Financial Services Authority Regulation Number 10/POJK.03/2015 on the Issuance of Deposit Certificates by Banks

COPY
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 10 /POJK.03/2015
CONCERNING
THE ISSUANCE OF DEPOSIT CERTIFICATES BY BANKS
BY THE GRACE OF GOD THE ALMIGHTY,
THE COMMISSIONERS COUNCIL OF THE FINANCIAL SERVICES AUTHORITY, Considering:
a. that in order to enhance the role of banking and Sharia banking as institutions for collecting public funds that provide various savings products to the public, it is necessary to increase transactions in deposit certificate products; b. that the issuance of deposit certificates must take into account prudential aspects and the application of bank risk management, as well as take into account Sharia principles for the issuance of deposit certificates based on Sharia principles;
c. that the regulations regarding deposit certificates at present are no longer adequate and need to be adjusted to the development of public needs and technology;
d. that based on the considerations as referred to in letters a, b, and c, it is necessary to establish a Financial Services Authority Regulation concerning the Issuance of Deposit Certificates by 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 by Law Number 10 of 1998 (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 11 of 2008 concerning Electronic Information and Transactions (State Gazette of the Republic of Indonesia Year 2008 Number 58, Supplement to the State Gazette of the Republic of Indonesia Number 4843);
3. 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);
4. 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);
   DECIDING:
   Establishing: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING THE ISSUANCE OF DEPOSIT CERTIFICATES BY BANKS.

CHAPTER I
GENERAL PROVISIONS
Article 1
In this Financial Services Authority Regulation, the following terms are defined as:

1. Bank means a Commercial Bank that conducts business activities conventionally as referred to in Law Number 7 of 1992 concerning Banking as amended by Law Number 10 of 1998, as well as Sharia Commercial Banks and Sharia Business Units as referred to in Law Number 21 of 2008 concerning Sharia Banking;
2. Depository and Settlement Institution, hereinafter abbreviated as LPP, is a party that conducts central custodian activities for custodian banks, securities companies, and other parties for the purpose of recording and managing deposit certificates in scripless form;
3. Deposit Certificate means a deposit in the form of a time deposit, including those based on Sharia principles, where the proof of deposit certificate can be transferred.

CHAPTER II
FORM AND ISSUER OF DEPOSIT CERTIFICATES
Article 2
(1) Deposit Certificates may be issued in physical or scripless form.
(2) Deposit Certificates in physical form as referred to in paragraph (1) must be bearer instruments.
(3) Deposit Certificates in scripless form as referred to in paragraph (1) must have their ownership identified by the Bank in the recording at the LPP.

Article 3
(1) Banks may issue Deposit Certificates in physical form without first obtaining approval from the Financial Services Authority.
(2) Banks issuing Deposit Certificates in scripless form must first obtain approval from the Financial Services Authority.
(3) Approval from the Financial Services Authority as referred to in paragraph (2) is required for the first issuance of Deposit Certificates in scripless form by the Bank.
(4) The requirements and procedures for approval of the issuance of Deposit Certificates in scripless form as referred to in paragraph (3) which are first issued by Commercial Banks refer to regulations governing business activities and office networks based on bank core capital and regulations governing the application of risk management for Commercial Banks. (5) The requirements and procedures for approval of the issuance of Deposit Certificates in scripless form as referred to in paragraph (3) which are first issued by Sharia Commercial Banks and Sharia Business Units refer to regulations governing business activities and office networks based on bank core capital and regulations governing products and activities of Sharia Commercial Banks and Sharia Business Units.

Article 4
(1) Deposit Certificates as referred to in Article 2 paragraph (1) may be issued in Rupiah or foreign currency.
(2) Deposit Certificates in foreign currency as referred to in paragraph (1) may only be issued by Banks that have obtained approval to conduct business activities in foreign currency.

CHAPTER III
CHARACTERISTICS OF DEPOSIT CERTIFICATES
Article 5
(1) The nominal value of Deposit Certificates is at least IDR 10,000,000.00 (ten million Rupiah) or its equivalent in foreign currency.
(2) The maturity period of Deposit Certificates is at least 1 (one) month and at most 36 (thirty-six) months.

