Amendment to Financial Services Authority Regulation Number 50/POJK.03/2017 on the Net Stable Funding Ratio Obligation for Commercial Banks

EXTRACT FINANCIAL SERVICES AUTHORITY REGULATION OF THE REPUBLIC OF INDONESIA NUMBER 20 OF 2024 CONCERNING AMENDMENT TO FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 50/POJK.03/2017 ON THE OBLIGATION TO FULFILL THE NET STABLE FUNDING RATIO FOR COMMERCIAL BANKS

BY THE GRACE OF GOD THE ALMIGHTY,

THE COMMISSIONERS COUNCIL OF THE FINANCIAL SERVICES AUTHORITY,

Considering: a. that in order to create a healthy banking system capable of developing and competing nationally and internationally, and in line with the development of international standards, banks need to have strong and adequate liquidity; b. that to assess liquidity adequacy, a liquidity ratio that is equivalent, reliable, and comparable is needed to assess the adequacy of stable funding based on the composition of assets and administrative account transactions; c. that to accommodate the development of international standards and support the strengthening of Indonesian banking liquidity, adjustments need to be made to the Financial Services Authority Regulation Number 50/POJK.03/2017 concerning the Obligation to Fulfill the Net Stable Funding Ratio for Commercial Banks; d. that based on considerations as referred to in letters a, b, and c, it is necessary to establish a Financial Services Authority Regulation concerning Amendment to Financial Services Authority Regulation Number 50/POJK.03/2017 concerning the Obligation to Fulfill the Net Stable Funding Ratio for Commercial Banks;

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 several times, lastly with Law Number 4 of 2023 concerning Development and Strengthening of the Financial Sector (State Gazette of the Republic of Indonesia Year 2023 Number 4, Supplement to the State Gazette of the Republic of Indonesia Number 6845);
2. 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) as amended by Law Number 4 of 2023 concerning Development and Strengthening of the Financial Sector (State Gazette of the Republic of Indonesia Year 2023 Number 4, Supplement to the State Gazette of the Republic of Indonesia Number 6845);
3. Financial Services Authority Regulation Number 50/POJK.03/2017 concerning the Obligation to Fulfill the Net Stable Funding Ratio for Commercial Banks (State Gazette of the Republic of Indonesia Year 2017 Number 159, Supplement to the State Gazette of the Republic of Indonesia Number 6099);

DECIDES:

To Establish: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING AMENDMENT TO FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 50/POJK.03/2017 CONCERNING THE OBLIGATION TO FULFILL THE NET STABLE FUNDING RATIO FOR COMMERCIAL BANKS.

Article I

Several provisions in the Financial Services Authority Regulation Number 50/POJK.03/2017 concerning the Obligation to Fulfill the Net Stable Funding Ratio for Commercial Banks (State Gazette of the Republic of Indonesia Year 2017 Number 159, Supplement to the State Gazette of the Republic of Indonesia Number 6099) are amended as follows:

1. The provisions of Article 1 are amended to read as follows:

Article 1

In this Financial Services Authority Regulation:

1. Bank means a Commercial Bank as referred to in Law Number 7 of 1992 concerning Banking as amended several times, lastly with Law Number 4 of 2023 concerning Development and Strengthening of the Financial Sector, including branches of banks located abroad, which conduct conventional business activities.

2. Available Stable Funding, hereinafter abbreviated as ASF, is the amount of stable liabilities and equity over a 1 (one) year period to finance the Bank's activities.

3. Required Stable Funding, hereinafter abbreviated as RSF, is the amount of assets and administrative account transactions that need to be funded by stable funding.

4. Net Stable Funding Ratio, hereinafter abbreviated as NSFR, is the ratio between ASF and RSF.

5. NSFR Report is a report presenting quantitative information in the form of NSFR calculations and values, as well as qualitative information in the form of NSFR development analysis.

6. NSFR Working Paper is a report containing detailed NSFR calculations as data sources in compiling the NSFR Report.

7. NSFR Fulfillment Action Plan is a report containing at least improvement plans for fulfilling NSFR adequacy accompanied by completion timeframes.

8. The provisions of Article 4 are deleted.

9. The provisions of paragraph (3) of Article 5 remain, and the Explanation of paragraph (3) of Article 5 is amended as set forth in the article-by-article explanation.

10. The provisions of Article 6 are amended to read as follows:

Article 6

Banks are required to: a. monitor NSFR fulfillment; b. submit NSFR calculation reports; and c. publish the NSFR Report, both individually and on a consolidated basis.

5. Between Article 15 and Article 16, 1 (one) article is inserted, namely Article 15A, which reads as follows:

Article 15A

(1) The obligation to calculate and report NSFR for Banks included in the bank group based on Tier 1 capital other than foreign banks, is first conducted for the end-of-December 2024 position for: a. monthly monitoring of NSFR fulfillment as referred to in Article 7 paragraph (1); b. submission of NSFR Working Papers and NSFR Reports for the end-of-quarter reporting position as referred to in Article 10 paragraph (1); and c. publication and disclosure of NSFR Reports for the end-of-quarter reporting position as referred to in Article 14 paragraph (1).

