Financial Services Authority Regulation Number 3 of 2022 Concerning the Assessment of the Health Level of Rural Credit Banks and Sharia Rural Financing Banks

COPY
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 3 /POJK.03/2022
CONCERNING
THE ASSESSMENT OF THE HEALTH LEVEL OF RURAL CREDIT BANKS AND SHARIA RURAL FINANCING BANKS BY THE GRACE OF THE MOST HIGH GOD, THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY, Considering:
a. that the health level of rural credit banks and sharia rural financing banks is of interest to all parties, including owners, management, and relevant agencies, to understand the performance and condition of rural credit banks and sharia rural financing banks; b. that the health level of rural credit banks and sharia rural financing banks serves as a tool for the Financial Services Authority to understand the performance and condition of rural credit banks and sharia rural financing banks in setting supervision strategies and focus;
c. that to improve the effectiveness of risk management and governance implementation, it is necessary to refine the regulations on the assessment of the health level of rural credit banks and sharia rural financing banks with a risk-based approach;
d. that based on the considerations referred to in letters a, b, and c, it is necessary to establish a Financial Services Authority Regulation concerning the Assessment of the Health Level of Rural Credit Banks and Sharia Rural Financing Banks; Recalling:

1. Law Number 7 of 1992 concerning Banking (State Gazette of the Republic of Indonesia Year 1992 Number 31, Supplement to the State Gazette of the Republic of Indonesia Number 3472) as amended by Law Number 10 of 1998 concerning Amendments to Law Number 7 of 1992 concerning Banking (State Gazette of the Republic of Indonesia Year 1998 Number 182, Supplement to the State Gazette of the Republic of Indonesia Number 3790);
2. Law Number 21 of 2008 concerning Sharia Banking (State Gazette of the Republic of Indonesia Year 2008 Number 94, Supplement to the State Gazette of the Republic of Indonesia Number 4867);
3. Law Number 21 of 2011 concerning the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Supplement to the State Gazette of the Republic of Indonesia Number 5253);
   DECIDING:
   Establishing: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING THE ASSESSMENT OF THE HEALTH LEVEL OF RURAL CREDIT BANKS AND SHARIA RURAL FINANCING BANKS.

CHAPTER I
GENERAL PROVISIONS
Article 1
In this Financial Services Authority Regulation, the following terms are defined:

1. Rural Credit Bank, hereinafter abbreviated as BPR, is a conventional bank that does not provide payment transaction services in its operations.
2. Sharia Rural Financing Bank, hereinafter abbreviated as BPRS, is a sharia bank that does not provide payment transaction services in its business activities.
3. Board of Directors is the board of directors for BPR and BPRS in the form of a limited liability company, state-owned enterprise, regional enterprise, regional company, or management for BPR in the form of a cooperative legal entity.
4. Board of Commissioners is the board of commissioners for BPR and BPRS in the form of a limited liability company, or commissioner for BPR in the form of a regional enterprise legal entity, supervisory board for BPR in the form of a state-owned enterprise legal entity and regional enterprise legal entity, and supervisor for BPR in the form of a cooperative legal entity.
5. Health Level of BPR and BPRS is the result of the assessment of the condition of BPR and BPRS conducted against the factors of risk profile, governance, profitability, and capital of BPR and BPRS.
6. Composite Rating is the final rating of the Health Level assessment results of BPR and BPRS.

Article 2
(1) BPR and BPRS are required to maintain and/or improve the Health Level of BPR and BPRS by applying prudential principles and risk management in carrying out business activities, and by applying sharia principles for BPRS. (2) The Board of Directors and Board of Commissioners of BPR and BPRS are required to:
a. ensure efforts to maintain and monitor the Health Level of BPR and BPRS; and b. take necessary steps to maintain and/or improve the Health Level of BPR and BPRS, as referred to in paragraph (1). (3) BPR or BPRS that violates the provisions referred to in paragraph (1) and/or members of the Board of Directors and/or members of the Board of Commissioners who violate the provisions referred to in paragraph (2) shall be subject to administrative sanctions in the form of written reprimands. (4) In the event that:
a. BPR or BPRS, members of the Board of Directors, and/or members of the Board of Commissioners have been subject to administrative sanctions as referred to in paragraph (3); and b. BPR or BPRS continues to violate the provisions referred to in paragraph (1) and/or members of the Board of Directors and/or members of the Board of Commissioners continue to violate the provisions referred to in paragraph (2), BPR or BPRS may be subject to administrative sanctions in the form of:

1. prohibition on expanding business activities and/or office networks; and/or
2. temporary suspension of some operational activities of BPR or BPRS.
   (5) In the event that:
   a. BPR or BPRS, members of the Board of Directors, and/or members of the Board of Commissioners have been subject to administrative sanctions as referred to in paragraph (3) and/or paragraph (4); and b. BPR or BPRS continues to violate the provisions referred to in paragraph (1) and/or members of the Board of Directors and/or members of the Board of Commissioners continue to violate the provisions referred to in paragraph (2), the principal parties of BPR or BPRS may be subject to administrative sanctions in the form of prohibition as principal parties in accordance with the Financial Services Authority Regulation concerning re-evaluation for principal parties of financial service institutions. (6) The administrative sanctions referred to in paragraph (3), paragraph (4), and paragraph (5) shall apply starting from the reporting position for December 2023.

CHAPTER II
ASSESSMENT OF THE HEALTH LEVEL OF BPR AND BPRS
Article 3
(1) BPR and BPRS are required to conduct self-assessments of the Health Level of BPR and BPRS completely and correctly in accordance with this Financial Services Authority Regulation. (2) The self-assessment of the Health Level of BPR and BPRS referred to in paragraph (1) must be conducted every semester for the end-of-period positions in June and December. (3) In the event that certain conditions are met based on self-assessment and/or upon request by the Financial Services Authority, BPR and BPRS are required to update the self-assessment of the Health Level of BPR and BPRS from time to time. (4) The results of the self-assessment of the Health Level of BPR and BPRS referred to in paragraph (2) and paragraph (3) must be approved by the Board of Directors and submitted to the Board of Commissioners. (5) BPR and BPRS are required to submit the results of the self-assessment of the Health Level of BPR and BPRS every semester for the end-of-period positions in June and December as referred to in paragraph (2) to the Financial Services Authority for:
a. the assessment of the Health Level of BPR and BPRS for the end-of-period position in June, submitted no later than July 31; and b. the assessment of the Health Level of BPR and BPRS for the end-of-period position in December, submitted no later than January 31. (6) The Financial Services Authority may request BPR and BPRS to submit results of updates to the self-assessment of the Health Level of BPR and BPRS from time to time as referred to in paragraph (3). (7) BPR or BPRS that violates the provisions referred to in paragraph (1), paragraph (2), paragraph (3), paragraph (4), and/or paragraph (5) shall be subject to administrative sanctions in the form of written reprimands. (8) In the event that BPR or BPRS:
a. has been subject to administrative sanctions as referred to in paragraph (7); and b. continues to violate the provisions referred to in paragraph (1), paragraph (2), paragraph (3), paragraph (4), and/or paragraph (5), BPR or BPRS may be subject to administrative sanctions in the form of:

