Financial Services Authority Regulation Number 12/POJK.03/2016 on Business Activities and Office Network Areas of Rural Credit Banks Based on Core Capital

EXTRACT
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 12 /POJK.03/2016
ON
BUSINESS ACTIVITIES AND OFFICE NETWORK AREAS
OF RURAL CREDIT BANKS BASED ON CORE CAPITAL
BY THE GRACE OF GOD THE ALMIGHTY
THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that in order to support the optimal and sustainable growth of the Indonesian economy, it is necessary to increase the resilience and competitiveness of the national banking industry; b. that in order to increase the role and contribution of the Rural Credit Bank industry to the regional economy in accordance with the capital capacity of Rural Credit Banks, it is necessary to arrange the scope of business activities and office network areas of Rural Credit Banks based on core capital;
c. based on the considerations referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation on Business Activities and Office Network Areas of Rural Credit Banks Based on Core Capital;

Recalling:

1. Law Number 7 of 1992 on 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 21 of 2011 on 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);
3. Financial Services Authority Regulation Number 20/POJK.03/2014 on Rural Credit Banks (State Gazette of the Republic of Indonesia Year 2014 Number 351, Supplement to the State Gazette of the Republic of Indonesia Number 5629);

DECIDING:
Establishing: FINANCIAL SERVICES AUTHORITY REGULATION ON BUSINESS ACTIVITIES AND OFFICE NETWORK AREAS OF RURAL CREDIT BANKS BASED ON CORE CAPITAL.

CHAPTER I
GENERAL PROVISIONS

Article 1
In this Financial Services Authority Regulation, the following terms are defined:

1. Rural Credit Bank, hereinafter abbreviated as BPR, is a bank that conducts conventional business activities and does not provide payment transaction services as referred to in Law Number 7 of 1992 on Banking as amended by Law Number 10 of 1998.
2. Core Capital is core capital as referred to in the Financial Services Authority Regulation regarding minimum capital provision requirements and minimum core capital fulfillment for BPR.
3. Business Activities are BPR business activities as referred to in Law Number 7 of 1992 on Banking as amended by Law Number 10 of 1998 and other activities to support BPR business activities, covering BPR products and activities.
4. BPR based on Business Activities, hereinafter abbreviated as BPRKU, is a grouping of BPR based on BPR Business Activities adjusted to the Core Capital owned.
5. Office Network is BPR offices including branch offices, cash offices, cash service activities, and electronic banking devices as referred to in the Financial Services Authority Regulation regarding BPR.
6. Opening of Office Network is the opening of BPR Office Networks including the opening of offices resulting from the relocation of addresses or change of status of BPR offices.
7. Business Plan is a written document describing the short-term (one year) and medium-term (three years) activity plans of BPR, including plans to improve business performance, and strategies to realize these plans according to established targets and timeframes, while still paying attention to the fulfillment of prudential regulations and the application of risk management.
8. Electronic Money is electronic money as referred to in Bank Indonesia regulations regarding electronic money.
9. Electronic Banking is BPR activities using electronic media including but not limited to phone banking, SMS banking, mobile banking, and internet banking.
10. Automated Teller Machine (ATM) Card is a payment tool using a card that can be used to withdraw cash and/or transfer funds where the cardholder's obligation is fulfilled immediately by directly reducing the cardholder's deposit at the BPR as referred to in Bank Indonesia regulations regarding payment tools using cards.
11. Debit Card is a payment tool using a card that can be used to pay obligations arising from economic activities, including shopping transactions, where the cardholder's obligation is fulfilled immediately by directly reducing the cardholder's deposit at the BPR as referred to in Bank Indonesia regulations regarding payment tools using cards.

Article 2
BPR may only conduct Business Activities and Opening of Office Networks within the scope of territory in accordance with Core Capital.

