Financial Services Authority Regulation Number 19/POJK.05/2021 Concerning the Conduct of Business of Microfinance Institutions

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
COPY
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 19/POJK.05/2021
CONCERNING
THE CONDUCT OF BUSINESS OF MICROFINANCE INSTITUTIONS BY THE GRACE OF GOD THE MOST HIGH, THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY, Considering:
a. that in order to provide greater access for the community to financing sources and to provide certainty of the continuity of the business activities of Microfinance Institutions, and to implement the provisions of Article 15, Article 21 paragraph (4), Article 32, and Article 33 paragraph (3) of Law Number 1 of 2013 concerning Microfinance Institutions, the Financial Services Authority Regulation Number 13/POJK.05/2014 concerning the Conduct of Business of Microfinance Institutions has been established, as amended by the Financial Services Authority Regulation Number 62/POJK.05/2015 concerning Amendments to the Financial Services Authority Regulation Number 13/POJK.05/2014 concerning the Conduct of Business of Microfinance Institutions; b. that in order to encourage the development of healthy and accountable microfinance institutions, the Financial Services Authority Regulation Number 13/POJK.05/2014 concerning the Conduct of Business of Microfinance Institutions as amended by the Financial Services Authority Regulation Number 62/POJK.05/2015 concerning Amendments to the Financial Services Authority Regulation Number 13/POJK.05/2014 concerning the Conduct of Business of Microfinance Institutions is no longer in line with developments and legal needs;
c. that based on the considerations as referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation concerning the Conduct of Business of Microfinance Institutions;
Recalling:

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);
Law Number 1 of 2013 concerning Microfinance Institutions (State Gazette of the Republic of Indonesia Year 2013 Number 12, Supplement to the State Gazette of the Republic of Indonesia Number 5394);
Government Regulation Number 89 of 2014 concerning Loan Interest Rates or Financing Returns and the Scope of Business Areas of Microfinance Institutions (State Gazette of the Republic of Indonesia Year 2014 Number 321, Supplement to the State Gazette of the Republic of Indonesia Number 5616);
DECIDING:
Establishing: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING THE CONDUCT OF BUSINESS OF MICROFINANCE INSTITUTIONS.

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

Microfinance Institution, hereinafter abbreviated as MFI, is a financial institution specifically established to provide business development services and community empowerment, either through loans or financing in micro-scale businesses to members and the community, savings management, or the provision of business development consulting services that are not solely profit-seeking.
Loan is the provision of funds by the MFI to the community that must be returned according to the agreement.
Financing is the provision of funds by the MFI to the community that must be returned according to the agreement based on Sharia principles.
Savings are funds entrusted by the community to the MFI in the form of savings and/or deposits based on a fund storage agreement.
Depositor is the party that places its funds with the MFI based on an agreement.
Sharia Principles are Islamic legal provisions based on fatwas or statements of Sharia compliance from the National Sharia Board of the Indonesian Ulema Council.
Board of Directors is the corporate organ authorized and fully responsible for managing the corporation for the interests of the corporation, in accordance with the purposes and objectives of the corporation and representing the corporation, both inside and outside of court, according to the articles of association for MFIs in the form of limited liability companies or equivalent to the Board of Directors for MFIs in the form of cooperative legal entities.
Board of Commissioners is the corporate organ tasked with conducting general and/or specific supervision according to the articles of association and providing advice to the Board of Directors for MFIs in the form of limited liability companies or equivalent to the Board of Commissioners for MFIs in the form of cooperative legal entities.
Equity is the sum of paid-up capital, additional paid-up capital, reserves, grants, and profit or loss balances for MFIs in the form of limited liability companies or the sum of basic savings, mandatory savings, reserve funds, grants, and surplus of business results for MFIs in the form of cooperative legal entities.

CHAPTER II
BUSINESS ACTIVITIES
First Section
General
Article 2
(1) MFI business activities include business development services and community empowerment, either through Loans or Financing in micro-scale businesses to members and the community, Savings management, or the provision of business development consulting services. (2) In carrying out business activities as referred to in paragraph (1), MFIs may conduct fee-based activities as long as they do not conflict with regulations in the financial services sector. (3) Business activities as referred to in paragraph (1) are conducted conventionally or based on Sharia Principles.

Second Section
Disbursement of Loans or Financing
Article 3
(1) In carrying out the business activity of disbursing Loans or Financing as referred to in Article 2 paragraph (1), MFIs are required to conduct an analysis of the feasibility of disbursing Loans or Financing. (2) The disbursement of Loans or Financing as referred to in paragraph (1) is carried out for business development and community empowerment. (3) In managing risks over the disbursement of Loans or Financing, MFIs may transfer Loan or Financing risks through credit guarantee mechanisms. (4) In the event that MFIs carry out risk management as referred to in paragraph (3), MFIs are required to use guarantee institutions that meet the following provisions:
a. have obtained a business license from the Financial Services Authority; and b. are not subject to sanctions restricting business activities or suspension of business activities from the Financial Services Authority.

