Sharia Principles in the Activities of Collecting and Chanelling Funds and Providing Sharia Bank Services. Bank Roles in the Prevention and Eradication of Money Laundering Crimes based on Law of the Republic of Indonesia No.
FINANCIAL SERVICES
- FINANCIAL SERVICES AUTHORITY
- OJK Vision and Mission Vision
- OJK Purpose
- OJK Function and Duties
- OJK Organization
- Mechanism of Coordination between Bank Indonesia and Financial Services Authority
FKMM is a forum established to smoothen and optimize cooperation and coordination in order to implement the functions, duties and authorities of BI and OJK. Development of Joint Implementation Guidelines on the Mechanism of Cooperation and Coordination of BI and OJK.
BANKING
BANKING
The primary function of Indonesian banking is as the collector and distributor of public funds, and aims to support the implementation of national building in order to enhance the equalization of the development and its results, economic growth and national stability, towards the improvement of the people’s standard of living. Banking has a strategic position, namely, supporting the smooth operations of the payment system, implementing monetary policy and achieving financial system stability, hence, it requires a banking system that is sound, transparent and accountable.
Definition
Indonesian Banking, in running its function is based on the economic democracy and applies prudential principle. Undertaking custodial activities for the benefits of other parties on the basis of an agreement based on Sharia Principles;.
Prohibition of Bank Business Activities 1. Prohibition of Business Activities of BU
Activities of business support are other activities conducted by banks beyond the business activities of banks. Prohibition of Business Activities of BPR .. a) Accepting deposits in the form of demand deposits and participating in payment traffic;.
BANK REGULATION AND SUPERVISION
- BANK REGULATION AND SUPERVISION
- The Purpose of Bank Regulation and Supervision Bank regulation and supervision is directed to optimize
- Bank Regulation and Supervision Authority
- Bank Supervision System
- Banking Information System to Support Bank Supervisory Duties
- Roadmap of SLIK data collection
- Banking Investigation
- Consumer Education and Protection
In the future SLIK will be further developed in order to be able to support financing and investments in capital markets and non-bank financial industry, and also market intelligence. Preventive actions are carried out in the form of governance and implementation in the field of education and protection.
BANKING DEVELOPMENT AND
Banking Development Year 2016
OJK motivates financial services industry to increase its contribution in the national economic growth and to enhance competitiveness, particularly in facing the Asean Economic Community (AEC). To provide direction on the national financial industry development in the next five years, OJK has launched a Master Plan of SJK Indonesia 2015-2019.
Medium-Term Banking Development
To improve the role of banks in the funding of environmentally friendly business sectors as a part of the implementation of Sustainable Finance Roadmap (RKB);. The roles of Sustainable Finance were expected to not only increase the financing portion but also to improve resiliency and competitiveness of financial service institutions.
Basel Framework
The minimum leverage ratio that should be met was 3%, calculated by dividing core capital (Tier 1) with the bank’s total exposure (without weighted risk). In implementing leverage ratio, OJK had issued CP Leverage Ratio in October 2014 asking inputs from various relevant parties.
Regional Development Bank (BPD) as Regional Champion
By the launching of the BPD Transformation Program, it is expected that BPD in the future will become competitive, strong and contributive banks for regional development. The vision of the referred BPD Transformation Program is “to become a strong bank with high competitiveness and significant contribution for the growth and equality of sustainable regional economy”, in line with the target of the Master Plan for Financial Services Sector as well as the vision of Indonesian Long Term Development. The BPD Transformation Program must be based on a solid foundation, covering a strong corporate culture, good corporate governance (GCG), risk management and internal control that is effective to support the effectiveness of operations and competitiveness.
To support the implementation of BPD Transformation Program, OJK and ASBANDA has explored cooperations with several international institutions. Association of Germany Savings Bank (Sparkassen Foundation for International Cooperation) has agreed to provide technical assistance to ASBANDA and BPD in the framework of implementation of the said BPD Transformation Program for three years. To ensure the success of BPD Transformation Program, intensive communication programs will continue to be conducted to all stakeholders in order to increase awareness and their support to the BPD Transformation Program.
In 2015 a series of activities have been carried out in the context of the referred BPD Transformation Program among others in the form of capacity enhancement of the Management, Executive Officials and Supervisors.