Article 3
Based on Core Capital, BPR is grouped into 3 (three) BPRKUs, namely:
a. BPRKU 1 is a BPR with Core Capital of less than IDR 15,000,000,000.00 (fifteen billion rupiah); b. BPRKU 2 is a BPR with Core Capital of at least IDR 15,000,000,000.00 (fifteen billion rupiah) up to less than IDR 50,000,000,000.00 (fifty billion rupiah); and
c. BPRKU 3 is a BPR with Core Capital of at least IDR 50,000,000,000.00 (fifty billion rupiah).

CHAPTER II
BPR BUSINESS ACTIVITIES

Article 4
Business Activities that may be conducted by BPR are:
a. gathering funds in the form of:
1) deposits in the form of time deposits, savings, and/or other forms equivalent thereto;
2) received loans;
b. disbursing funds;
c. placing funds in the form of:
1) current accounts, time deposits, deposit certificates, and/or savings at commercial banks and sharia commercial banks;
2) time deposits, and/or savings at BPR and sharia people's financing banks;
3) Bank Indonesia Certificates;
d. foreign currency exchange business activities; e. other activities to support BPR business activities in the form of:
1) activities as organizers and agents for financial services without offices in the context of inclusive finance (Laku Pandai);
2) provision of Electronic Banking services;
3) salary payment services for BPR customers;
4) cooperation activities in the context of fund transfers limited to receiving money transfers from abroad;
5) activities as issuers of ATM Cards;
6) activities as issuers of Debit Cards;
7) activities as issuers of Electronic Money and marketing of Electronic Money from other issuers;
8) fund transfers for own interests or customer interests through BPR accounts at commercial banks;
9) cooperation activities with insurance companies to refer insurance products to customers related to BPR products; and
10) receiving entrusted funds in the context of bill payment services such as electricity, telephone, water, and tax payments.

Article 5
(1) BPR is required to conduct Business Activities in accordance with the BPRKU group.
(2) Business Activities of BPR in accordance with the BPRKU group as referred to in paragraph (1) for:
a. BPRKU 1:
1) gathering funds in the form of:
a) deposits in the form of time deposits, savings, and/or other forms equivalent thereto; and b) received loans;
2) disbursing funds;
3) placing funds in the form of:
a) current accounts, time deposits, deposit certificates, and/or savings at commercial banks and sharia commercial banks; b) time deposits, and/or savings at BPR and sharia people's financing banks; and c) Bank Indonesia Certificates;
4) other activities to support BPR business activities in the form of:
a) activities as agents for financial services without offices in the context of inclusive finance (Laku Pandai); b) salary payment services for BPR customers; c) cooperation activities in the context of fund transfers limited to receiving money transfers from abroad; d) marketing of Electronic Money from other issuers; e) fund transfers for own interests or customer interests through BPR accounts at commercial banks; f) cooperation activities with insurance companies to refer insurance products to customers related to BPR products; g) receiving entrusted funds in the context of bill payment services such as electricity, telephone, water, and tax payments; and h) activities as issuers of ATM Cards, for BPRKU 1 having minimum core capital of at least IDR 6,000,000,000.00 (six billion rupiah). b. BPRKU 2:
1) Business Activities that may be conducted by BPRKU 1;
2) foreign currency exchange business activities; and
3) other activities to support BPR business activities in the form of:
a) activities as issuers of Debit Cards; and b) activities as issuers of Electronic Money.
c. BPRKU 3:
1) Business Activities that may be conducted by BPRKU 2; and
2) other activities to support BPR business activities in the form of:
a) provision of Electronic Banking services; and b) activities as organizers of financial services without offices in the context of inclusive finance (Laku Pandai).