Article 6
(1) Interest on Deposit Certificates for Commercial Banks is fixed and paid in a discounted manner.
(2) The yield and mechanism for payment of yield for Deposit Certificates based on Sharia principles are further regulated by a Circular Letter of the Financial Services Authority.

Article 7
Banks are prohibited from issuing Deposit Certificates that are derivative in nature and/or linked to other financial products.

Article 8
(1) Deposit Certificates in physical form must meet characteristics established by the Financial Services Authority to meet the principles of product security and transparency.
(2) The characteristics of Deposit Certificates in physical form as referred to in paragraph (1) are further regulated by a Circular Letter of the Financial Services Authority.

CHAPTER IV
RECORDING AND MONITORING OF DEPOSIT CERTIFICATES
Article 9
(1) Banks must record the initial ownership of Deposit Certificates in physical form or Deposit Certificates in scripless form.
(2) Upon the redemption of Deposit Certificates in physical form, Banks must ensure that the first endorsement corresponds to the owner of the Deposit Certificate in physical form whose name is recorded with the Bank and examine subsequent endorsements and the identity proof of the last owner. (3) The management of recording ownership and changes in ownership of Deposit Certificates in scripless form is conducted by the LPP for and on behalf of the Bank.

Article 10
(1) Banks issuing Deposit Certificates in scripless form must monitor the recording and changes in ownership of Deposit Certificates in scripless form conducted by the LPP.
(2) Banks must ensure that electronic information, electronic documents, and/or their printouts related to the recording and management of Deposit Certificates in scripless form at the LPP meet the validity as regulated in legislation concerning electronic information and transactions.

CHAPTER V
RISK MANAGEMENT, ANTI-MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM, AND CONSUMER PROTECTION
Article 11
(1) Banks issuing Deposit Certificates must apply risk management.
(2) The application of risk management as referred to in paragraph (1) refers to regulations governing the application of risk management for Commercial Banks or the application of risk management for Sharia Commercial Banks and Sharia Business Units.

Article 12
Banks issuing Deposit Certificates must apply anti-money laundering and counter-terrorism financing programs as regulated in legislation concerning the application of anti-money laundering and counter-terrorism financing programs for Banks.

Article 13
Banks issuing Deposit Certificates must apply consumer protection principles as referred to in regulations governing consumer protection in the financial services sector.

CHAPTER VI
APPLICATION FOR APPROVAL AND REPORTING OF DEPOSIT CERTIFICATE ISSUANCE
Article 14
The application for approval of the issuance of Deposit Certificates in scripless form as referred to in Article 3 paragraph (2) is submitted to the Financial Services Authority at the following addresses:

1. The Department of Supervision of the Relevant Bank, Regional Office 1, or the Department of Sharia Banking, Financial Services Authority, Jl. M.H. Thamrin No. 2 Jakarta 10350, for Banks headquartered in the Jabodetabek area; or
2. The Regional Office or Local Office of the Financial Services Authority, for Banks headquartered outside the Jabodetabek area.

Article 15
(1) Banks must submit periodic reports regarding Deposit Certificates issued to the Financial Services Authority.
(2) The reports that must be submitted as referred to in paragraph (1) for Commercial Banks refer to regulations governing Monthly Reports of Commercial Banks.
(3) The reports that must be submitted as referred to in paragraph (1) for Sharia Commercial Banks and Sharia Business Units refer to regulations governing Monthly Monetary and Financial System Stability Reports of Sharia Commercial Banks and Sharia Business Units.