1. prohibition on expanding business activities and/or office networks; and/or
2. temporary suspension of some operational activities of BPR or BPRS.
   (9) In the event that BPR or BPRS:
   a. has been subject to administrative sanctions as referred to in paragraph (7) and/or paragraph (8); and b. continues to violate the provisions referred to in paragraph (1), paragraph (2), paragraph (3), paragraph (4), and/or paragraph (5), the principal parties of BPR or BPRS may be subject to administrative sanctions in the form of prohibition as principal parties in accordance with the Financial Services Authority Regulation concerning re-evaluation for principal parties of financial service institutions. (10) The administrative sanctions referred to in paragraph (7), paragraph (8), and paragraph (9) shall apply starting from the reporting position for December 2023. (11) Provisions regarding the format of the results of the self-assessment of the Health Level of BPR and BPRS shall be established by the Financial Services Authority.

Article 4
(1) The results of the self-assessment of the Health Level of BPR and BPRS as referred to in Article 3 paragraph (5) and the results of the self-assessment of the Health Level of BPR and BPRS from time to time as referred to in Article 3 paragraph (6) shall be reported online through the Financial Services Authority reporting system. (2) In the event that the Financial Services Authority reporting system referred to in paragraph (1) is not yet available, the reports referred to in Article 3 paragraph (5) and/or paragraph (6) shall be submitted offline. (3) In the event that the deadline for submitting the results of the self-assessment of the Health Level of BPR and BPRS as referred to in Article 3 paragraph (5) falls on a Saturday, Sunday, or holiday, the results of the self-assessment of the Health Level of BPR and BPRS shall be submitted on the next working day. (4) Provisions regarding the submission of the results of the self-assessment of the Health Level of BPR and BPRS shall be established by the Financial Services Authority.

Article 5
(1) The Financial Services Authority conducts the assessment of the Health Level of BPR and BPRS every semester for the end-of-period positions in June and December.
(2) In the event that BPR and BPRS meet certain conditions, the Financial Services Authority may conduct updates to the assessment of the Health Level of BPR and BPRS from time to time. (3) The assessment of the Health Level of BPR and BPRS as referred to in paragraph (1) and the update of the assessment of the Health Level of BPR and BPRS from time to time as referred to in paragraph (2) are conducted based on:
a. examination results; b. results of analysis of periodic reports submitted by BPR and BPRS; and/or
c. other information.

Article 6
In the event that there is a difference between the results of the assessment of the Health Level of BPR and BPRS conducted by the Financial Services Authority as referred to in Article 5 and the results of the self-assessment of the Health Level of BPR and BPRS as referred to in Article 3, the assessment of the Health Level of BPR and BPRS that applies is the result of the assessment of the Health Level of BPR and BPRS conducted by the Financial Services Authority.

CHAPTER III
MECHANISM OF ASSESSMENT OF THE HEALTH LEVEL OF BPR AND BPRS
Section One
General
Article 7
(1) BPR and BPRS are required to conduct the assessment of the Health Level of BPR and BPRS using a risk-based approach with an assessment scope covering the factors:
a. risk profile; b. governance;
c. profitability; and
d. capital.
(2) The assessment of the Health Level of BPR and BPRS based on the factors referred to in paragraph (1) is conducted through comprehensive and structured analysis.
(3) BPR or BPRS that violates the provisions referred to in paragraph (1) shall be subject to administrative sanctions in the form of written reprimands.
(4) In the event that BPR or BPRS:
a. has been subject to administrative sanctions as referred to in paragraph (3); and b. continues to violate the provisions referred to in paragraph (1), BPR or BPRS may be subject to administrative sanctions in the form of:

1. prohibition on expanding business activities and/or office networks; and/or
2. temporary suspension of some operational activities of BPR or BPRS.
   (5) The administrative sanctions referred to in paragraph (3) and paragraph (4) shall apply starting from the reporting position for December 2023.
   (6) Provisions regarding the mechanism of the assessment of the Health Level of BPR and BPRS shall be established by the Financial Services Authority.

Section Two
Assessment of the Risk Profile Factor
Article 8
(1) For BPR, the assessment of the risk profile factor as referred to in Article 7 paragraph (1) letter a is an assessment of inherent risk and the quality of risk management implementation in BPR operations conducted against 6 (six) types of risks:
a. credit risk; b. operational risk;
c. compliance risk;
d. liquidity risk; e. reputation risk; and f. strategic risk.
(2) The assessment of the risk profile factor as referred to in paragraph (1) is implemented in accordance with the Financial Services Authority Regulation concerning the implementation of risk management for rural credit banks. (3) BPR with core capital of at least IDR 50,000,000,000.00 (fifty billion rupiah) is required to apply risk management for all types of risks as referred to in paragraph (1). (4) BPR with core capital of less than IDR 50,000,000,000.00 (fifty billion rupiah) is required to apply risk management for at least 4 (four) types of risks as referred to in paragraph (1) letters a through d. (5) BPR with core capital of less than IDR 50,000,000,000.00 (fifty billion rupiah) but having products, services, and/or other activities that increase risk exposure is required to apply risk management for all types of risks as referred to in paragraph (1). (6) BPR with core capital:
a. of at least IDR 50,000,000,000.00 (fifty billion rupiah) as referred to in paragraph (3); or b. of less than IDR 50,000,000,000.00 (fifty billion rupiah) but having products, services, and/or other activities that increase risk exposure as referred to in paragraph (5), shall submit risk profile reports in accordance with the Financial Services Authority Regulation concerning the implementation of risk management for rural credit banks covering 6 (six) types of risks as referred to in paragraph (1) starting from the second semester of 2022. (7) BPR with core capital of less than IDR 50,000,000,000.00 (fifty billion rupiah) as referred to in paragraph (4) shall submit risk profile reports in accordance with the Financial Services Authority Regulation concerning the implementation of risk management for rural credit banks covering 4 (four) types of risks as referred to in paragraph (1) letters a through d starting from the second semester of 2022. (8) In the event that based on monthly reports, BPR experiences an increase in core capital to become at least IDR 50,000,000,000.00 (fifty billion rupiah) for 6 (six) consecutive monthly reporting positions after December 31, 2022, BPR is required to submit risk profile reports:
a. covering all types of risks as referred to in paragraph (1); and b. conducted for the first time in the risk profile report of the semester following 1 (one) year that BPR has met the core capital of at least IDR 50,000,000,000.00 (fifty billion rupiah) for 6 (six) consecutive monthly reporting positions. (9) BPR that violates the provisions referred to in paragraph (3), paragraph (4), and/or paragraph (5) shall be subject to administrative sanctions in the form of written reprimands. (10) In the event that BPR:
a. has been subject to administrative sanctions as referred to in paragraph (9); and b. continues to violate the provisions referred to in paragraph (3), paragraph (4), and/or paragraph (5), BPR may be subject to administrative sanctions in the form of:

1. prohibition on expanding business activities and/or office networks; and/or
2. temporary suspension of some operational activities of BPR.
   (11) BPR that violates the provisions referred to in paragraph (8) shall be subject to administrative sanctions in the form of 2 (two) written reprimands by the Financial Services Authority, with the second written reprimand given if BPR does not:
   a. submit risk profile reports; or b. correct risk profile reports, within 10 (ten) working days after the first written reprimand.
   (12) In the event that BPR:
   a. has been subject to administrative sanctions as referred to in paragraph (11); and b. continues to not submit or not correct risk profile reports within 10 (ten) working days after the second written reprimand, BPR shall be subject to administrative sanctions in the form of a fine of IDR 10,000,000.00 (ten million rupiah). (13) In the event that BPR:
   a. has been subject to administrative sanctions as referred to in paragraph (12); and b. continues to violate the provisions referred to in paragraph (8), members of the Board of Directors, members of the Board of Commissioners, and/or executive officials of BPR shall be subject to administrative sanctions in the form of prohibition as principal parties in accordance with the Financial Services Authority Regulation concerning re-evaluation for principal parties of financial service institutions. (14) The administrative sanctions referred to in paragraph (9) through paragraph (13) shall apply starting from the reporting position for December 2023.

Article 9
(1) For BPRS, the assessment of the risk profile factor as referred to in Article 7 paragraph (1) letter a is an assessment of inherent risk and the quality of risk management implementation in BPRS operations conducted against 6 (six) types of risks:
a. credit risk; b. operational risk;
c. compliance risk;
d. liquidity risk; e. reputation risk; and f. strategic risk.
(2) The assessment of the risk profile factor as referred to in paragraph (1) is implemented in accordance with the Financial Services Authority Regulation concerning the implementation of risk management for sharia rural financing banks. (3) The action plan for implementing risk management and/or adjustment of the action plan for implementing risk management is implemented in accordance with the Financial Services Authority Regulation concerning the implementation of risk management for sharia rural financing banks. (4) The action plan and/or adjustment of the action plan as referred to in paragraph (3) for BPRS with core capital:
a. of at least IDR 50,000,000,000.00 (fifty billion rupiah) shall be completed no later than June 30, 2022; or b. of less than IDR 50,000,000,000.00 (fifty billion rupiah) shall be completed no later than December 31, 2022. (5) BPRS with core capital of at least IDR 50,000,000,000.00 (fifty billion rupiah) shall submit for the first time risk profile reports in accordance with the Financial Services Authority Regulation concerning the implementation of risk management for sharia rural financing banks covering:
a. 3 (three) types of risks consisting of:

1. credit risk;
2. operational risk; and
3. compliance risk,
   for the second semester of 2022; and b. 6 (six) types of risks consisting of:
4. credit risk;
5. operational risk;
6. compliance risk;
7. liquidity risk;
8. reputation risk; and
9. strategic risk,
   for the first semester of 2023.
   (6) BPRS with core capital of less than IDR 50,000,000,000.00 (fifty billion rupiah) shall submit for the first time risk profile reports in accordance with the Financial Services Authority Regulation concerning the implementation of risk management for sharia rural financing banks covering:
   a. 2 (two) types of risks consisting of credit risk and operational risk for the first semester of 2023; and b. 4 (four) types of risks consisting of credit risk, operational risk, compliance risk, and liquidity risk for the second semester of 2023. (7) In the event that based on monthly reports, BPRS experiences an increase in core capital to become at least IDR 50,000,000,000.00 (fifty billion rupiah) for 6 (six) consecutive monthly reporting positions up to December 31, 2022, BPRS is required to submit risk profile reports:
   a. covering all types of risks as referred to in paragraph (1); and b. conducted in stages as referred to in paragraph (5).
   (8) In the event that based on monthly reports, BPRS experiences an increase in core capital to become at least IDR 50,000,000,000.00 (fifty billion rupiah) for 6 (six) consecutive monthly reporting positions after December 31, 2022 up to June 30, 2023, BPRS is required to submit risk profile reports:
   a. covering all types of risks as referred to in paragraph (1); and b. conducted for the first time in the risk profile report of the first semester of 2023.
   (9) In the event that based on monthly reports, BPRS experiences an increase in core capital to become at least IDR 50,000,000,000.00 (fifty billion rupiah) for 6 (six) consecutive monthly reporting positions after June 30, 2023, BPRS is required to submit risk profile reports:
   a. covering all types of risks as referred to in paragraph (1); and b. conducted for the first time in the risk profile report of the following semester no later than 1 (one) year after BPRS has met the core capital of at least IDR 50,000,000,000.00 (fifty billion rupiah) for 6 (six) consecutive monthly reporting positions. (10) BPRS that violates the provisions referred to in paragraph (7), paragraph (8), and/or paragraph (9) shall be subject to administrative sanctions in the form of 2 (two) written reprimands by the Financial Services Authority, with the second written reprimand given if BPRS does not:
   a. submit risk profile reports; or b. correct risk profile reports, within 10 (ten) working days after the first written reprimand.
   (11) In the event that BPRS:
   a. has been subject to administrative sanctions as referred to in paragraph (10); and b. continues to not submit or not correct risk profile reports within 10 (ten) working days after the second written reprimand, BPRS shall be subject to administrative sanctions in the form of a fine of IDR 10,000,000.00 (ten million rupiah). (12) In the event that BPRS:
   a. has been subject to administrative sanctions as referred to in paragraph (11); and b. continues to violate the provisions referred to in paragraph (7), paragraph (8), and/or paragraph (9), members of the Board of Directors, members of the Board of Commissioners, and/or executive officials of BPRS may be subject to administrative sanctions in the form of prohibition as principal parties in accordance with the Financial Services Authority Regulation concerning re-evaluation for principal parties of financial service institutions.

