Amendment to Financial Services Authority Regulation Number 1/POJK.05/2017 Concerning Business Licensing and Institutional Requirements for Guarantee Institutions

The Indonesian Financial Services Authority (OJK) issued Regulation Number 10 of 2025 to amend licensing and institutional rules for guarantee institutions to strengthen the sector's health and sustainability. The regulation significantly increases minimum paid-up capital requirements based on operational scope and restricts cross-border guarantee activities to specific bordering areas with OJK approval. Additionally, it mandates the appointment of controlling shareholders, prohibits shareholder funds from illicit sources, limits foreign worker roles to executive or IT functions, and updates administrative sanctions.

Indonesia

Otoritas Jasa Keuangan (Financial Services Authority)

Regulation of the Financial Services Authority Number 10 of 2025 Concerning Amendment to the Financial Services Authority Regulation Number 1/POJK.05/2017 Concerning Business Licensing and Institutional Requirements for Guarantee Institutions

Abstract: The formulation of this Financial Services Authority Regulation is carried out to strengthen the institutions of guarantee companies, realize a healthy, trusted, and sustainable guarantee industry, and because POJK Number 1/POJK.05/2017 Concerning Business Licensing and Institutional Requirements for Guarantors is no longer in line with the development of the guarantee industry.

The legal basis for this Financial Services Authority Regulation is: Law Number 21 of 2011 as amended by Law Number 4 of 2023; Law Number 1 of 2016 as amended by Law Number 4 of 2023; and POJK 1/POJK.05/2017.

Adjustments to provisions regarding paid-up capital of Guarantee Institutions based on operational area scope, namely:

The amount of paid-up capital of Guarantee Companies and Sharia Guarantee Companies at the time of establishment is set at a minimum: a. Rp250,000,000,000.00 (two hundred fifty billion rupiah) for the national operational area scope; b. Rp100,000,000,000.00 (one hundred billion rupiah) for the provincial operational area scope; or c. Rp50,000,000,000.00 (fifty billion rupiah) for the district/city operational area scope.
The amount of paid-up capital of Reinsurance Companies and Sharia Reinsurance Companies at the time of establishment is set at a minimum of Rp500,000,000,000.00 (five hundred billion rupiah).

Addition of provisions regarding the implementation of Guarantee or Sharia Guarantee activities outside the operational area scope, namely Guarantee Companies and Sharia Guarantee Companies with provincial or district/city operational area scopes are prohibited from carrying out Guarantee or Sharia Guarantee activities against Insured parties outside their operational area scope, unless they meet the following requirements:

Carry out guarantees in areas that border directly; there are no guarantee companies or Sharia guarantee companies in the target area; and
Obtain approval from the Financial Services Authority (OJK).

Addition of provisions regarding funding sources by shareholders for participation and/or capital increases to Guarantee Institutions, which are prohibited from originating from loans and activities related to money laundering, terrorism financing, proliferation financing of weapons of mass destruction, and other financial crimes.

Addition of provisions regarding the obligation of Guarantee Institutions to appoint at least 1 (one) Controlling Shareholder (PSP). In the event that there are other PSPs not yet appointed by the Guarantee Institution, the OJK has the authority to appoint PSPs outside those already appointed by the Guarantee Institution.

Addition of rules regarding foreign workers with provisions that:

Foreign workers may only hold positions as experts who are executive officials or consultants; and
May only be assigned to handle underwriting functions and/or information systems.

Adjustment of provisions regarding administrative sanctions.

Note: This Financial Services Authority Regulation (POJK) takes effect 6 (six) months from the date of promulgation. This Financial Services Authority Regulation was promulgated on May 6, 2025, and established on April 28, 2025.