CHAPTER VII
SANCTIONS
Article 16
(1) Banks that do not comply with the provisions of Article 2 paragraph (2), Article 2 paragraph (3), Article 3 paragraph (2), Article 8 paragraph (1), Article 9 paragraph (1), Article 9 paragraph (2), and Article 10 paragraph (1) shall be subject to sanctions in the form of:
a. written reprimand; b. downgrade of health level; and/or
c. restriction and/or suspension of certain business activities.
(2) Banks that violate the provisions of Article 7 shall be subject to sanctions in the form of:
a. written reprimand; b. downgrade of health level; and/or
c. restriction and/or suspension of certain business activities.
(3) Banks that do not comply with the provisions of Article 10 paragraph (2) shall be subject to sanctions as regulated in legislation concerning electronic information and transactions. (4) Banks that do not comply with the provisions of Article 11 paragraph (1) shall be subject to sanctions as regulated in regulations concerning the application of risk management for Commercial Banks or the application of risk management for Sharia Commercial Banks and Sharia Business Units. (5) Banks that do not comply with the provisions of Article 12 shall be subject to sanctions as regulated in legislation concerning the application of anti-money laundering and counter-terrorism financing programs. (6) Banks that do not comply with the provisions of Article 13 shall be subject to sanctions as regulated in regulations concerning consumer protection in the financial services sector. (7) Commercial Banks that do not comply with the provisions of Article 15 shall be subject to sanctions as regulated in regulations concerning Monthly Reports of Commercial Banks. (8) Sharia Commercial Banks and Sharia Business Units that do not comply with the provisions of Article 15 shall be subject to sanctions as regulated in regulations concerning Monthly Monetary and Financial System Stability Reports of Sharia Commercial Banks and Sharia Business Units.

CHAPTER VIII
TRANSITIONAL PROVISIONS
Article 17
(1) Deposit Certificates issued before the implementation of these provisions shall remain valid until maturity.
(2) Banks submit reports to the Financial Services Authority regarding the issuance of Deposit Certificates in scripless form that were conducted before these provisions came into effect. (3) The submission of reports to the Financial Services Authority as referred to in paragraph (2) must be submitted no later than December 31, 2015.

CHAPTER IX
OTHER PROVISIONS
Article 18
The transfer of ownership of Deposit Certificates in scripless form conducted through the money market is subject to regulations governed by the competent authority.

CHAPTER X
CLOSING PROVISIONS
Article 19
Further provisions from this Financial Services Authority Regulation are regulated in a Circular Letter of the Financial Services Authority.

Article 20
At the time this Financial Services Authority Regulation comes into effect, all regulations governing the issuance of Deposit Certificates are declared to remain valid insofar as they do not conflict with this Financial Services Authority Regulation.

Article 21
This Financial Services Authority Regulation comes into effect on the date of its promulgation.
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 July 14, 2015
CHAIRMAN OF THE COMMISSIONERS COUNCIL
FINANCIAL SERVICES AUTHORITY, signature
MULIAMAN D. HADAD
Promulgated in Jakarta
On July 14, 2015
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signature
YASONNA H. LAOLY
STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2015 NUMBER 164 Copy in accordance with the original Director of Legal Affairs 1 Department of Law signature Sudarmaji

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 10 /POJK.03/2015
CONCERNING
THE ISSUANCE OF DEPOSIT CERTIFICATES BY BANKS
I. GENERAL
The development of banking savings products in the context of collecting public funds has undergone various feature changes in line with changes in public needs. The consequence of this is that the risks attached to such savings products are increasingly high, so that existing regulations are considered inadequate and need to be adjusted so that Banks can increase fund collection activities while still based on the principles of prudence and bank risk management. Some developments in public needs include types of currency, adjustments to minimum nominal values, better security, and product transparency. In addition, the very rapid development of information technology and in order to increase public confidence, support the speed of transfer transactions of Deposit Certificates, increase security, and transparency regarding Deposit Certificates, Deposit Certificates in scripless form are required. In banking business practice, there are Deposit Certificates in scripless form even though the current regulation of deposit certificates is only for Deposit Certificates in physical form, so it is necessary to regulate Deposit Certificates in scripless form to support the effectiveness of Deposit Certificate issuance transactions by Banks which are expected to be able to drive economic growth, particularly in the banking sector.