Article 10
The risk profile factor as referred to in Article 7 paragraph (1) letter a is assigned a factor rating:
a. rating 1; b. rating 2;
c. rating 3;
d. rating 4; or e. rating 5.

Section Three
Assessment of the Governance Factor
Article 11
(1) The assessment of the governance factor as referred to in Article 7 paragraph (1) letter b is an assessment of BPR and BPRS management's implementation of governance principles in accordance with the Financial Services Authority Regulation concerning the implementation of governance. (2) The governance factor as referred to in Article 7 paragraph (1) letter b is assigned a factor rating:
a. rating 1; b. rating 2;
c. rating 3;
d. rating 4; or e. rating 5.

Article 12
(1) BPR and BPRS are required to submit reports on the implementation of governance in accordance with the Financial Services Authority Regulation concerning the implementation of governance to at least:
a. shareholders; b. the Financial Services Authority;
c. BPR Association for BPR or BPRS Association for BPRS in Indonesia; and
d. 1 (one) media office or economic and financial magazine for BPR or stakeholders through internal media owned by BPRS for BPRS, no later than January 31 for reports with a position date of December 31. (2) For BPR and BPRS that have a website, the report on the implementation of governance as referred to in paragraph (1) must be published on the BPR and BPRS website no later than January 31 for reports with a position date of December 31. (3) BPR or BPRS that violates the provisions referred to in paragraph (1) shall be subject to administrative sanctions in the form of:
a. a fine of IDR 100,000.00 (one hundred thousand rupiah) per working day of delay; or b. a written reprimand and a fine of IDR 5,000,000.00 (five million rupiah), for BPR or BPRS that has not submitted the report on the implementation of governance exceeding 1 (one) month from the final deadline for report submission. (4) In the event that BPR or BPRS does not submit the report on the implementation of governance as referred to in paragraph (1) up to the submission period...

next, subject to administrative sanctions consisting of 2 (two) written warnings by the Financial Services Authority, with the second written warning issued if the BPR and BPRS do not submit the report on governance implementation within a period of 10 (ten) working days after the first written warning.

(5) The imposition of fines as referred to in paragraph (3) and/or paragraph (4) does not eliminate the obligation to submit the report on governance implementation.

(6) BPR or BPRS that submits the report on governance implementation as referred to in paragraph (1) which is assessed as incomplete and/or significantly incorrect is subject to administrative sanctions consisting of 2 (two) written warnings by the Financial Services Authority, with the second written warning issued if the BPR or BPRS does not:

a. submit the report on governance implementation; or b. correct the report on governance implementation, within a period of 10 (ten) working days after the first written warning.

(7) In the event that the BPR or BPRS:
a. has been subjected to administrative sanctions as referred to in paragraph (6); and b. continues to violate the provisions as referred to in paragraph (1) and/or paragraph (6), the members of the Board of Directors, members of the Board of Commissioners, and/or executive officials of the BPR or BPRS may be subjected to administrative sanctions consisting of a ban as a principal party in accordance with the Financial Services Authority Regulation regarding re-evaluation for principal parties of financial service institutions.

(8) In the event that the BPR or BPRS:
a. has been subjected to administrative sanctions as referred to in paragraph (4) and/or paragraph (6); and b. continues to not submit or not correct the report on governance implementation within a period of 10 (ten) working days after the second written warning, the BPR or BPRS is subject to administrative sanctions consisting of a fine of Rp10,000,000.00 (ten million rupiah).

(9) The imposition of fines as referred to in paragraph (8) does not eliminate the obligation to submit the corrected report on governance implementation.

(10) BPR or BPRS that violates the provisions as referred to in paragraph (2) is subject to administrative sanctions consisting of a written warning.

(11) In the event that the BPR or BPRS:
a. has been subjected to administrative sanctions as referred to in paragraph (10); and b. continues to violate the provisions as referred to in paragraph (2), the BPR or BPRS may be subjected to administrative sanctions consisting of the temporary suspension of part of the operational activities of the BPR or BPRS.

(12) Administrative sanctions as referred to in paragraphs (3), (4), (6), (7), (8), (10), and (11) shall take effect for the reporting position of December 2023.

Fourth Part
Assessment of Profitability Factors
Article 13

(1) Assessment of profitability factors as referred to in Article 7 paragraph (1) letter c includes assessment of the components of profitability performance and operational efficiency levels of BPR and BPRS.

(2) The components of profitability performance and operational efficiency levels of BPR and BPRS as referred to in paragraph (1) are established with component rankings:
a. ranking 1; b. ranking 2;
c. ranking 3;
d. ranking 4; or e. ranking 5.

Fifth Part
Assessment of Capital Factors
Article 14

(1) Assessment of capital factors as referred to in Article 7 paragraph (1) letter d includes assessment of the components of capital adequacy levels of BPR and BPRS.

(2) The components of capital adequacy levels of BPR and BPRS as referred to in paragraph (1) are established with component rankings:
a. ranking 1; b. ranking 2;
c. ranking 3;
d. ranking 4; or e. ranking 5.

CHAPTER IV
COMPOSITE RANKING OF THE HEALTH LEVEL OF BPR AND BPRS
Article 15

(1) The determination of the Composite Ranking of the Health Level of BPR and BPRS is carried out based on a comprehensive and structured analysis of:
a. factor rankings as referred to in Article 10 and Article 11 paragraph (2); and b. component rankings as referred to in Article 13 paragraph (2) and Article 14 paragraph (2).

(2) The determination of the Composite Ranking of the Health Level of BPR and BPRS as referred to in paragraph (1) considers the qualitative aspect assessment of profitability factors and capital factors.

(3) The Composite Rankings as referred to in paragraph (1) are categorized:
a. Composite Ranking 1 (CR-1); b. Composite Ranking 2 (CR-2);
c. Composite Ranking 3 (CR-3);
d. Composite Ranking 4 (CR-4); and e. Composite Ranking 5 (CR-5).

