Regulatory AlertsOJK Circular No. 27/SEOJK.03/2025 on Credit Rating Agencies and Recognized Ratings
The Financial Services Authority (OJK) issued Circular No. 27/SEOJK.03/2025 to establish the criteria and procedures for recognizing credit rating agencies, aligning with Basel III reforms and transferring administrative authority to the licensing division. This regulation mandates direct or indirect recognition for agencies meeting standards of objectivity, independence, transparency, and credibility, which are then published on the OJK website for use in prudential calculations by various bank types. It explicitly repeals the previous Circular No. 37/SEOJK.03/2016 and subjects recognized agencies to periodic monitoring and potential removal from the official list.
Financial Services Authority Circular Number 27/SEOJK.03/2025 regarding Credit Rating Agencies and Recognized Ratings by the Financial Services Authority
Abstract: The preparation of this Financial Services Authority Circular (SEOJK) regarding Credit Rating Agencies and Recognized Ratings by the Financial Services Authority is motivated by the need to harmonize standards with the Basel Committee on Banking Supervision (BCBS), particularly regarding updates to the Basel III Reforms concerning the Standardised approach: use of external ratings in 2020, which included additional criteria and explanations. Additionally, there is a transfer of authority for the recognition of rating agencies from the research and banking regulation unit to the unit handling licensing in the banking sector.
The legal basis for this SEOJK is: POJK No. 11/POJK.03/2016 as amended several times, most recently by POJK No. 27 of 2022.
Note: This SEOJK takes effect on the date of establishment. This SEOJK was established on November 19, 2025.
This SEOJK regulates the use of ratings from exposures held by Conventional Commercial Banks, Islamic Commercial Banks, Rural Economic Banks, and Islamic Rural Economic Banks for the purposes of capital calculation, asset quality assessment, maximum credit granting/fund disbursement limit calculations, and other prudential regulations.
The Financial Services Authority conducts direct recognition or indirect recognition of rating agencies that apply to become Financial Services Authority recognized rating agencies.
Credit rating agencies recognized by the Financial Services Authority are those that meet the assessment criteria established in this SEOJK. The aforementioned assessment criteria include objectivity, independence, transparency, public disclosure, resources, and credibility.
Credit rating agencies and ratings established by the Financial Services Authority are published in the list of recognized credit rating agencies and ratings by the Financial Services Authority through the Financial Services Authority website.
The Financial Services Authority conducts periodic monitoring of the list of recognized credit rating agencies and ratings based on assessment results and monitoring of compliance with the established assessment criteria.
Credit rating agencies may be removed from the list of recognized credit rating agencies and ratings by the Financial Services Authority based on the Financial Services Authority's assessment results and/or the request of the aforementioned credit rating agency.
With the enactment of this SEOJK, SEOJK Number 37/SEOJK.03/2016 regarding Credit Rating Agencies and Recognized Ratings by the Financial Services Authority is repealed and declared invalid.