Regulatory AlertsInternal Liquidity Adequacy Assessment Process for Commercial Banks
The Otoritas Jasa Keuangan issued Circular Letter No. 26/SEOJK.03/2025 to mandate the implementation of the Internal Liquidity Adequacy Assessment Process (ILAAP) for commercial banks, tailored to their size, characteristics, and complexity. Banks are required to align liquidity management with their established risk appetite and tolerance, while submitting periodic ILAAP reports covering intraday liquidity, funding profiles, and survival period monitoring to inform risk profiling and health assessments. The OJK conducts a Liquidity Supervisory Review and Evaluation Process (LSREP) to evaluate these results, requiring banks with high liquidity risk to implement corrective measures such as strengthening liquidity conditions and risk management frameworks.