Article 6
(1) Business Activities of BPR as referred to in Article 4 in the form of:
a. gathering funds in other forms equivalent to the form of deposits in the form of time deposits and/or savings; b. foreign currency exchange business activities;
c. activities as organizers of financial services without offices in the context of inclusive finance (Laku Pandai);
d. provision of Electronic Banking services; e. cooperation activities in the context of fund transfers limited to receiving money transfers from abroad; f. activities as issuers of ATM Cards; g. activities as issuers of Debit Cards; and h. activities as issuers of Electronic Money, must obtain permission and/or approval from the Financial Services Authority and/or Bank Indonesia in advance, in accordance with the duties and authorities possessed by each institution. (2) Business Activities of BPR as referred to in Article 4 in the form of:
a. activities as agents for financial services without offices in the context of inclusive finance (Laku Pandai); b. salary payment services for BPR customers;
c. marketing of Electronic Money from other issuers;
d. fund transfers for own interests or customer interests through BPR accounts at commercial banks; e. cooperation activities with insurance companies to refer insurance products to customers related to BPR products; and f. receiving entrusted funds in the context of bill payment services such as electricity, telephone, water, and tax payments, must be reported to the Financial Services Authority.

Article 7
Business Activities of BPR constitute a new Business Activity or new supporting business activity if they meet the criteria:
a. have never been implemented previously by the relevant BPR; or b. have been implemented previously by the relevant BPR, but have undergone development that changes certain or all risks of the relevant BPR.

Article 8
(1) To obtain approval from the Financial Services Authority as referred to in Article 6 paragraph (1), BPR submits an application for a new Business Activity implementation plan by meeting the requirements:
a. the new Business Activity implementation plan has been included in the Business Plan; b. the health level is classified as healthy for the last 12 (twelve) months;
c. has a Minimum Capital Provision Ratio (KPMM) of at least 12% (twelve percent) for the last 6 (six) months;
d. has a gross Non Performing Loan (NPL) ratio of at most 5% (five percent) for the last 6 (six) months; e. is not in a loss condition in the previous year or the current year; f. has adequate information technology; g. meets operational readiness in terms of organizational completeness and human resources with adequate competence regarding information technology and customer services and complaints; h. applies risk management at least for credit risk, operational risk, compliance risk, and liquidity risk as regulated in provisions governing the application of risk management for BPR; and
i. there are no violations of regulations related to BPR.
(2) The application for a new Business Activity implementation plan as referred to in paragraph (1) must be accompanied by documents containing at least information and explanations regarding:
a. type and general description of the new Business Activity; b. time of implementation of the new Business Activity;
c. purpose of the new Business Activity;
d. correlation of the new Business Activity with BPR business strategy; e. risks regarding the implementation of the new Business Activity; and f. risk mitigation regarding the implementation of the new Business Activity.

Article 9
(1) The Financial Services Authority provides approval or rejection of the new Business Activity implementation plan application within a maximum of 30 (thirty) working days from the date the application along with the required documents is received completely. (2) In order to provide approval or rejection as referred to in paragraph (1), the Financial Services Authority conducts:
a. research on the fulfillment of requirements; and b. research on document completeness.

Article 10
(1) BPR implementing new Business Activities as referred to in Article 6 paragraph (2) must submit a report on the implementation of new Business Activities by attaching supporting documents containing at least information and explanations regarding:
a. type and general description of the new Business Activity; b. time of implementation of the new Business Activity;
c. purpose of the new Business Activity; and
d. correlation of the new Business Activity with BPR business strategy.
(2) The report on the implementation of new Business Activities as referred to in paragraph (1) must be submitted to the Financial Services Authority at the latest 10 (ten) working days from the date of activity implementation. (3) In the event that the Financial Services Authority finds deviations in the implementation of new Business Activities as referred to in Article 6 paragraph (2), the Financial Services Authority has the authority to request the BPR to adjust or cease the implementation of such Business Activities.

CHAPTER III
BPR OFFICE NETWORK AREAS

Article 11
(1) BPR is required to obtain permission from the Financial Services Authority to open branch offices.
(2) The mechanism for granting permission to open branch offices as referred to in paragraph (1) refers to the Financial Services Authority Regulation regarding BPR.

