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The Financial Services Authority (the “OJK”) has had regulatory authority over Indonesian banks, except Bank Indonesia (“BI”), since 31st December, 2013, as stipulated under Law No. 21 of 2011 regarding the Financial Services Authority. BI is Indonesia’s central bank and maintains jurisdiction over the monetary supply.
The OJK changed its policy in 2015 for bank acquisitions involving more than 40% of the shares of the target bank. In the past, the acquiring bank could only initially acquire a maximum of 40% of the target bank’s issued shares. If the acquirer wished to acquire a greater percentage, then it had to file a separate application for approval after the initial 40% acquisition. The application also required the acquirer and the target companies to satisfy more stringent requirements. Among others, both the acquirer and the target companies had to be public companies.
In 2015 the OJK informally changed its policy such that the acquirer is now allowed to obtain approval to acquire more than 40% of the shares in a target company at one time, provided the acquirer agrees to purchase more than one target company and then merges or consolidates the two subsidiaries after completion of the acquisition.
The OJK issued Circular Letter No.6/SEOJK.03/2015 regarding Non-Office Financial Services in the Framework of Inclusive Finance by Banks (“OJKCL 6”). OJKCL 6 implements OJK Regulation No. 19/POJK.03/2014 regarding Financial Services (“POJK 19”). Among other matters, OJKCL 6 allows branchless banking. While this should be helpful for people in remote areas of Indonesia, where they have to travel far to get to the nearest bank branch, branchless banking is limited. For example, it only covers basic savings accounts. The requirements for a basic savings account are: (i) it can only be registered under the individual name of an Indonesian citizen; (ii) it must be in Rupiah currency; (iii) there must be no minimum deposit or balance; (iv) the maximum balance in the account must not exceed 20 million IDR; and (v) the cumulative transactions in the bank account must not exceed 5 million IDR in one month.
Under Bank Indonesia Regulation No. 17/3/PBI/2015 regarding Requirements to Use Rupiah Currency (“BI Reg 17/2015”), BI requires cash and non-cash transactions within Indonesia to be done in Rupiah.
SSEK - 30th May 2016
Contribution to GDP: 2.87% (2016)
Return on Assets: 2.30% (Q4 2015)
Number of Commercial Banks: 120; 4 State/Partially State Owned, 10 Foreign, 16 Joint Ventures, 32 Non Foreign Exchange, 35 Foreign Exchange, 26 Regional Development Banks (August 2015).
Number of Islamic Banks & Units: 13 Banks, 32 Units (2016)
Total Assets: 6,244 trillion IDR (Q3 2015)
Government Bodies: Bank Indonesia, Ministry of Finance, Financial Services Authority (OJK).
Relevant Law: Bank Indonesia Regulation No. 14/8/PBI/2012 on Share
Ownership in Commercial Banks limits ownership by a single local/foreign financial institution to 40%, by a non financial institution to 30%, and by an individual to 20%. Larger stake is possible with the approval of Bank Indonesia.
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