OJK Regulation No. 11 of 2025 on the Conduct of Guarantee Institution Business

Regulation of the Financial Services Authority Number 11 of 2025 concerning The Conduct of Guarantee Institution Business

Abstract: To strengthen the guarantee industry and realize a healthy, trusted, and sustainable guarantee industry, as well as to support national economic growth and equitable distribution, and because the Financial Services Authority Regulation (POJK) Number 2/POJK.05/2017 concerning the Conduct of Guarantee Institution Business as amended by POJK 30/POJK.05/2018 concerning Amendments to POJK Number 2/POJK.05/2017 concerning the Conduct of Guarantee Institution Business is no longer in line with the development of the guarantee institution industry in Indonesia, it is necessary to replace it with improved provisions. The legal basis for this Financial Services Authority Regulation is: Law No. 21 of 2011 as amended by Law No. 4 of 2023; and Law No. 1 of 2016 as amended by Law No. 4 of 2023. The improvements made include provisions on approval of other business activities, feasibility analysis of prospective guaranteed parties, risk mitigation, claim payment and subrogation, retention amount, risk sharing, minimum equity and gearing ratio, health level, reporting, and consumer protection. Guarantee certificates or kafalah certificates issued before this POJK takes effect are declared to remain valid until the end of their guarantee period. Extensions of guarantee certificates or kafalah certificates carried out after this POJK takes effect must comply with this POJK. Guarantee Institutions subject to administrative sanctions based on POJK No. 2/POJK.05/2017 and which have not been able to overcome the causes of the administrative sanctions imposed, shall be subject to further administrative sanctions in accordance with this POJK. Guarantee Companies or Islamic Guarantee Companies must have a minimum equity of: IDR 50,000,000,000.00 (fifty billion rupiah) for the district/city scope; IDR 100,000,000,000.00 (one hundred billion rupiah) for the provincial scope; and IDR 250,000,000,000.00 (two hundred fifty billion rupiah) for the national scope. Reinsurance Companies or Islamic Reinsurance Companies must have a minimum equity of IDR 500,000,000,000.00 (five hundred billion rupiah) for the national scope. Compliance with equity requirements by Guarantee Institutions is carried out in stages, namely: minimum 75% of the minimum equity requirements by December 31, 2026; and minimum 100% of the minimum equity requirements by December 31, 2028. Guarantee Companies and Islamic Companies set the risk borne by the Guaranteed Recipient at: 25% of the outstanding value of credit, financing, or Sharia-based financing at the time the claim right arises, for credit, financing, and Sharia-based financing guarantees; and 10% (ten percent) of the contract value at the time the claim right arises, for trade transaction guarantees. Note: This Financial Services Authority Regulation 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. At the time this Financial Services Authority Regulation takes effect, the following provisions: a. Financial Services Authority Regulation Number 2/POJK.05/2017 concerning the Conduct of Guarantee Institution Business; and b. Financial Services Authority Regulation Number 30/POJK.05/2018 concerning Amendments to Financial Services Authority Regulation Number 2/POJK.05/2017 concerning the Conduct of Guarantee Institution Business, are repealed and declared invalid.