Amendment to Financial Services Authority Regulation Number 34/POJK.03/2020 Regarding Policies for Rural Credit Banks and Sharia Rural Financing Banks as a Result of the Spread of Coronavirus Disease 2019

COPY
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 2 /POJK.03/2021
CONCERNING
AMENDMENT TO FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 34/POJK.03/2020 CONCERNING POLICIES FOR RURAL CREDIT BANKS AND SHARIA RURAL FINANCING BANKS AS A RESULT OF THE SPREAD OF CORONAVIRUS DISEASE 2019 BY THE GRACE OF THE ALMIGHTY GOD, THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY, Considering:
a. that the spread of Coronavirus Disease 2019 (COVID-19) globally and domestically is still ongoing and has a quite significant impact on the real sector, including micro, small, and medium enterprises; b. that the subsequent impact of the spread of Coronavirus Disease 2019 (COVID-19) on the real sector, including micro, small, and medium enterprises, affects the performance of rural credit banks (BPR) and Sharia rural financing banks (BPRS);
c. that to encourage the optimization of the performance of the rural credit bank and Sharia rural financing bank industry, it is necessary to adjust the Financial Services Authority Regulation Number 34/POJK.03/2020 concerning Policies for Rural Credit Banks and Sharia Rural Financing Banks as a Result of the Spread of Coronavirus Disease 2019 to regulate the simulation of the impact calculation of the application of stimulus policies, dividend and/or management bonus policies, and the extension of the stimulus period;
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 Amendment to Financial Services Authority Regulation Number 34/POJK.03/2020 concerning Policies for Rural Credit Banks and Sharia Rural Financing Banks as a Result of the Spread of Coronavirus Disease 2019; 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 the Amendment 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);
4. Financial Services Authority Regulation Number 34/POJK.03/2020 concerning Policies for Rural Credit Banks and Sharia Rural Financing Banks as a Result of the Spread of Coronavirus Disease 2019 (State Gazette of the Republic of Indonesia Year 2020 Number 139, Supplement to the State Gazette of the Republic of Indonesia Number 6520);

DECIDES:
Establish: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING THE AMENDMENT TO FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 34/POJK.03/2020 CONCERNING POLICIES FOR RURAL CREDIT BANKS AND SHARIA RURAL FINANCING BANKS AS A RESULT OF THE SPREAD OF CORONAVIRUS DISEASE 2019.

Article I
Several provisions in the Financial Services Authority Regulation Number 34/POJK.03/2020 concerning Policies for Rural Credit Banks and Sharia Rural Financing Banks as a Result of the Spread of Coronavirus Disease 2019 (State Gazette of the Republic of Indonesia Year 2020 Number 139, Supplement to the State Gazette of the Republic of Indonesia Number 6520) are amended as follows:

1. The provision of paragraph (4) of Article 2 is amended, so that it reads as follows:

Article 2
(1) BPR or BPRS may apply policies for BPR and BPRS as a result of the spread of Coronavirus Disease 2019 (COVID-19).
(2) The application of policies for BPR and BPRS as a result of the spread of Coronavirus Disease 2019 (COVID-19) consists of:
a. the formation of provisions for the write-off of productive assets; b. the calculation of the value of collateral taken over as a reduction factor for core capital in the calculation of the minimum capital provision obligation;
c. the calculation of fund provision in the form of interbank fund placements; and/or
d. the provision of funds for human resource education and training.

(3) BPR or BPRS in applying policies as referred to in paragraph (2) must still pay attention to the principle of prudence.
(4) In the event that BPR or BPRS applies policies as referred to in paragraph (2), BPR or BPRS must conduct:
a. adjustments to guidelines for all policies applied; b. adequate documentation and administration of all policies applied; and
c. simulation of the impact calculation of the application of policies on the capital adequacy and liquidity of BPR and BPRS.
(5) Documentation and administration of each policy applied as referred to in paragraph (4) letter b must at least contain:
a. provisions for the write-off of productive assets:
1. the amount of provisions for the write-off of productive assets that must be formed in accordance with the provisions of the Financial Services Authority regulations concerning the quality of productive assets and the formation of provisions for the write-off of productive assets; and
2. the realization of the amount of provisions for the write-off of productive assets formed in accordance with the provisions of this Financial Services Authority Regulation,
for each productive asset account of BPR and BPRS; b. the calculation of the value of collateral taken over as a reduction factor for core capital of BPR and BPRS in the calculation of the minimum capital provision obligation;
c. the calculation of fund provision in the form of interbank fund placements; and/or
d. the provision of funds for human resource education and training:
1. the amount of costs for human resource education and training that must be fulfilled in accordance with the provisions of the Financial Services Authority regulations concerning the obligation to provide funds for education and training for the development of human resources of rural credit banks and Sharia rural financing banks; and
2. the realization of costs for human resource education and training of BPR and BPRS in accordance with the provisions of this Financial Services Authority Regulation.