Article 12
(1) BPR is required to submit a report on the plan to open cash offices to obtain confirmation from the Financial Services Authority.
(2) The mechanism for reporting the plan to open cash offices as referred to in paragraph (1) refers to the Financial Services Authority Regulation regarding BPR.

Article 13
(1) BPRKU 1 as referred to in Article 3 letter a may only conduct BPR Office Network Opening in 1 (one) regency or city area the same as the regency or city area of the location of the BPR head office. (2) BPRKU 1 as referred to in paragraph (1) may have BPR Office Networks in the form of branch offices of at most 20 (twenty) offices. (3) Specifically for BPRKU 1 that has met Core Capital of at least IDR 6,000,000,000.00 (six billion rupiah), BPR Office Network Opening may be conducted in the regency or city area the same as the location of the BPR head office and/or regency or city areas bordering directly with the regency or city area of the location of the BPR head office, within 1 (one) province area the same. (4) BPR Office Networks in the form of branch offices that may be owned by BPRKU 1 as referred to in paragraph (3) are at most 30 (thirty) offices.

Article 14
(1) BPRKU 2 as referred to in Article 3 letter b may only conduct BPR Office Network Opening in the regency or city area the same as the location of the BPR head office and/or regency or city areas bordering directly with the regency or city area of the location of the BPR head office, within 1 (one) province area the same. (2) BPR Office Networks in the form of branch offices that may be owned by BPRKU 2 as referred to in paragraph (1) are at most 40 (forty) offices.

Article 15
(1) BPRKU 3 as referred to in Article 3 letter c may conduct BPR Office Network Opening in the province of the location of the BPR head office and in regencies or cities in other provinces bordering directly with the province of the location of the BPR head office. (2) BPR Office Networks in the form of branch offices that may be opened by BPRKU 3 as referred to in paragraph (1) are at most 70 (seventy) offices. (3) Branch offices of BPRKU 3 as referred to in paragraph (2) that may be opened in other provinces are at most 20% (twenty percent) of the number of branch offices owned by BPRKU 3.

Article 16
(1) The Special Capital Region of Jakarta, Bogor Regency or City, Depok City, Tangerang Regency or City, South Tangerang City, and Bekasi Regency or City are grouped by administrative region:
a. all cities in the Special Capital Region of Jakarta Province and Thousand Islands Regency constitute the area of the Special Capital Region of Jakarta Province; b. Bogor Regency or City, Depok City, and Bekasi Regency or City constitute part of West Java Province; and
c. Tangerang Regency or City, and South Tangerang City constitute part of Banten Province.
(2) BPRs located in the province areas as referred to in paragraph (1) may conduct Office Network Opening with territorial limitations referring to Article 13, Article 14, and Article 15.

Article 17
Relocation of addresses for existing BPRKU 1 and BPRKU 2 Office Networks may be conducted in:
a. the same regency or city as the Office Network relocating the address; or b. within the territorial boundaries as referred to in Article 13 and Article 14.

Article 18
BPR may only open cash offices in the regency or city area the same as the regency or city area of the location of the head office of the cash office as regulated in the Financial Services Authority Regulation regarding BPR.

Article 19
(1) In the event of territorial expansion causing BPR branch offices and head offices to be in different province areas, BPR Office Networks may continue to operate in the original area, except if the BPR experiences a change to a lower BPRKU group which results in adjustments to the Office Network area. (2) Opening of BPR Office Networks conducted after territorial expansion refers to territorial limitations as regulated in Article 13, Article 14, and Article 15.

CHAPTER IV
OTHER PROVISIONS

Article 20
(1) In the event that BPR Core Capital increases for 6 (six) consecutive months so as to meet the Core Capital requirements for a higher BPRKU group, the BPR is grouped into the higher BPRKU group. (2) BPR as referred to in paragraph (1) may conduct Business Activities and/or Office Network Opening in accordance with the type of Business Activities and Office Network area of the higher BPRKU group if it meets the requirements to conduct Business Activities and/or Office Network Opening for BPR.

