the reliability of documents, Bank Indonesia may conduct examination, if necessary.
Letter b
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The scope of interview includes but not limited to integrity and/or competence. Interview shall be conducted for a party which :
a. is never previously employed and/or never becomes a Controlling Shareholder in any banking institution; or
b. is previously employed and/or becomes a Controlling Shareholder in banking institution but further information on the integrity and/or competence of the person concerned are required.
If a prospective Controlling Shareholder of an SRB is incorporated as a legal entity or foundation, the interview shall be conducted for the members of the executive board of the legal entity or foundation, or officers empowered to represent the legal entity or foundation concerned.
If an SRB constitutes a part of the holdings of a business group, the interview to the prospective Controlling Shareholder shall be conducted for parties which according to the assessment of Bank Indonesia exercise either direct or indirect control of the entire business group.
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If the prospective Controlling Shareholder is the Central Government or Regional Government, no interview shall be conducted for the prospective Controlling Shareholder.
If there is no Controlling Shareholder, an interview shall be conducted for a specified prospective founding shareholder according to the assessment of Bank Indonesia.
Letter c
For confirmation of the reliability of documents, Bank Indonesia may conduct examination, if necessary.
Number 10
Article 59A
Self-explanatory Article 59B
Self-explanatory. Number 11
Article 65A
Paragraph (1)
Self-explanatory. Paragraph (2)
Letter a
Self-explanatory.
- 8 - Letter b
Self-explanatory. Letter c
Self-explanatory. Letter d
Self-explanatory. Paragraph (3)
Self-explanatory. Paragraph (4)
Self-explanatory. Paragraph (5)
Self-explanatory. Number 12
Article 66
Paragraph (1)
Self-explanatory. Paragraph (2)
Self-explanatory. Paragraph (3)
Self-explanatory. Paragraph (4)
Self-explanatory. Number 13
Article 68
Paragraph (1)
Self-explanatory.
- 9 - Paragraph (2)
Self-explanatory. Paragraph (3)
Self-explanatory. Paragraph (4)
Self-explanatory.
Chapter II
Self-explanatory.