Article 16
In the event that based on the results of identification and assessment by the Financial Services Authority, problems are found that significantly affect or will affect the operations and/or continuity of the business of BPR and BPRS, the Financial Services Authority may downgrade the Composite Ranking of the Health Level of BPR and BPRS.

CHAPTER V
FOLLOW-UP ON THE RESULTS OF ASSESSMENT OF THE HEALTH LEVEL OF BPR AND BPRS
Article 17

(1) In the event that based on the results of the Health Level assessment of BPR and BPRS conducted by the Financial Services Authority and/or self-assessment results there are:
a. governance factors and/or risk profiles of BPR and BPRS established with ranking 4 and/or ranking 5; b. Composite Ranking of the Health Level of BPR and BPRS established with ranking 4; and/or
c. Composite Ranking of the Health Level of BPR and BPRS established other than ranking 4 or ranking 5, but potentially subject to intensive supervision or there are significant problems that need to be addressed so as not to disrupt the continuity of the business of BPR and BPRS,
BPR and BPRS are required to submit an action plan.

(2) BPR and BPRS are required to submit the action plan as referred to in paragraph (1) to the Financial Services Authority:
a. at most 14 (fourteen) working days after the date of request by the Financial Services Authority, for action plans that are follow-up to the results of the Health Level assessment of BPR and BPRS by the Financial Services Authority. b. at the latest:

1. August 15 for Health Level assessment of BPR and BPRS at the end-of-June position; and
2. February 15 for Health Level assessment of BPR and BPRS at the end-of-December position,
   for action plans that are follow-up to self-assessment results by BPR and BPRS.
   c. at most 14 (fourteen) working days after BPR and BPRS submits updates of self-assessment of the Health Level of BPR and BPRS at any time to the Financial Services Authority.

(3) The Financial Services Authority may request BPR and BPRS to make adjustments to the action plan as referred to in paragraph (1).

(4) Provisions regarding the action plan of BPR and BPRS are established by the Financial Services Authority.

Article 18

(1) BPR and BPRS are required to submit reports on the realization of the action plan as referred to in Article 17 paragraph (1) to the Financial Services Authority.

(2) BPR and BPRS submit reports on the realization of the action plan as referred to in paragraph (1) at most 10 (ten) working days after the implementation of the action plan.

(3) In the event that the implementation of the action plan is carried out in stages, BPR and BPRS are required to submit realization reports for each stage of the action plan at most 10 (ten) working days after the implementation of each stage.

(4) In the event that there are significant problems that disrupt the timely completion of the action plan as referred to in paragraphs (2) and (3), BPR and BPRS are required to submit reasons and causes of the disruption of the completion of the action plan at most 10 (ten) working days after the target completion time established.

(5) In certain conditions, the Financial Services Authority may establish different submission periods for reports from the periods as referred to in paragraphs (2) or (3).

(6) The Financial Services Authority may conduct examinations regarding the implementation of the action plan by BPR and BPRS.

Article 19
If the deadline for submitting the action plan as referred to in Article 17 paragraph (2) letter b falls on a Saturday, Sunday, or public holiday, the action plan based on self-assessment is submitted on the next working day.

Article 20
The obligation to submit action plans and reports on the realization of action plans as referred to in Articles 17 and 18 for BPR and BPRS established under intensive supervision or special supervision by the Financial Services Authority is implemented in accordance with the Financial Services Authority Regulation regarding the establishment of status and follow-up of supervision of rural credit banks and sharia rural financing banks.

Article 21

(1) BPR or BPRS that violates the provisions as referred to in Article 17 paragraph (1), paragraph (2), Article 18 paragraph (1), paragraph (3), and/or paragraph (4) is subject to administrative sanctions consisting of a written warning.

(2) In the event that the BPR or BPRS:
a. has been subjected to administrative sanctions as referred to in paragraph (1); and b. continues to violate the provisions as referred to in Article 17 paragraph (1), paragraph (2), Article 18 paragraph (1), paragraph (3), and/or paragraph (4), the BPR or BPRS may be subjected to administrative sanctions consisting of:

1. prohibition on expanding business activities and/or office networks; and/or
2. temporary suspension of part of the operational activities of the BPR or BPRS.

(3) In the event that the BPR or BPRS:
a. has been subjected to administrative sanctions as referred to in paragraph (1) and/or paragraph (2); and b. continues to violate the provisions as referred to in Article 17 paragraph (1), paragraph (2), Article 18 paragraph (1), paragraph (3), and/or paragraph (4), the principal parties of the BPR or BPRS may be subjected to administrative sanctions consisting of a ban as a principal party in accordance with the Financial Services Authority Regulation regarding re-evaluation for principal parties of financial service institutions.

(4) Administrative sanctions as referred to in paragraphs (1), (2), and (3) shall take effect for the reporting position of December 2023.

CHAPTER VI
OTHER PROVISIONS
Article 22
In certain considerations, the Financial Services Authority may establish other policies related to arrangements that already exist in this Financial Services Authority Regulation in accordance with provisions of legislation regarding government administration.

CHAPTER VII
TRANSITIONAL PROVISIONS
Article 23

(1) Health Level assessment of BPR and BPRS in accordance with this Financial Services Authority Regulation shall take effect for the reporting position of December 2022.

(2) Imposition of sanctions against the submission of risk profile reports for BPRS as referred to in Article 9 paragraph (4) shall start to be applied to the submission of reports for the first semester of 2023.

(3) Imposition of sanctions against the submission of risk profile reports for BPRS as referred to in Article 9 paragraph (5) shall start to be applied to the submission of reports for the second semester of 2023.

(4) BPR and BPRS that apply for merger or amalgamation since December 2023, projections of health levels for 2 (two) periods shall be implemented in accordance with this Financial Services Authority Regulation.