Article 21
(1) In the event that BPR Core Capital decreases for 6 (six) consecutive months so as not to meet the Core Capital amount requirements in the original BPRKU group, the BPR is grouped into a lower BPRKU group. (2) BPR as referred to in paragraph (1) that has conducted Business Activities and/or Office Network Opening in accordance with the original BPRKU group is required to submit an action plan to the Financial Services Authority in order to meet the Core Capital amount requirements for the original BPRKU group, at the latest in the 8th (eighth) month since the decrease in Core Capital occurred. (3) BPR is required to obtain approval from the Financial Services Authority for the action plan as referred to in paragraph (2). (4) BPR is required to complete the action plan as referred to in paragraph (2) at the latest 1 (one) year since the approval of the Financial Services Authority. (5) In the event that BPR cannot complete the action plan as referred to in paragraph (4), BPR is required to adjust all Business Activities and/or Office Network areas to BPR activities according to the lower level group within a maximum period of 1 (one) year. (6) During the adjustment period as referred to in paragraph (5), BPR is required to immediately cease the offering, sale, and/or new agreements or transactions for Business Activities permitted to be conducted by BPR before the decrease in Core Capital.

Article 22
The Financial Services Authority has the authority to determine individual BPR branch office numbers different from those regulated in Article 13, Article 14, and Article 15 based on certain considerations.

CHAPTER V
SANCTIONS

Article 23
BPRs violating regulations as in Article 5 paragraph (1), Article 6, Article 11 paragraph (1), Article 12 paragraph (1), Article 27 paragraph (1), Article 28 paragraph (1) or Article 28 paragraph (2) are each subject to sanctions requiring payment of a fine of IDR 5,000,000.00 (five million rupiah) and other administrative sanctions in the form of:
a. written reprimand; b. downgrade of BPR health rating;
c. prohibition on opening Office Networks;
d. temporary cessation of part of BPR business activities; and/or e. listing of BPR management in the list of parties who obtain a failed status through the mechanism of competence and propriety tests.

Article 24
BPRs violating regulations in Article 10 paragraph (2), Article 21 paragraph (2) or Article 29 paragraph (1) are subject to administrative sanctions in the form of written reprimand and a requirement to pay IDR 100,000.00 (one hundred thousand rupiah) per working day of delay with a maximum total of IDR 2,000,000.00 (two million rupiah).

Article 25
BPRs violating regulations in Article 21 paragraph (3), Article 21 paragraph (4), Article 21 paragraph (5), Article 21 paragraph (6) or Article 29 paragraph (2) are subject to administrative sanctions in the form of:
a. written reprimand; b. downgrade of BPR health rating;
c. prohibition on opening Office Networks; and/or
d. temporary cessation of part of BPR business activities.

CHAPTER VI
TRANSITIONAL PROVISIONS

Article 26
The determination of BPR in the BPRKU group for the first time is based on the position of BPR Core Capital at the end of December 2015.

Article 27
(1) For BPRs that before the implementation of this Financial Services Authority Regulation have conducted Business Activities not in accordance with the BPRKU group as referred to in Article 5, they are required to increase Core Capital to be in accordance with the Core Capital of the appropriate BPRKU group at the latest 3 (three) years since the implementation of this Financial Services Authority Regulation. (2) During the period of fulfilling the obligations as referred to in paragraph (1), BPRs are prohibited from offering, selling, and/or new transactions and extensions for Business Activities not in accordance with the relevant BPRKU group.

Article 28
(1) For BPRs that have conducted Business Activities as referred to in Article 6 paragraph (1) before the implementation of this Financial Services Authority Regulation but have not yet obtained permission and/or approval in advance from the Financial Services Authority, they are required to submit a permission application to the Financial Services Authority at the latest 6 (six) months since the implementation of this POJK. (2) For BPRs that have conducted Business Activities as referred to in Article 6 paragraph (2) before the implementation of this Financial Services Authority Regulation...