II. ARTICLE BY ARTICLE
Article 1
Clearly sufficient.

Article 2
Paragraph (1)
Commercial Banks conducting business activities conventionally may issue Deposit Certificates. Sharia Commercial Banks and Sharia Business Units may issue Deposit Certificates based on Sharia principles. Paragraph (2) What is meant by bearer instrument (aan order) is the ability of the holder of a Deposit Certificate in physical form to transfer the proof of deposit certificate to another party by signing on the Deposit Certificate sheet (endorsement) so that the last designated party has the right to receive payment from the issuing Bank when the Deposit Certificate in physical form matures. Paragraph (3) What is meant by ownership being identifiable in the recording at the LPP is the name of the last holder of the Deposit Certificate in scripless form recorded at the LPP.

Article 3
Paragraph (1)
Clearly sufficient.
Paragraph (2)
Clearly sufficient.
Paragraph (3)
Clearly sufficient.
Paragraph (4)
In regulations governing business activities and office networks based on bank core capital, and regulations governing the application of risk management for commercial banks, there are rules regarding new products or activities. The requirements and procedures for approval of new products or activities include among others the inclusion of the plan to issue new products in the bank's business plan, a letter of application for approval of new product issuance accompanied by supporting documents, the time limit for submission of the application letter, and the validity period of the approval for new product issuance. Paragraph (5) The requirements and procedures for approval of new products or activities include among others the inclusion of the plan to issue new products in the Bank's Business Plan, the submission of an application for approval of new product issuance accompanied by supporting documents, the time limit for submission of the letter of application for approval of new product issuance, the time limit for reporting on the implementation of new product issuance, and the validity period of the approval for new product issuance.

Article 4
Paragraph (1)
Clearly sufficient.
Paragraph (2)
The requirements for banks that can conduct business activities in foreign currency (foreign exchange banks) refer to regulations governing the requirements for Commercial Banks to conduct business activities in foreign currency.

Article 5
Paragraph (1)
Nominal values of Deposit Certificates in foreign currency are issued in multiples of hundreds.
Example: USD 1,100, EUR 900, SGD 1,200
Paragraph (2)
Clearly sufficient.

Article 6
Paragraph (1)
What is meant by paid in a discounted manner is the payment of interest in advance by the Bank at the time of issuance of the Deposit Certificate by deducting the nominal value that should be deposited by the customer to the issuing Bank. Paragraph (2) A Circular Letter of the Financial Services Authority regulates Deposit Certificates based on Sharia principles, including yield and mechanism for payment of yield, contracts in accordance with fatwas, and Sharia requirements related to objects to be financed from funds collected through the issuance of Deposit Certificates based on Sharia principles.

Article 7
Clearly sufficient.

Article 8
Clearly sufficient.

Article 9
Paragraph (1)
Clearly sufficient.
Paragraph (2)
Clearly sufficient.
Paragraph (3)
The clause that recording is conducted by the LPP for and on behalf of the Bank is included in the agreement between the Bank issuing Deposit Certificates in scripless form and the LPP.

Article 10
Paragraph (1)
Monitoring is conducted through a system provided by the LPP that can be accessed at any time by the Bank issuing Deposit Certificates in scripless form.
Paragraph (2)
The validity provisions for electronic information and/or electronic documents and/or their printouts regulated in the law concerning electronic information and transactions include "electronic information and/or electronic documents are considered valid as long as the information contained therein can be accessed, displayed, integrity is guaranteed, and can be accounted for so as to explain a state of affairs."

Article 11
Paragraph (1)
Clearly sufficient.
Paragraph (2)
The application of risk management includes among others:
a. the application of risk management in the use of information technology for Banks issuing Deposit Certificates in scripless form; b. legal risk management regarding the Bank's compliance with applicable regulations regarding foreign exchange regulations for Banks issuing Deposit Certificates in foreign currency; and
c. internal control systems and the application of anti-fraud strategies.

Article 12
Clearly sufficient.

Article 13
Clearly sufficient.

Article 14
Clearly sufficient.

Article 15
Clearly sufficient.

Article 16
Clearly sufficient.

Article 17
Clearly sufficient.

Article 18
Clearly sufficient.

Article 19
Clearly sufficient.

Article 20
Clearly sufficient.

Article 21
Clearly sufficient.
SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5718