Amendment to Financial Services Authority Circular Number 56/SEOJK.03/2017 on the Determination of Status and Supervisory Follow-up for Rural Banks and Sharia Rural Financing Institutions

To:
Directors of Rural Banks and Sharia Rural Financing Institutions At their offices.

COPY
FINANCIAL SERVICES AUTHORITY CIRCULAR
NUMBER 5 /SEOJK.03/2020
CONCERNING
AMENDMENT TO FINANCIAL SERVICES AUTHORITY CIRCULAR NUMBER 56/SEOJK.03/2017 CONCERNING THE DETERMINATION OF STATUS AND SUPERVISORY FOLLOW-UP FOR RURAL BANKS AND SHARIA RURAL FINANCING INSTITUTIONS

In connection with the establishment of Financial Services Authority Regulation Number 32/POJK.03/2019 concerning Amendment to Financial Services Authority Regulation Number 19/POJK.03/2017 concerning the Determination of Status and Supervisory Follow-up for Rural Banks and Sharia Rural Financing Institutions, hereinafter abbreviated as POJK on Determination of Status and Supervisory Follow-up for BPR and BPRS, and in order to provide further explanation regarding the capital improvement plan prepared by BPR or BPRS under intensive supervision and the assessment period used in determining BPR or BPRS under intensive supervision and BPR or BPRS under special supervision, it is necessary to make several changes in Financial Services Authority Circular Number 56/SEOJK.03/2017 concerning the Determination of Status and Supervisory Follow-up for Rural Banks and Sharia Rural Financing Institutions as follows:

1. The provision in item I.6 is amended to read as follows:
6. The health level of a BPR or BPRS is the health level as referred to in the provisions of legislation concerning the method of assessing the health level of rural banks and Financial Services Authority Regulations concerning the system for assessing the health level of Sharia rural financing institutions.

2. The provision in item I.7 is amended to read as follows:
7. The action plan submitted by a BPR or BPRS to the Financial Services Authority is the commitment of the BPR or BPRS that must be fulfilled as referred to in Article 9 paragraph (1) letter a and Article 24 letter a of the POJK on Determination of Status and Supervisory Follow-up for BPR and BPRS.

3. The provision in item I.8 is deleted.

4. The provision in item I.9 is deleted.

5. The Roman numeral II provision is deleted.

6. Between item III.2 and item III.3, two (2) numbers are inserted, namely numbers 2A and 2B so that they read as follows:
2A. The assessment period used in determining a BPR or BPRS under intensive supervision is established as follows:
1) assessment of the average KPMM ratio and/or CR over the last 6 (six) months calculated monthly based on the monthly reports of the BPR or BPRS; and/or
2) assessment of the health level of the BPR or BPRS is based on the assessment period of the health level of the BPR or BPRS referring to the provisions of legislation concerning the method of assessing the health level of rural banks and Financial Services Authority Regulations concerning the system for assessing the health level of Sharia rural financing institutions.

2B. In order to determine a BPR or BPRS under intensive supervision, the Financial Services Authority may update the assessment of the health level of the BPR or BPRS at any time as referred to in item 2A.2), which is carried out among others when the BPR or BPRS experiences problems causing the health level of the BPR or BPRS to meet the criteria for a BPR or BPRS under intensive supervision.

7. The Roman numeral III provision is added with four (4) numbers, namely numbers 13 to 16 so that they read as follows:
13. A BPR or BPRS under intensive supervision due to capital problems must submit a capital improvement plan as part of the action plan as referred to in Article 11 paragraph (1) of the POJK on Determination of Status and Supervisory Follow-up for BPR and BPRS.

14. The capital improvement plan as referred to in number 13 must reflect the ability of the BPR or BPRS to achieve and maintain the KPMM ratio, prioritizing an increase in paid-in capital to increase the adequate KPMM ratio, which is at least in accordance with the KPMM ratio meeting the criteria in normal supervision as referred to in Article 13 of the POJK on Determination of Status and Supervisory Follow-up for BPR and BPRS, taking into account among other things potential operational expenses and losses that may affect the KPMM ratio within a certain period, accompanied by a target time for capital improvement within the period of the BPR or BPRS under intensive supervision.

15. If based on the assessment of the Financial Services Authority, the capital improvement plan as referred to in number 14 cannot be realized or cannot meet the efforts to rehabilitate the BPR or BPRS under intensive supervision, the BPR or BPRS must submit an amendment to the capital improvement plan.

16. Amendments to the capital improvement plan as referred to in number 15 are submitted within the period of the BPR or BPRS under intensive supervision accompanied by supporting documents including analysis of changes to the capital improvement plan and efforts by the BPR or BPRS to fulfill commitments to exit intensive supervision.

8. Between item IV.2 and item IV.3, one (1) number is inserted, namely number 2A so that it reads as follows:
2A. The assessment period used in determining a BPR or BPRS under special supervision caused by the average KPMM ratio and/or CR over the last 6 (six) months calculated monthly based on the monthly reports of the BPR or BPRS.

9. The provision in item V.2 is deleted.

10. The provision in item V.3.a is amended to read as follows:
a. BPR or BPRS under intensive supervision as referred to in number 1 letter a:
1) for BPRs, capital deposit funds placed in the form of deposits at:
a) General Banks in Indonesia by stating in the name “Commissioners of the Financial Services Authority q.q. (name of BPR)” and stating the name of the additional capital depositor; and/or b) the respective BPR by stating in the name “Commissioners of the Financial Services Authority q.q. (name of the shareholder depositor)”,
2) for BPRSs, capital deposit funds placed in the form of deposits at:
a) Sharia General Banks and/or Sharia Business Units in Indonesia by stating in the name “Commissioners of the Financial Services Authority q.q. (name of BPRS)” and stating the name of the additional capital depositor; and/or b) the respective BPRS by stating in the name “Commissioners of the Financial Services Authority q.q. (name of the shareholder depositor)”, and stating that withdrawal can only be done after obtaining written approval from the Financial Services Authority.

11. The provision in item VI.3 is amended to read as follows:
3. Correspondence Address
Correspondence sent by a BPR or BPRS to the Financial Services Authority concerning a BPR or BPRS under intensive supervision and a BPR or BPRS under special supervision is addressed to:
a. Regional Office of the Financial Services Authority, for BPRs and BPRSs whose headquarters are located in the working area of the Regional Office of the Financial Services Authority; or b. Office of the Financial Services Authority, for BPRs and BPRSs whose headquarters are located in the working area of the Office of the Financial Services Authority.

This copy corresponds to the original
Deputy Director of Legal Consultation and
Banking Regulation Harmonization 1
Legal Directorate 1
Legal Department signed
Wiwit Puspasari

12. Closing
    The provisions in this Financial Services Authority Circular shall take effect on the date of determination.
    Determined in Jakarta on April 29, 2020
    EXECUTIVE HEAD OF BANKING SUPERVISOR
    FINANCIAL SERVICES AUTHORITY
    REPUBLIC OF INDONESIA, signed
    HERU KRISTIYANA