2. The provision of Article 7 remains, the Explanation of paragraph (1) of Article 7 is amended as stated in the article-by-article explanation.
3. Between CHAPTER V and CHAPTER VI, 2 (two) chapters are inserted, namely CHAPTER VA and CHAPTER VB, so that they read as follows.

CHAPTER VA
SIMULATION OF THE IMPACT CALCULATION OF THE APPLICATION OF POLICIES

Article 7A
(1) BPR or BPRS conducts periodic simulations of the impact calculation of the application of policies as referred to in Article 2 paragraph (4) letter c.
(2) The period of simulation of the impact calculation of the application of policies as referred to in paragraph (1) is determined by BPR and BPRS in accordance with the conditions and policies applied by each respective BPR and BPRS. (3) The Financial Services Authority may determine a period for the simulation of the impact calculation of the application of policies that is faster than the period determined by BPR and BPRS as referred to in paragraph (2). (4) The Financial Services Authority may request BPR and BPRS to submit the results of the simulation of the impact calculation of the application of policies as referred to in paragraph (1) and action plans if necessary. (5) The results of the simulation calculation and action plans as referred to in paragraph (4) are submitted at the latest 14 (fourteen) days since the date of the notification letter from the Financial Services Authority. (6) If the time limit as referred to in paragraph (5) falls on a Saturday, Sunday, and/or national holiday, BPR or BPRS submits the results of the simulation calculation and action plans on the next working day.

CHAPTER VB
DIVIDEND AND/OR MANAGEMENT BONUS DISTRIBUTION POLICY

Article 7B
(1) In the event that BPR or BPRS distributes dividends and/or management bonuses, BPR or BPRS must ensure that the distribution of dividends and/or management bonuses does not impact the capital adequacy of BPR and BPRS in accordance with the provisions of the Financial Services Authority regulations concerning the minimum capital provision obligation and the fulfillment of minimum core capital. (2) In ensuring the impact of the distribution of dividends and/or management bonuses on capital adequacy as referred to in paragraph (1), BPR or BPRS must calculate at least the application of policies as referred to in Article 2 paragraph (2) letters a and b. (3) The Financial Services Authority may request BPR and BPRS to submit the results of the calculation of the impact of the distribution of dividends and/or management bonuses as referred to in paragraph (2) at the latest 14 (fourteen) days since the date of the notification letter from the Financial Services Authority. (4) If the time limit as referred to in paragraph (3) falls on a Saturday, Sunday, and/or national holiday, BPR or BPRS submits the results of the calculation of the impact of the distribution of dividends and/or management bonuses on the next working day. (5) BPR or BPRS that does not meet the provisions as referred to in paragraph (1) and/or paragraph (2) is subject to administrative sanctions in the form of a written warning. (6) In the event that BPR or BPRS has been subject to administrative sanctions as referred to in paragraph (5), and BPR or BPRS still does not meet the provisions as referred to in paragraph (1) and/or paragraph (2), it may be subject to administrative sanctions in the form of:
a. a downgrade of health level; and/or b. a prohibition as a principal party in accordance with the provisions of the Financial Services Authority regulations concerning the re-evaluation of principal parties of financial service institutions.

4. The provision of Article 10 is amended, so that it reads as follows:

Article 10
The application of policies for BPR and BPRS in this Financial Services Authority Regulation is valid until March 31, 2022.

Article II
This Financial Services Authority Regulation takes effect on the date of enactment.

This copy is in accordance with the original
Legal Director 1
Legal Department signed
Mufli Asmawidjaja

So that everyone knows, it is ordered to promulgate this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.
Established in Jakarta on February 17, 2021
CHAIRMAN OF THE COMMISSIONERS
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO
Promulgated in Jakarta on February 18, 2021
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY
SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2021 NUMBER 69

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 2 /POJK.03/2021
CONCERNING
AMENDMENT TO FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 34/POJK.03/2020 CONCERNING POLICIES FOR RURAL CREDIT BANKS AND SHARIA RURAL FINANCING BANKS AS A RESULT OF THE SPREAD OF CORONAVIRUS DISEASE 2019

