KEY BANKING REGULATIONS
B. BI Regulations that Still Valid
B.1 Regulations on Institution, Management, and Ownership of Banks
16. Determination of Status and Follow-up of Bank Supervision
experiencing difficulties that might jeopardize its business activities, i.e.
if it meets one or more criteria as follows:
a. CAR < 8%
b. GWM ratio in rupiah less than 5%
and based on OJK’s assessment:
• the Bank experiences underlying liquidity problems; or
• the Bank experiences deteriorating development within a short time.
15. Requirements for Non-foreign Exchange Commercial Banks to become Foreign Exchange Commercial Banks
The requirements for becoming Foreign Exchange Commercial Banks:
a. Having a minimum Capital Adequancy Ratio (CAR) of 8% in the latest month;
b. Having a consecutively sound condition of TKS in the last 24 months;
c. Total paid-up capital no less than Rp 150 billion;
d. Banks have made preparations to implement activities as Foreign Exchange Commercial Banks including: organization, HR, operational guidelines of foreign exchange activities and also admistration system and its supervision.
16. Determination of Status and Follow-up of Bank Supervision
a. Status determination of bank supervision consists of:
1) Normal Supervision;
2) Intensive Supervision; and 3) Special Supervision.
Period d. OJK’s assessment the bank has
underlying liquidity problems;
e. Ratio of NPL (non performing loans) in net above 5% from the total credit;
f. The soundness (TKS) of Bank at composite rating (PK) 4 or 5;
g. TKS bank at PK 3 and GCG at PK 4;
OJK shall determine BDPI status no longer than one year since the date of OJK’s notification letter.
OJK may extend the intensive supervision period no more than 1 time and no longer than 1 year only for BDPI that meets the criteria:
a. Non Performing Loan (NPL) in net above 5% from the total credit and its settlements is complex in nature;
b. Bank TKS at PK 4 or 5; and/or c. Bank TKS at PK 3 and GCG at PK 4.
Specifically for b and c criteria, the period extension of BDPI also accompanied with the increase of supervision actions.
OJK shall determine BDPK status no longer than 3 months since the date of OJK’s notification letter.
Supervisory Measures Instruct the bank to conduct
mandatory supervisory action, among others:
a. Write-off non performing loans and calculate bank losses with bank capital;
b. Limit payment of remuneration or other equivalent forms to the members of BOC and/or BOD of the bank, or compensation to related parties;
1. BDPK shall be required to increase capital to meet the KPMM and/
or obligation to meet GWM in accordance with the applicable regulation.
2. Aside of supervisory actions at the time of BDPI, in the context of special supervision, OJK has the authority to:
a. Prohibit banks to sell or decrease total
Supervisory Measures h. Conduct no or limit assets growth,
participation and/or provision of new funds;
i. Sell a part of or the entire assets and/or obligations of the bank to other parties;
j. Conduct no expansion of office networks;
k. Conduct no particular business activities;
l. Close bank office networks;
m. Make no inter-bank transactions;
n. Perform merger or consolidation with other banks;
o. Replace BOC and/or BOD;
p. Handover management of the entire or a part of bank activities to other parties; and/or q. Sell the bank to a buyer prepared
to taking over the entire bank obligations.
in the structure of bank business group, unless it has the approval of OJK; and/or c. Instruct banks to report every change of bank shareholding less than 10%.
DPI is obliged to:
a. Submit action plans in accordance with problems faced;
b. Submit realization of the action plans;
c. Submit a complete list of related parties; and/or
d. Perform other actions and/or report certain matters determined by OJK;
in the event a bank determined as BDPI due to a capital problem, the bank and/or the bank
shareholders is also required to submit a capital restoration plan in order to resolve the bank capital problem.
OJK freezes certain business activities of BDPK no longer than 1 month during the special supervision period in the event:
a. OJK considers that the bank condition deteriorating; and/or b. Violation of banking regulations
conducted by BOD, BOC and/or PSP.
Supervisory Measures Banks determined no longer under
intensive supervision status if the banks condition is improved and no longer having potential problems that might jeopardize the business continuity.
OJK shall announce in 2 daily newspapers which have wide circulation and in OJK homepage any BDPK which certain business activities has been freezed including the reasons and improvement actions that must be done and/or
Supervisory Measures OJK shall notify in writing to banks
which are no longer under intensive supervision.
Conversely, in order to balance the information to public, in the event the bank condition is improving and not categorized as bank under special supervision, OJK will also announce it.
Banks which certain business activities are frozen must notify all their office networks regarding the frozen status of certain business activities.
b. Banks which TKS Condition cannot be improved
BDPK shall be determined as banks which unsound condition cannot be improved if:
1) The special supervision period has not been passed, but the bank condition is deteriorating so that:
a) CAR ≤ 4% and considered cannot be increased to 8%, and/or
b) GWM ratio in rupiah ≤ 0% and considered cannot be settled according to the applicable regulation; or
2) The period of special supervision has been passed and:
a) CAR < 8% and/or
b) GWM Ratio in rupiah < 5%
c. Banks with Systemic Impact
In the event BDPK suspected to have systemic impact, OJK will provide information to the institution that has function to determine the policy for preventing and dealing with crisis based on the laws and regulations.
d. Banks with No Systemic Impact
In the event BDPK has no systemic impact and meets the criteria as bank which unsound condition cannot be recovered, OJK will notify and ask for the LPS decision whether or not to rescue the concerned bank.
In the event LPS decided not to rescue the bank referred to, OJK shall revoke the business license of the concerned bank after receiving notification regarding the LPS decision.
Further settlement to the bank which business license is revoked shall be conducted by LPS in accordance with the applicable laws and regulations.
e. Banks under the Handling or Rescuing of LPS Banks under the handling or rescuing of LPS shall be exempted from the determination as BDPI or BDPK. However, the bank referred to still has an obligation to conduct supervisory actions set by OJK, and in the event the referred bank meets the criteria of bank with unsound condition that cannot be improved, OJK will declare the referred bank as a bank that cannot be restructured.
17. Follow-up Handling towards BPR under Special