Maximum Limit for Credit Granting by Rural Banks and Maximum Limit for Fund Disbursement by Sharia Rural Banks

Financial Services Authority Circular Letter Number 11/SEOJK.03/2023

Regarding Maximum Limit for Credit Granting by Rural Banks and Maximum Limit for Fund Disbursement by Sharia Rural Banks

Abstract: As a follow-up to the issuance of POJK No. 23 of 2022 regarding the Maximum Limit for Credit Granting by Rural Banks and the Maximum Limit for Fund Disbursement by Sharia Financing Banks, it is necessary to refine the implementation provisions in order to align with legislation, apply prudential principles, and manage the risk of providing or disbursing funds, as well as to maintain stability and encourage improved performance of Rural Banks (BPR) and Sharia Rural Banks (BPRS), including by addressing potential and/or liquidity issues of BPR and BPRS.

The legal basis for this Financial Services Authority Circular Letter is: Law No. 7 of 1992 on Banking as amended by Law No. 10 of 1998 on Amendments to Law No. 7 of 1992 on Banking, Law No. 21 of 2008 on Sharia Banking, Law No. 21 of 2011 on the Financial Services Authority, Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector, POJK No. 23 of 2022 on the Maximum Limit for Credit Granting by Rural Banks and the Maximum Limit for Fund Disbursement by Sharia Financing Banks, and other related POJK and SEOJK.

This Financial Services Authority Circular Letter regulates further explanations, including the addition of control criteria to the definition of related parties in the calculation of the Maximum Limit for Credit Granting (BMPK) and the Maximum Limit for Fund Disbursement (BMPD), adjustment of reference codes in BPR BMPK reporting related to changes in the definition of related parties, calculation of violations and exceedances of BMPK and BMPD, determination of category groups based on financial relationships between borrowers or facility recipients, and reporting outputs based on information on violations and exceedances of BMPK and BMPD submitted by BPR and BPRS through monthly reports.

Notes: The calculation of violations and exceedances of BPR BMPK refers to Appendix I, which is an integral part of this Financial Services Authority Circular Letter. The calculation of violations and exceedances of BPRS BMPD refers to Appendix II, which is an integral part of this Financial Services Authority Circular Letter. Reporting outputs for BPR BMPK in accordance with Appendix III, which is an integral part of this Financial Services Authority Circular Letter, or reporting outputs for BPRS BMPD in accordance with Appendix IV, which is an integral part of this Financial Services Authority Circular Letter, can be downloaded through the Financial Services Authority reporting system based on reported information as per BPR monthly reports and BPRS monthly reports.

BPR and BPRS must consider BMPK Violations and Exceedances in risk profile and governance assessments, which have a significant impact on the determination of the health level value of BPR in accordance with Financial Services Authority Regulations regarding the assessment of the health level of rural banks and sharia financing banks.

This Financial Services Authority Circular Letter takes effect on the date of establishment, August 15, 2023.

Financial Services Authority Circular Letter Number 41/SEOJK.03/2017 regarding the Maximum Limit for Credit Granting by Rural Banks and Bank Indonesia Circular Letter No. 13/17/DPBS regarding the Maximum Limit for Fund Disbursement by Sharia Financing Banks are repealed and declared invalid.

Financial Services Authority Circular Letter Number 12/SEOJK.03/2022 regarding Monthly Reports of Rural Banks is declared to remain valid insofar as it does not conflict with this Financial Services Authority Circular Letter.

Financial Services Authority Circular Letter Number 3/SEOJK.03/2023 regarding Monthly Reports of Sharia Financing Banks is declared to remain valid insofar as it does not conflict with this Financial Services Authority Circular Letter.