Keuangan this but has not yet submitted the Business Activity Report to the Financial Services Authority (OJK), must submit the report to the Financial Services Authority no later than 6 (six) months from the effective date of this Financial Services Authority Regulation.

Article 29
(1) In order to fulfill obligations according to the time limits as referred to in Article 28 paragraph (1), Rural Banks (BPR) must submit an action plan to the Financial Services Authority no later than 6 (six) months from the implementation of this Financial Services Authority Regulation. (2) BPR must obtain approval from the Financial Services Authority for the action plan as referred to in paragraph (1).

Article 30
Branch networks of BPR that, at the time of the implementation of this Financial Services Authority Regulation, are located outside the permitted territory according to the BPR Capital Group (BPRKU) classification may continue to operate without having to adjust the BPR branch network territory, except if the BPR experiences a downgrade to a lower BPRKU group.

Article 31
Requests for the opening of BPR branch networks that were submitted prior to the implementation of this Financial Services Authority Regulation and have not yet received permits shall be processed based on the Financial Services Authority Regulation Number 20/POJK.03/2014 concerning Rural Banks.

CHAPTER VIII
CLOSING PROVISIONS

Article 32
Further provisions of this Financial Services Authority Regulation shall be regulated by a Circular Letter of the Financial Services Authority.

Article 33
At the time this Financial Services Authority Regulation comes into force:
a. provisions regarding the limitation of branch opening territory within the same province as the BPR head office province as regulated in Article 37 paragraph (1) of the Financial Services Authority Regulation Number 20/POJK.03/2014 concerning Rural Banks; b. provisions regarding the territory of the Special Capital Region of Jakarta, Bogor Regency or City, Depok City, Tangerang Regency or City, South Tangerang City, and Bekasi Regency or City which are declared as one province territory for the purpose of permits for opening Branch Offices as regulated in Article 37 paragraph (2) of the Financial Services Authority Regulation Number 20/POJK.03/2014 concerning Rural Banks;
c. provisions regarding the obligation of BPR to close or move BPR branch offices or move the BPR head office into the same province in the event of territorial expansion causing the branch office and BPR head office to be in different province territories as regulated in Article 37 paragraph (4) of the Financial Services Authority Regulation Number 20/POJK.03/2014 concerning Rural Banks;
d. provisions regarding requirements for BPR submitting requests for approval of service activities using ATM cards and/or Debit cards as regulated in Article 50 paragraph (2) of the Financial Services Authority Regulation Number 20/POJK.03/2014 concerning Rural Banks; and e. provisions regarding the imposition of sanctions related to permits for opening branch offices as regulated in Article 84 of the Financial Services Authority Regulation Number 20/POJK.03/2014 concerning Rural Banks, are repealed and declared invalid.

Article 34
In the event that BPR already has a risk profile rating, operational risk level, and compliance risk level in accordance with regulations governing the implementation of risk management for BPR, regulations governing the requirements for bank organizers of Laku Pandai (Financial Services Without Branch Offices for Inclusive Finance) for BPR as regulated in Article 12 of the Financial Services Authority Regulation Number 19/POJK.03/2014 concerning Financial Services Without Branch Offices for Inclusive Finance (Laku Pandai) are declared invalid for BPR.

Article 35
This Financial Services Authority Regulation comes into force upon being enacted.

In order that everyone knows it, ordering the enactment of this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Established in Jakarta on 9 February 2016
CHAIRMAN OF THE COMMISSIONERS BOARD
FINANCIAL SERVICES AUTHORITY, signed
MULIAMAN D. HADAD

Enacted in Jakarta on 17 February 2016
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2016 NUMBER 34 Copy in accordance with the original Legal Director 1 Legal Department signed Yuliana

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 12 /POJK.03/2016
CONCERNING
BUSINESS ACTIVITIES AND BRANCH NETWORK AREAS OF RURAL BANKS BASED ON CORE CAPITAL

I. GENERAL
In order to encourage regional economic growth and improve local community welfare, a greater role and contribution of BPR is needed in providing banking services throughout all regions, especially in remote areas. In order to contribute more significantly, efforts are needed to encourage the strengthening of BPR capital, so that they can perform more productively and meet the changing needs and demands of society for quality products and services.