Article 24
At the time this Financial Services Authority Regulation takes effect:
a. health level assessment for:

1. BPR, remains implemented in accordance with the Director's Decision of Bank Indonesia No.30/12/KEP/DIR year 1997 concerning Procedures for Assessing the Health Level of Rural Credit Banks;
2. BPRS, remains implemented in accordance with Financial Services Authority Regulation Number 20/POJK.03/2019 concerning the System for Assessing the Health Level of Sharia Rural Financing Banks,
   until the reporting position of November 2023; b. submission and publication of reports on governance implementation remains implemented for:
3. BPR in accordance with Financial Services Authority Regulation Number 4/POJK.03/2015 concerning Governance Implementation for Rural Credit Banks; and
4. BPRS in accordance with Financial Services Authority Regulation Number 24/POJK.03/2018 concerning Governance Implementation for Sharia Rural Financing Banks,
   until the reporting position of December 2022;
   c. submission of risk profile reports for BPR in accordance with the types of risks assessed by BPR remains implemented in accordance with Financial Services Authority Regulation Number 13/POJK.03/2015 concerning Risk Management Implementation for Rural Credit Banks until the reporting position of June 2023; and
   d. violations of submission and publication of reports on governance implementation are subject to administrative sanctions for:
5. BPR in accordance with Financial Services Authority Regulation Number 4/POJK.03/2015 concerning Governance Implementation for Rural Credit Banks; and
6. BPRS subject to administrative sanctions in accordance with Financial Services Authority Regulation Number 24/POJK.03/2018 concerning Governance Implementation for Sharia Rural Financing Banks,
   until the reporting position of December 2022.

CHAPTER VIII
CLOSING PROVISIONS
Article 25
At the time this Financial Services Authority Regulation takes effect:
a. Article 76 paragraph (1) and paragraph (2) of Financial Services Authority Regulation Number 4/POJK.03/2015 concerning Governance Implementation for Rural Credit Banks (State Gazette of the Republic of Indonesia Year 2015 Number 72, Supplement to the State Gazette of the Republic of Indonesia Number 5685); and b. Article 90 of Financial Services Authority Regulation Number 24/POJK.03/2018 concerning Governance Implementation for Sharia Rural Financing Banks (State Gazette of the Republic of Indonesia Year 2018 Number 228, Supplement to the State Gazette of the Republic of Indonesia Number 6266), are repealed and declared invalid on January 1, 2023.

Article 26
At the time this Financial Services Authority Regulation takes effect, Article 3, Article 22 paragraph (4), paragraph (5), paragraph (6), Article 28 paragraph (3), Article 30 paragraph (3), and Article 36 of Financial Services Authority Regulation Number 13/POJK.03/2015 concerning Risk Management Implementation for Rural Credit Banks (State Gazette of the Republic of Indonesia Year 2015 Number 272, Supplement to the State Gazette of the Republic of Indonesia Number 5761), are repealed and declared invalid on July 1, 2023.

Article 27
At the time this Financial Services Authority Regulation takes effect:
a. Director's Decision of Bank Indonesia No.30/12/KEP/DIR year 1997 concerning Procedures for Assessing the Health Level of Rural Credit Banks; and b. Financial Services Authority Regulation Number 20/POJK.03/2019 concerning the System for Assessing the Health Level of Sharia Rural Financing Banks (State Gazette of the Republic of Indonesia Year 2019 Number 158, Supplement to the State Gazette of the Republic of Indonesia Number 6380), are repealed and declared invalid on December 1, 2023.

Article 28
At the time this Financial Services Authority Regulation takes effect, Article 19 paragraph (4), Article 21 paragraph (5), Article 21 paragraph (6), Article 26, Article 31, and Article 32 of Financial Services Authority Regulation Number 23/POJK.03/2018 concerning Risk Management Implementation for Sharia Rural Financing Banks (State Gazette of the Republic of Indonesia Year 2018 Number 227, Supplement to the State Gazette of the Republic of Indonesia Number 6265), are repealed and declared invalid.

Article 29
This Financial Services Authority Regulation takes effect upon being promulgated.

A copy of this is in accordance with the original Director of Legal Affairs 1 Legal Department signed Mufli Asmawidjaja

For everyone to know, ordering the promulgation of this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Established in Jakarta on March 2, 2022
CHAIRMAN OF THE BOARD OF COMMISSIONERS
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO

Promulgated in Jakarta on March 4, 2022
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2022 NUMBER 58

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 3 /POJK.03/2022
CONCERNING
ASSESSMENT OF THE HEALTH LEVEL OF RURAL CREDIT BANKS AND SHARIA RURAL FINANCING BANKS

I. GENERAL
The Health Level of BPR and BPRS is an interest of all parties, including owners, managers, the community, the Financial Services Authority, and other parties. The Health Level of BPR and BPRS can be used by interested parties to evaluate the performance of BPR and BPRS in applying prudential principles and compliance with applicable legislation and sharia principles for BPRS.

Furthermore, the development of the financial services industry along with societal needs, accompanied by product and service innovations, affects the increasingly complex risk exposure of BPR and BPRS and requires BPR and BPRS to pay attention to risk aspects and governance. Thus, in the process of assessing the Health Level of BPR and BPRS, assessment of risk profiles and governance in the activities of BPR and BPRS must also be included.

Moreover, the dynamic nature of the condition of BPR and BPRS drives the Health Level assessment system to be regulated under a principle-based framework to provide a picture of the actual condition of each BPR and BPRS currently and in the future. In relation to this matter, an update of regulations regarding the Assessment of the Health Level of BPR and BPRS is necessary.

II. ARTICLE BY ARTICLE
Article 1
Clear enough.

Article 2
Paragraph (1)
The Health Level of BPR and BPRS is used as one of the means to evaluate the actual conditions and problems faced by BPR and BPRS and to determine follow-up actions to overcome weaknesses or problems of BPR and BPRS, whether in the form of improvement actions by BPR and BPRS or supervisory actions by the Financial Services Authority.

Paragraph (2)
What is meant by "ensuring efforts" includes, among others, conducting self-assessments of the Health Level of BPR and BPRS periodically outside the end-of-June and end-of-December positions.

Paragraph (3)
Clear enough.

Paragraph (4)
Clear enough.

Paragraph (5)
Clear enough.

Paragraph (6)
Clear enough.

Article 3
Paragraph (1)
Clear enough.

Paragraph (2)
Clear enough.

Paragraph (3)
Certain conditions include:
a. significant deterioration of the financial condition of BPR and BPRS that has the potential to lower the health level; b. BPR and BPRS facing problems such as liquidity and/or capital risks that could cause BPR and BPRS to potentially be placed under intensive supervision or special supervision; or
c. other conditions that, in the opinion of the Financial Services Authority, require updating of the health level assessment, including based on findings from examination results.

Paragraph (4)
Clear enough.

Paragraph (5)
Clear enough.

Paragraph (6)
Clear enough.

Paragraph (7)
Clear enough.

Paragraph (8)
Clear enough.

Paragraph (9)
Clear enough.

Paragraph (10)
Clear enough.

Paragraph (11)
Establishment by the Financial Services Authority in the form of a Circular Letter of the Financial Services Authority.