Sharia Banking Development 1. General Review of Sharia Banking
This OJK Circular Letter becomes the basis for the application of Guidelines on Indonesian Sharia Banking Accounting (PAPSI-Pedoman Akuntansi Perbankan Syariah Indonesia) of BPRS. BPRS capital based on operational area zone, roadmap on spin-off prepation of UUS BPD and increased financing of sharia banking in agriculture sector. In addition to that, application of roadmap of sharia banking 2015-2019 to accelerate sharia banking is expected to increase the total assets and market share of sharia banking in year 2016.
Meanwhile, the policy direction of sharia banking development in 2016 is aligned with the 7 (seven) policy direction of sharia banking development in the Roadmap of Sharia Banking 2015-2019 as a reference in implementing the activities of sharia banking for the next one year. Roadmap of Indonesia Sharia Banking 2015-2019 In the effort to rebuild the rapid growth of sharia banking industry and to achieve the vision to provide a significant contribution of sharia banking to the national economy, a roadmap of sharia banking development is crucial to be formulated. Roadmap of Sharia Banking (RPS-RoadmapPerbankan Syariah) of Indonesia 2015-2019 shall present strategic issues or challenges that still occur in the sharia banking industry.
To realize sharia banking that significantly contributes to the growth of sustainable economic, equitable development and financial system stability as well as high competitiveness”.
Rural Banks Development (BPR)
Therefore, the implementation good governance principles, GCG and risk management for BPR becomes a necessity and is to be implemented immediately. In 2015, the policy on BPR development will be focused on the efforts to consolidate industrial security and good governance improvement in order to increase competitiveness through capital strengthening policy, implementation of GCG principle and Risk Management. The above paid-up capital requirement shall not be obligatory for BPR that has been in operation at the time the POJK has been enacted, normally known as existing BPR.
Regarding the aforementioned matter, an assessment had been carried out to draft a capital security policy for existing BPR in order to improve resiliency and competitiveness of BPR in the future. Although there are no specific regulations regarding BPR GCG, the spirit of GCG principle has been included in various regulations applicable for BPR. Therefore, in order to anticipate future potential loss, Risk Management needs to be implemented, namely a series of methodologies and procedures used to identify, measure, monitor and control any risks arising from BPR business activities.
BPR Risk Management Concept covered among others the types of relevant risk, implementation of risk types and risk management process (identification, evaluation, supervision and risk control) in accordance to the characteristics of BPR businesses.
Integrated Supervision
IT aspect becomes very important as it is related to the continuity of bank operations. To increase the effectiveness, consistency, transparency and efficiency of decision-making process in an integrated supervision, OJK has also established an Integrated Supervision Committee consisted of Chief Executive and Deputy Commissioners related to Banking Supervision, IKNB, and Capital Market. The scope and duty of the Integrated Supervision Committee among others (1) to propose policy directions of integrated supervision; (2) to determine results and supervisory actions; and (3) to report the results and plans for supervisory actions periodically in the Board of Commissioners Meeting (RDK-Rapat Dewan Komisioner) or based on a call for meeting from one of the Member of BOC (DK) and/or RDK.
KEY BANKING REGULATIONS
KEY BANKING REGULATIONS
New Regulations of OJK Products
- Implementation of Governance for Rural Banks (BPR)
- Transparency and Publication of Bank Reports Pursuant to OJK Regulation No.6/POJK.03/2015
- Issuance of Certificates of Deposits by Banks Pursuant to OJK Regulation Number 10/POJK.03/2015
- Prudential Regulation in the context of National Economic Stimulus for Commercial Banks
- Prudential Regulation in the context of National Economic Stimulus for Sharia Commercial Banks
- Application of Risk Management for Rural Banks (BPR)
- Products and Activities of Sharia Banks and Sharia Business Units
- Submission of Foreign Customers Information related to Taxation to Partner Countries or
- Integrated Minimum Capital Requirement for Financial Conglomerates
- Bank Business Activities in the Form of Fiduciary Arrangement (Trust)
- Requirement for Liquidity Coverage Ratio for
- Competency Certification for Members of Board of Directors and Members of Board of
- Application of Governance in the Provision of Remuneration for Banks
After passing the announcement deadline up to no later than 1 (one) month after the deadline of the announcement. In the context of risk management inherent to the issuance of the new product and/or new activity implementation, BPR are obliged to have a written policy and procedure. Banks are obliged to obtain approvals from OJK to issue new Products and/or implement new Activities if the new Products and/or Activities are not specified in the codification of the Bank Products and Activities/ . f.