To achieve this goal, it is necessary to organize the scope of business activities and BPR branch network territory based on core capital. The organization of the BPR industry according to capital capacity is carried out so that BPR can focus on business activities and the provision of products and services adjusted to capital capacity and risk management capabilities, so that each BPR can develop and play an optimal role according to its capital group.

Efforts to encourage the strengthening of BPR capital are also aimed at increasing BPR competitiveness through improvements in human resource quality, infrastructure completeness, information technology, and the availability of facilities and infrastructure supporting the improvement of BPR service quality.

In addition to involving the types of business activities that can be provided by BPR based on capital capacity, the BPR branch network territory limits also need to be adjusted to the BPR's ability to perform intermediation functions in specific territories. With the implementation of this POJK, each BPR can position itself in its respective group calculated based on the amount of core capital. The higher the BPR stratum, the more diverse the types of business activities and other activities supporting BPR operations, and the wider the scope of BPR Branch Network Opening territory.

II. ARTICLE BY ARTICLE

Article 1
Sufficiently clear.

Article 2
The division of Business Activities and the limitation of the territory for Opening BPR Branch Networks are established according to the BPR's Core Capital capacity so that BPR can serve the community according to capital capacity and risk management capabilities and encourage efforts to strengthen BPR to increase BPR competitiveness.

Article 3
Sufficiently clear.

Article 4
Letter a
Sufficiently clear.
Letter b
Sufficiently clear.
Letter c
Sufficiently clear.
Letter d
Foreign exchange exchange business activities are conducted by foreign exchange traders as referred to in Bank Indonesia regulations concerning foreign exchange traders.
Letter e
Number 1)
Implementation of activities as organizers and agents for financial services without branch offices for inclusive finance (Laku Pandai) refers to Financial Services Authority regulations governing financial services without branch offices for inclusive finance (Laku Pandai). Number 2) Included in the scope of Electronic Banking includes:
a. phone banking, which is a service for banking transactions by contacting the BPR's service number; b. SMS banking, which is a banking information or transaction service that can be accessed directly via mobile phones using Short Message Service (SMS) media;
c. mobile banking, which is a service for conducting banking transactions via mobile phones; and
d. internet banking, which is a service for conducting banking transactions via the internet for BPR that are organizers of Laku Pandai.
Number 3)
Sufficiently clear.
Number 4)
Sufficiently clear.
Number 5)
Sufficiently clear.
Number 6)
Sufficiently clear.
Number 7)
The provision of payment instruments in the form of Electronic Money refers to Bank Indonesia regulations concerning electronic money.
Number 8)
Sufficiently clear.
Number 9)
Sufficiently clear.
Number 10)
Sufficiently clear.

Article 5
Sufficiently clear.

Article 6
Sufficiently clear.

Article 7
Sufficiently clear.

Article 8
Paragraph (1)
Letter a
Sufficiently clear.
Letter b
Fulfillment of health level requirements is based on the results of assessments conducted by the Financial Services Authority referring to the latest reports received by the Financial Services Authority. Letter c Sufficiently clear. Letter d Sufficiently clear. Letter e Sufficiently clear. Letter f Adequate information technology in this case involves systems capable of recording transactions in real time, accompanied by security mechanisms starting from systems, data, and networks, as well as monitoring and evaluation mechanisms for information technology facilities for the provision of services to customers. Letter g Sufficiently clear. Letter h Sufficiently clear. Letter i What is meant by "violations of regulations related to BPR" includes violations of:

1. prohibitions on concurrent positions and family or in-law relationships, as well as minimum requirements for the number of board of directors members and board of commissioners members;
2. the obligation of BPR to have at least 1 (one) shareholder with a specific percentage of share ownership; and/or
3. the obligation to fulfill minimum core capital.
   Paragraph (2)
   Sufficiently clear.