Article 4
Paragraph (1)
What is meant by "Financial Services Authority reporting system" is the Online Reporting Application of the Financial Services Authority (APOLO) in accordance with the Financial Services Authority Regulation regarding reporting by rural credit banks and sharia rural financing banks through the Financial Services Authority reporting system.

Paragraph (2)
Conditions where the Financial Services Authority reporting system is not available, including cases where the system is available but cannot yet receive reports from BPR and BPRS.

Paragraph (3)
Public holidays refer to holidays based on decisions of the central and/or regional governments regarding holidays and joint leave.

Paragraph (4)
Clear enough.

Article 5
Paragraph (1)
Clear enough.

Paragraph (2)
Clear enough.

Paragraph (3)
Letter a
Clear enough.

Letter b
Clear enough.

Letter c
Other information may include:
a. information from other authorized parties or institutions that impacts the assessment of the Health Level of BPR and BPRS; or b. information known to the public, including information from mass media believed to be correct.

Article 6
The Financial Services Authority may communicate with BPR and BPRS regarding differences in the assessment of the Health Level of BPR and BPRS between those generated by the Financial Services Authority and those by BPR and BPRS.

Article 7
Paragraph (1)
Letter a
Clear enough.

Letter b
Clear enough.

Letter c
What is meant by "assessment of profitability factors" is the assessment of the condition and ability of BPR and BPRS to generate profit to support capital and operational activities adequately and sustainably.

Letter d
What is meant by "assessment of capital factors" is the assessment of the adequacy of the capital of BPR and BPRS reflecting financial support in the implementation of BPR and BPRS activities to absorb current and future potential losses.

Paragraph (2)
What is meant by "comprehensive and structured" is an assessment process carried out thoroughly and systematically and focused on the main problems of BPR and BPRS. Analysis is integrated, i.e., considering inter-risk correlations. Analysis must be supported by core facts and relevant ratios to show problems faced by BPR and BPRS and documented adequately.

Paragraph (3)
Clear enough.

Paragraph (4)
Clear enough.

Paragraph (5)
Clear enough.

Paragraph (6)
Clear enough.

Article 8
Paragraph (1)
Letter a
What is meant by "credit risk" is the risk due to the failure of debtors and/or other parties to fulfill obligations to the BPR.

Letter b
What is meant by "operational risk" is the risk caused, among others, by insufficient and/or malfunctioning internal processes, human resource errors, system failures, and/or external problems affecting BPR operations.

Letter c
What is meant by "compliance risk" is the risk resulting from the BPR not complying with and/or not implementing applicable legislation and other provisions, including risks resulting from weaknesses in legal aspects. Weaknesses in legal aspects include, among others, legal demands, lack of supporting applicable legislation, or weaknesses in agreements such as unmet contract validity requirements and imperfect collateral binding.

Letter d
What is meant by "liquidity risk" is the risk resulting from the inability of the BPR to meet maturing obligations from cash flow funding sources and/or high-quality liquid assets that can be pledged, without disrupting BPR activities and/or financial conditions.

Letter e
What is meant by "reputational risk" is the risk resulting from a decrease in stakeholder trust stemming from negative perceptions regarding the BPR.

Letter f
What is meant by "strategic risk" is the risk resulting from the BPR's imprecision in making and/or executing strategic decisions and the BPR's failure to anticipate changes in the business environment.

Paragraph (2)
Clear enough.

Paragraph (3)
Clear enough.

Paragraph (4)
Clear enough.

Paragraph (5)
Products, services, goods, and/or other activities that increase risk exposure include, among others:
a. requiring significant investment that affects the financial performance of the BPR; b. vulnerable or sensitive to changes in external factors such as macroeconomics, government policies, competition levels; or
c. having high complexity.

Paragraph (6)
Clear enough.

Paragraph (7)
Clear enough.

Paragraph (8)
What is meant by "monthly report" is the monthly report submitted by the BPR, including monthly reports after correction of findings from Financial Services Authority examinations.

Paragraph (9)
Clear enough.

Paragraph (10)
Clearly stated.
Paragraph (11)
Clearly stated.
Paragraph (12)
Clearly stated.
Paragraph (13)
Clearly stated.
Paragraph (14)
Clearly stated.
Article 9
Paragraph (1)
Letter a
What is meant by "credit risk" is the risk resulting from the failure of customers or other parties to fulfill their obligations to BPRS, including risks resulting from BPRS sharing in the business losses of customers financed through profit-sharing financing, whether using the net revenue sharing method or the profit and loss sharing method (investment risk).

Letter b
What is meant by "operational risk" is the risk caused, among other things, by insufficient and/or non-functioning internal processes, human resource errors, system failures, and/or external issues affecting BPRS operations.

Letter c
What is meant by "compliance risk" is the risk resulting from BPRS not complying with and/or not implementing regulatory provisions and other regulations as well as Sharia principles, including risks resulting from weaknesses in legal aspects. Weaknesses in legal aspects are caused, among other things, by legal claims, the absence of supporting regulatory provisions, or weaknesses in agreements such as the failure to meet the validity requirements of contracts and imperfect collateral binding.

Letter d
What is meant by "liquidity risk" is the risk resulting from BPRS's inability to meet maturing obligations from cash flow funding sources and/or high-quality liquid assets that can be pledged, without disrupting BPRS activities and/or financial conditions, including risks resulting from changes in the interest rates paid by BPRS to customers, due to changes in the interest rates received by BPRS from fund disbursement, which can affect the behavior of BPRS's third-party fund customers (interest rate risk/rate of return risk).

Letter e
What is meant by "reputation risk" is the risk resulting from a decline in the level of trust of stakeholders stemming from negative perceptions of BPRS.

Letter f
What is meant by "strategic risk" is the risk resulting from BPRS's inaccuracy in making and/or implementing strategic decisions as well as BPRS's failure to anticipate changes in the business environment.

Paragraph (2)
Clearly stated.
Paragraph (3)
Clearly stated.
Paragraph (4)
Clearly stated.
Paragraph (5)
Clearly stated.
Paragraph (6)
Clearly stated.

Paragraph (7)
What is meant by "monthly report" is the monthly report submitted by BPRS, including monthly reports after corrections resulting from examinations by the Financial Services Authority.

Paragraph (8)
Clearly stated.
Paragraph (9)
Clearly stated.
Paragraph (10)
Clearly stated.
Paragraph (11)
Clearly stated.
Paragraph (12)
Clearly stated.
Article 10
A smaller ranking order reflects a better condition of BPR and BPRS.