I. GENERAL
The Financial Services Authority has issued Financial Services Authority Regulation Number 34/POJK.03/2020 concerning Policies for Rural Credit Banks and Sharia Rural Financing Banks as a Result of the Spread of Coronavirus Disease 2019, which has been effective since June 2, 2020. The spread of Coronavirus Disease 2019 (COVID-19) which is still ongoing both globally and domestically has an impact on the real sector, including micro, small, and medium enterprises, so that time is still needed for recovery, which affects the performance of BPR and BPRS as one of the financial service sectors with the main target market of micro, small, and medium enterprises. To support the stability of BPR and BPRS performance during the pandemic, further policies are needed to continue supporting the growth of the BPR and BPRS industry, so that they can perform intermediary functions, including encouraging the recovery and growth of the real sector, especially micro, small, and medium enterprises. The application of policies for BPR and BPRS as a result of the spread of Coronavirus Disease 2019 (COVID-19) still pays attention to the principle of prudence accompanied by a monitoring mechanism to prevent abuse in the application of regulations (moral hazard). Polices for BPR and BPRS as a result of the spread of Coronavirus Disease 2019 (COVID-19) are temporary so they need to be evaluated and adjusted. In this regard, it is necessary to adjust the Financial Services Authority Regulation Number 34/POJK.03/2020 concerning Policies for Rural Credit Banks and Sharia Rural Financing Banks as a Result of the Spread of Coronavirus Disease 2019, namely regulations regarding the simulation of the impact calculation of the application of stimulus policies, dividend and/or management bonus policies, and the extension of the stimulus period.

II. ARTICLE BY ARTICLE
Article I
Number 1
Article 2
Paragraph (1)
Clear enough.
Paragraph (2)
Clear enough.
Paragraph (3)
Clear enough.
Paragraph (4)
Clear enough.
Paragraph (5)
Letter a
Number 1
Financial Services Authority regulations concerning the quality of productive assets and the formation of provisions for the write-off of productive assets:

1. for BPR, Financial Services Authority regulations concerning the quality of productive assets and the formation of provisions for the write-off of productive assets of rural credit banks; or
2. for BPRS, Financial Services Authority regulations concerning the quality of productive assets and the formation of provisions for the write-off of productive assets of Sharia rural financing banks.
   Number 2
   Clear enough.
   Letter b
   Clear enough.
   Letter c
   Clear enough.
   Letter d
   Clear enough.
   Number 2
   Article 7
   Paragraph (1)
   Funds for education and training for human resource development, namely for the year 2021.
   Funds for education and training for human resource development in accordance with the provisions of Financial Services Authority regulations concerning the provision of human resource funds for BPR and BPRS. Paragraph (2) Clear enough. Number 3
   Article 7A
   Paragraph (1)
   The simulation of the impact calculation of the application of policies is aimed at assessing the influence of the application of policies for the formation of provisions for the write-off of productive assets, the calculation of collateral taken over that will mature, and/or interbank fund placements for addressing liquidity problems on the capital adequacy and liquidity of BPR and BPRS after this Financial Services Authority Regulation expires. Capital adequacy and liquidity of BPR and BPRS include, among others, the minimum capital provision ratio and cash ratio. Paragraph (2) The determination of the period for the simulation of the impact calculation of the application of policies includes considering new risk exposures from the policies applied. Paragraph (3) Clear enough. Paragraph (4) Clear enough. Paragraph (5) The results of the simulation calculation and action plans can be submitted by BPR and BPRS in the form of electronic copies via official email or printed copies addressed to the Regional Office of the Financial Services Authority or the local Financial Services Authority Office in accordance with the area where the head office of BPR and BPRS is located. Notification letters from the Financial Services Authority are based on the results of the Financial Services Authority's examination of the performance of BPR and BPRS as a result of the application of policies. Paragraph (6) Clear enough.
   Article 7B
   Paragraph (1)
   BPR or BPRS ensures that the distribution of dividends and/or management bonuses does not impact the capital adequacy of BPR and BPRS before the distribution of dividends and/or management bonuses is carried out. BPR or BPRS includes BPR or BPRS as a legal entity, controlling shareholders, members of the board of directors, members of the board of commissioners, and/or executive officials of BPR or BPRS. Financial Services Authority regulations concerning the minimum capital provision obligation and the fulfillment of minimum core capital:
   a. for BPR, Financial Services Authority regulations concerning the minimum capital provision obligation and the fulfillment of minimum core capital of rural credit banks; or b. for BPRS, Financial Services Authority regulations concerning the minimum capital provision obligation and the fulfillment of minimum core capital of Sharia rural financing banks. Paragraph (2) Capital adequacy includes considering the formation of provisions for the write-off of productive assets required as a result of the application of Financial Services Authority regulations concerning national economic stimulus as countercyclical policies as a result of the spread of coronavirus disease 2019 and its amendments. Paragraph (3) The results of the calculation of the impact of the distribution of dividends and/or management bonuses can be submitted by BPR and BPRS in the form of electronic copies via official email or printed copies addressed to the Regional Office of the Financial Services Authority or the local Financial Services Authority Office in accordance with the area where the head office of BPR and BPRS is located. Notification letters from the Financial Services Authority are based on the results of the Financial Services Authority's examination of the performance of BPR and BPRS as a result of the distribution of dividends and/or management bonuses. Paragraph (4) Clear enough. Paragraph (5) Clear enough. Paragraph (6) Clear enough. Number 4
   Article 10
   Clear enough.
   Article II
   Clear enough.
   SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6662