Article 9
Sufficiently clear.

Article 10
Sufficiently clear.

Article 11
Sufficiently clear.

Article 12
Sufficiently clear.

Article 13
Paragraph (1)
What is meant by regency or city is an administrative territory of a regency government or city government.
Paragraph (2)
BPR Branch Networks consist of at most 20 (twenty) offices, including both existing branch offices and those to be opened by the BPR.
Paragraph (3)
Sufficiently clear.
Paragraph (4)
BPR Branch Networks consist of at most 30 (thirty) offices, including both existing branch offices and those to be opened by the BPR.

Article 14
Paragraph (1)
Sufficiently clear.
Paragraph (2)
BPR Branch Networks consist of at most 40 (forty) offices, including both existing branch offices and those to be opened by the BPR.

Article 15
Paragraph (1)
Sufficiently clear.
Paragraph (2)
BPR Branch Networks consist of at most 70 (seventy) offices, including both existing branch offices and those to be opened by the BPR.
Paragraph (3)
Sufficiently clear.

Article 16
Sufficiently clear.

Article 17
Sufficiently clear.

Article 18
Sufficiently clear.

Article 19
Sufficiently clear.

Article 20
Paragraph (1)
Example:
BPRKU 2 can conduct business activities and expand the Branch Network territory as permitted for BPRKU 3 if it meets the Core Capital requirements for the BPRKU 3 group for 6 (six) consecutive months of at least Rp50,000,000,000.00 (fifty billion rupiah). Paragraph (2) Sufficiently clear.

Article 21
Paragraph (1)
What is meant by a decrease in Core Capital includes a decrease in Core Capital to less than Rp3,000,000,000.00 (three billion rupiah) or less than Rp6,000,000,000.00 (six billion rupiah). Paragraph (2) Sufficiently clear. Paragraph (3) Sufficiently clear. Paragraph (4) Sufficiently clear. Paragraph (5) Example:
BPR that was originally in the BPRKU 2 group, but experienced a decrease in Core Capital so that it no longer meets the Core Capital requirements as BPRKU 2 and cannot complete the action plan within a maximum period of 1 (one) year, must adjust all Business Activities and/or BPRKU 1 Branch Network territory. Paragraph (6) Sufficiently clear.

Article 22
What is meant by "certain considerations" are considerations for establishing different numbers of branch offices based on control span capabilities, healthy competition, expansion of financial access for low-income and productive communities (financial inclusion), efforts to distribute development in regions, and/or the continuity of individual BPR business development in the future so that they can operate sustainably.

Article 23
Letter a
Sufficiently clear.
Letter b
Sufficiently clear.
Letter c
Sufficiently clear.
Letter d
Sufficiently clear.
Letter e
The listing of BPR officials in the list of parties receiving a "fail" rating is executed through a competency and propriety test process in accordance with Financial Services Authority regulations concerning competency and propriety tests.

Article 24
Sufficiently clear.

Article 25
Sufficiently clear.

Article 26
Sufficiently clear.

Article 27
Sufficiently clear.

Article 28
Sufficiently clear.

Article 29
Sufficiently clear.

Article 30
Sufficiently clear.

Article 31
Sufficiently clear.

Article 32
Sufficiently clear.

Article 33
Sufficiently clear.

Article 34
With the invalidity of Article 12 of the Financial Services Authority Regulation Number 19/POJK.03/2014 concerning Financial Services Without Branch Offices for Inclusive Finance (Laku Pandai), the requirements that BPR must fulfill when submitting requests to become Laku Pandai organizers refer to the requirements regulated in the provisions concerning financial services without branch offices for inclusive finance (Laku Pandai).

Article 35
Sufficiently clear.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5849