Article 11
Paragraph (1)
Financial Services Authority Regulations regarding the implementation of governance:
a. For BPR, the Financial Services Authority Regulation regarding the implementation of governance for rural banks; and b. For BPRS, the Financial Services Authority Regulation regarding the implementation of governance for Islamic rural financing banks.

Paragraph (2)
Clearly stated.
Article 12
Paragraph (1)
The submission of governance implementation reports to shareholders prioritizes controlling shareholders, while for other shareholders, it is based on considerations of efficiency levels and the level of interest of each BPR and BPRS.

Paragraph (2)
Clearly stated.
Paragraph (3)
Clearly stated.
Paragraph (4)
Clearly stated.
Paragraph (5)
Clearly stated.
Paragraph (6)
What is meant by "incomplete and/or significantly incorrect" is the substance of the report that affects the final result of the governance factor assessment and the Composite Rating of the overall health level.

Paragraph (7)
Clearly stated.
Paragraph (8)
Clearly stated.
Paragraph (9)
Clearly stated.
Paragraph (10)
Clearly stated.
Paragraph (11)
Clearly stated.
Paragraph (12)
Clearly stated.
Article 13
Clearly stated.
Article 14
Clearly stated.
Article 15
Paragraph (1)
Clearly stated.

Paragraph (2)
The qualitative assessment of the profitability factor and the capital factor includes, among others:
a. the profitability factor, indicated by the assessment of profitability sources, profitability sustainability, and/or profitability management; and b. the capital factor, indicated by the assessment of capital management and/or capital access capability.

Paragraph (3)
Letter a
Composite Rating 1 (CR-1) reflects the condition of BPR and BPRS that is generally very healthy, so it is assessed as being very capable of facing significant negative influences from changes in business conditions and other external factors. This is reflected in the assessment factor rankings, including risk profile, governance implementation, profitability, and capital, which are generally very good. If there are weaknesses from either internal or external sides, generally these weaknesses are not significant.

Letter b
Composite Rating 2 (CR-2) reflects the condition of BPR and BPRS that is generally healthy, so it is assessed as being capable of facing significant negative influences from changes in business conditions and other external factors. This is reflected in the assessment factor rankings, including risk profile, governance implementation, profitability, and capital, which are generally good. If there are weaknesses from either internal or external sides, generally these weaknesses are less significant.

Letter c
Composite Rating 3 (CR-3) reflects the condition of BPR and BPRS that is generally fairly healthy, so it is assessed as being fairly capable of facing significant negative influences from changes in business conditions and other external factors. This is reflected in the assessment factor rankings, including risk profile, governance implementation, profitability, and capital, which are generally fairly good. If there are weaknesses from either internal or external sides, generally these weaknesses are fairly significant, and if not addressed well by management, they can disrupt the continuity of BPR and BPRS business.

Letter d
Composite Rating 4 (CR-4) reflects the condition of BPR and BPRS that is generally less healthy, so it is assessed as being less capable of facing significant negative influences from changes in business conditions and other external factors. This is reflected in the assessment factor rankings, including risk profile, governance implementation, profitability, and capital, which are generally less good. There are weaknesses from either internal or external sides that are generally significant and cannot be addressed well by management, disrupting the continuity of BPR and BPRS business.

Letter e
Composite Rating 5 (CR-5) reflects the condition of BPR and BPRS that is generally unhealthy, so it is assessed as being unable to face significant negative influences from changes in business conditions and other external factors. This is reflected in the assessment factor rankings, including risk profile, governance implementation, profitability, and capital, which are generally not good. There are weaknesses from either internal or external sides that are generally very significant, so addressing them requires funding support from shareholders or funding sources from other parties to strengthen the financial condition of BPR and BPRS.

Article 16
Analysis of the significance of the influence of an issue is conducted by considering, among others:
a. the negative impact of the issue and/or violations of regulatory provisions on the continuity of business or performance of BPR and BPRS; b. indications of intentional failure to fulfill commitments; and/or
c. the type, amount, and/or frequency of violations.

Article 17
Paragraph (1)
The action plan contains improvement steps to be implemented by BPR and BPRS to address significant issues faced, along with target completion times. The action plan submitted by BPR and BPRS constitutes a commitment to the Financial Services Authority.

Letter a
Clearly stated.

Letter b
For BPR and BPRS with a Composite Rating of the Health Level of BPR and BPRS established at rating 5, the submission of action plans is implemented in accordance with the Financial Services Authority Regulation regarding the determination of status and follow-up supervision of rural banks and Islamic rural financing banks.

Letter c
Analysis of the significance of the influence of an issue is conducted by considering, among others:
a. the negative impact of the issue and/or violations of regulatory provisions on the continuity of business or performance of BPR and BPRS, including assessment of the profitability factor; b. indications of intentional violations of regulatory provisions;
c. indications of intentional failure to fulfill commitments; and/or
d. the amount and/or frequency of violations.

Paragraph (2)
Letter a
The request date is the date of the Financial Services Authority letter or the date of the meeting minutes between the Financial Services Authority and BPR and BPRS.

Letter b
Clearly stated.

Letter c
Clearly stated.

Paragraph (3)
Clearly stated.

Paragraph (4)
Clearly stated.

Article 18
Paragraph (1)
Reports on the realization of action plans submitted by BPR and BPRS include explanations regarding developments and issues faced in the implementation of the action plan, accompanied by evidence and/or supporting documents.

Paragraph (2)
Clearly stated.

Paragraph (3)
Clearly stated.

Paragraph (4)
Significant issues include, among others:
a. unavoidable bankruptcy conditions consisting of natural disasters, non-natural disasters, and/or social disasters, which are justified by officials of the competent local government agency and/or can be verified for their truthfulness by the Financial Services Authority; and/or b. changes in policy and/or regulatory provisions.

Paragraph (5)
Specific conditions include, among others, BPR or BPRS being assessed as meeting significantly deteriorating financial conditions that have the potential to lower the Health Level of BPR and BPRS.

Paragraph (6)
Clearly stated.

Article 19
Clearly stated.

Article 20
Clearly stated.

Article 21
Clearly stated.

Article 22
Clearly stated.

Article 23
Clearly stated.

Article 24
Clearly stated.

Article 25
Clearly stated.

Article 26
Clearly stated.

Article 27
Clearly stated.

Article 28
Clearly stated.

Article 29
Clearly stated.
SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6773