BPR and BPRS through competency improvement of Members of the Board of Directors and Members of the Board of Commissioners of BPR and BPRS with certifications. Work Competency Certificate level 1 must be owned by Members of the BOD of BPR and BPRS with a total assets less than Rp300 billion;. Work Competency Certificate level 2 must be owned by Members of the BOD of BPR and BPRS with a total assets no less than Rp300 billion;.
Indonesia as one of the G-20 members has committed to adopt the principles in the form of regulations.
BI Regulations that Still Valid
- Regulations on Institution, Management, and Ownership of Banks
- Bank Establishment
- Bank Ownership
- Sole Proprietorship in Banking in Indonesia Key policies of sole proprietorship are that every
- Shares Ownership in Commercial Banks
- Management of Banks
- Foreign Workers Utilization and Transfer of Knowledge Program in Banking Sector
- Fit and Proper Test for BUS and UUS OJK shall conduct FPT to
- Opening of Bank Offices
- Change of Name and Logo of Banks
- Change of Business Activities of Conventional Banks into Sharia Banks
- Closure of Bank Branch Offices
- Closure of Sharia Business Units
- Requirements for Non-foreign Exchange Commercial Banks to become Foreign Exchange
- Determination of Status and Follow-up of Bank Supervision
- Follow-up Handling towards BPR under Special Supervision Status
- Follow-up Handling towards BPRS Under Special Supervision Status
- Bank Liquidation
- Business License Revocation on Request of the Shareholders (Self Liquidation)
- Regulation on Business Activities and Several Products of Banks
- Foreign Exchange Traders for Banks
- Foreign Exchange Transactions against Rupiah Improvement of regulation on foreign exchange
- Derivative Transactions
- Commercial Papers
- Deposits
- Branchless Financial Services in the Context of Inclusive Finance (Laku Pandai)
- Fiduciary Arrangement (Trust)
- Regulation on Products of Sharia Banks and Sharia Business Units
- Sharia Principles in the Activities of Collecting and Chanelling Funds and Providing Sharia
- Regulation on Financing Product of Gold Ownership for Sharia Banks and Sharia Business
- Regulation on Prudential
- Core Capital of Commercial Banks
- Net Open Position
- Regulation on Legal Lending Limit a. BU
- Quality of Assets of Sharia Commercial Banks and Sharia Business Units
- Assets Quality of BPRS
- Allowance for Uncollectible Accounts a. BU
- Debt Restructuring
- Financing Restructuring for BUS and UUS Pursuant to OJK Regulation No.16/POJK.03/2014
- Financing Restructuring for BPRS
- Statutory Reserves a. BU
- Transparency of Bank Financial Condition a. BU
- Transparency of Information on Bank Products and Utilization of Customer Personal Data
- Prudential Principle in the Investment Activities of Commercial Banks
- Prudential Principle in the Activities of Asset Securitization for Commercial Banks
- Prudential Principle in Implementing Structured Product Activities of Commercial Banks
- Prudential Principle in Implementing Agency Activities of Foreign Financial Products by
- Prudential Principle for Commercial Banks Outsourcing Part of the Job Implementation to
- Application of Anti-Fraud Strategy for Commercial Banks
- Business Activities and Office Network of BU, BUS and UUS Based on Core Capital
Members of the BOD and BOC are required to meet the requirements: (i) competency; (ii) integrity; and (iii) financial reputation. Declared as a politician and/or shareholder, members of the BOC or BOD found guilty causing bankruptcy of a company. The plan for the change of business activities of Conventional Banks into Sharia Banks must be specified in the RBB of the Conventional Banks.
Sell a part of or the entire assets and/or obligations of the bank to other parties;. Calculation of capital adequacy is one of the fundamental aspects in the implementation of prudential principles. Banks are obliged to conduct quality assessment of the Earning Assets (AP-Aset Produktif) and Non-Earning Assets (NPA-Non Produktif Aset).
Banks are prohibited to conduct capital investment in excess of the limit of funds provision as referred to in the applicable regulation on BMPK. Obligation to divest equity participation shall be conducted, in the event: (1) Equity Participation causes or expected to cause decrease of the bank capital and/or increase of the bank risk profiles significantly; or (2) on recommendations of the Subsidiary authorities and/or on instruction of OJK. Already listed and/or complied with the regulation of the authorities in the country of origin of the issuers; and.