(2) The procedures, formats, and timeframes for submitting NSFR Working Papers and NSFR Reports are carried out in accordance with the Financial Services Authority Regulation concerning bank reporting through the Financial Services Authority reporting system.

(3) The procedures, formats, and timeframes for publishing NSFR Reports are carried out in accordance with the Financial Services Authority Regulation concerning transparency and publication of bank reports.

6. The provisions of Article 16 are amended and the explanation of Article 16 is amended as set forth in the article-by-article explanation, so that it reads as follows:

Article 16

In the event that there are Banks included in the bank group based on Tier 2 capital, the bank group based on Tier 3 capital, the bank group based on Tier 4 capital, or foreign banks that subsequently become Banks included in the bank group based on Tier 1 capital other than foreign banks before the December 2024 position, the Banks remain obligated to fulfill the NSFR calculation and reporting provisions as regulated in this Financial Services Authority Regulation.

Article II

This Financial Services Authority Regulation takes effect on the date of its promulgation.

This extract is consistent with the original Director of Legal Development Legal Department Aat Windradi

In order that everyone may know it, 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 November 1, 2024

CHAIRMAN OF THE COMMISSIONERS COUNCIL FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA, MAHENDRA SIREGAR

Promulgated in Jakarta on November 8, 2024

MINISTER OF LAW AND HUMAN RIGHTS REPUBLIC OF INDONESIA, SUPRATMAN ANDI AGTAS

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2024 NUMBER 30/OJK

EXPLANATION OF FINANCIAL SERVICES AUTHORITY REGULATION OF THE REPUBLIC OF INDONESIA NUMBER 20 OF 2024 CONCERNING AMENDMENT TO FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 50/POJK.03/2017 ON THE OBLIGATION TO FULFILL THE NET STABLE FUNDING RATIO FOR COMMERCIAL BANKS

I. GENERAL

Just as with capital, a standard for calculating liquidity ratios is needed to measure the minimum liquidity that must be maintained by Banks in accordance with applicable international standards, namely Basel III: The Net Stable Funding Ratio issued by the Basel Committee on Banking Supervision (BCBS). The assessment of liquidity adequacy as regulated in the aforementioned international standard is carried out through the fulfillment of the stable funding ratio adjusted to the composition of assets and administrative accounts.

The aforementioned ratio has been applied in Indonesia since 2017 for Banks meeting certain criteria. Given that the maintenance of this ratio is intended to support the strengthening of banking liquidity, in its development, data that is equivalent, reliable, and comparable is needed that applies to all Banks.

In relation to this matter, adjustments are needed to the Financial Services Authority Regulation concerning the obligation to fulfill the net stable funding ratio for commercial banks, including among others the expansion of the scope of Banks.

II. ARTICLE BY ARTICLE EXPLANATION

Article I

Number 1 Article 1

Sufficiently clear.

Number 2 Article 4

Deleted.

Number 3 Article 5

Paragraph (1)

Sufficiently clear.

Paragraph (2)

The carrying value considered is the carrying value before deducting factors based on regulatory deductions, or other adjustments.

Example: Tier 1 capital and Tier 2 capital do not consider factors that are capital deductions as referred to in the Financial Services Authority Regulation concerning the minimum capital adequacy requirement for commercial banks.

Paragraph (3)

The term "all carrying values of assets on the financial position report (balance sheet)" in this provision includes minimum reserve deposits as regulated in regulations concerning minimum reserve deposits, and Capital Equivalency Maintained Assets (CEMA) as regulated in the Financial Services Authority Regulation concerning the minimum capital adequacy requirement for commercial banks.

For assets on the financial position report (balance sheet), the carrying value considered is the carrying value of assets plus accrued interest receivable (if any) minus Impairment Loss Reserves (CKPN) on assets calculated in accordance with financial accounting standards.

The aforementioned CKPN refers to CKPN on assets identified as impaired, namely CKPN on stage 2 (impaired assets) and stage 3 (significantly impaired assets) in accordance with financial accounting standards concerning financial instruments.

Paragraph (4)

Sufficiently clear.

Number 4 Article 6

Sufficiently clear.

Number 5 Article 15A

Paragraph (1)

Banks included in the bank group based on Tier 1 capital in accordance with the Financial Services Authority Regulation concerning commercial banks.

Foreign banks are Banks that meet the following criteria:

1. branches of banks located abroad;
2. commercial banks in the form of Indonesian legal entities where more than 50% (fifty percent) of their shares are owned by foreign citizens and/or foreign legal entities, either individually or jointly; and/or
3. banks owned individually or jointly by foreign citizens and/or foreign legal entities up to 50% (fifty percent) but there is control by such foreign citizens and/or foreign legal entities.

Paragraph (2)

Sufficiently clear.

Paragraph (3)

Sufficiently clear.

Number 6 Article 16

Banks included in the bank group based on Tier 2 capital, the bank group based on Tier 3 capital, the bank group based on Tier 4 capital in accordance with the Financial Services Authority Regulation concerning commercial banks.

Article II

Sufficiently clear.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 98/OJK