Article 4
(1) In carrying out the business activity of disbursing Loans or Financing to members or the community, MFIs establish the maximum Loan interest rate or maximum Financing return to be applied and implemented in accordance with applicable regulations. (2) MFIs are required to report the maximum Loan interest rate or maximum Financing return as referred to in paragraph (1) to the Financial Services Authority every 4 (four) months. (3) The report as referred to in paragraph (2) must be submitted no later than the end of January, May, and September, according to Format 1 contained in the Appendix which is an integral part of this Financial Services Authority Regulation. (4) In the event that MFIs will increase the maximum Loan interest rate or maximum Financing return before the reporting period as referred to in paragraph (2) ends, MFIs are required to first report to the Financial Services Authority according to Format 2 contained in the Appendix which is an integral part of this Financial Services Authority Regulation. (5) MFIs are prohibited from applying Loan interest rates or Financing returns exceeding the maximum Loan interest rate or maximum Financing return that has been reported to the Financial Services Authority as referred to in paragraph (2) and paragraph (4).

Article 5
MFIs are required to announce the maximum Loan interest rate or maximum Financing return as referred to in Article 4 through an announcement board at the MFI office that is easily accessible to the community or in a local daily newspaper.

Article 6
(1) MFIs are prohibited from disbursing Loans or Financing exceeding the maximum disbursement limit of Loans or Financing at the time of disbursement.
(2) The maximum disbursement limit of Loans or Financing as referred to in paragraph (1) is set at a maximum of 10% (ten percent) of Equity for 1 (one) customer.
(3) Equity is calculated based on financial reports for the last 4 (four) months prior to the date of disbursement of Loans or Financing.
(4) If MFIs obtain a business license for less than 4 (four) months, Equity is calculated based on the financial report submitted at the time of the business license application.

Article 7
(1) The maximum disbursement limit of Loans or Financing as referred to in Article 6 paragraph (1) is set at a maximum of 20% (twenty percent) of Equity for 1 (one) customer, meeting at least the following provisions:
a. the customer has a good track record with the relevant MFI; and b. the disbursement of Loans or Financing is accompanied by collateral or credit guarantees.
(2) The calculation of Equity as referred to in paragraph (1) follows the provisions as referred to in Article 6 paragraph (3) and paragraph (4).
(3) Collateral as referred to in paragraph (1) letter b includes:
a. savings and/or deposits blocked at the relevant MFI accompanied by a disbursement power of attorney; b. land and/or buildings that have certificates encumbered with a mortgage right;
c. land and/or buildings that have certificates not encumbered with a mortgage right;
d. land and/or buildings with proof of ownership in the form of a customary land acknowledgment letter attached with a Tax Notification Letter for the last 1 (one) year or a Value of Taxable Object Certificate; and/or e. motor vehicles, ships, and/or motorboats, accompanied by proof of ownership and have been bound according to applicable regulations. (4) Collateral as referred to in paragraph (1) letter b must have an economic value of at least 120% (one hundred twenty percent) of the value of the Loan or Financing. (5) Credit guarantees as referred to in paragraph (1) letter b must meet the provisions as referred to in Article 3 paragraph (4) and the value of the credit guarantee is at least 80% (eighty percent) of the value of the Loan or Financing.

Article 8
(1) MFIs are required to conduct an assessment of the quality of Loans or Financing disbursed.
(2) The quality assessment of Loans or Financing as referred to in paragraph (1) is set into 3 (three) groups:
a. performing; b. doubtful; and
c. non-performing.
(3) The quality assessment of Loans or Financing as referred to in paragraph (2) is set based on the factors of timely repayment of principal and/or interest/returns.
(4) Parameters used in the quality assessment of Loans or Financing as referred to in paragraph (3) are in accordance with Format 3 contained in the Appendix which is an integral part of this Financial Services Authority Regulation.

Article 9
(1) In assessing the quality of Loans or Financing as referred to in Article 8 paragraph (1), MFIs also calculate the ratio of non-performing Loans or non-performing Financing.
(2) The ratio of non-performing Loans or non-performing Financing as referred to in paragraph (1) is calculated by comparing Loans or Financing with doubtful and non-performing quality as referred to in Article 8 paragraph (2) letters b and c, with the total Loans or Financing given to the community. (3) MFIs must maintain the ratio of non-performing Loans or non-performing Financing as referred to in paragraph (1) at a maximum of 10% (ten percent). (4) In the event that MFIs do not meet the provisions as referred to in paragraph (3), MFIs are given a notice letter to take the following steps:
a. improve policies and implementation of Loan or Financing disbursement; b. improve policies and implementation of Loan or Financing quality assessment;
c. increase professionalism and integrity of employees carrying out Loan or Financing disbursement;
d. improve the organizational structure carrying out the functions of Loan or Financing disbursement and Loan or Financing administration; and/or e. improve policies regarding the duties, authorities, and responsibilities of the Board of Directors, Board of Commissioners, and employees carrying out Loan or Financing disbursement. (5) MFIs are prohibited from having a ratio of non-performing Loans or non-performing Financing as referred to in paragraph (1) exceeding 30% (thirty percent).

Article 10
(1) MFIs that have a total amount of Savings and/or received Loans exceeding Rp200,000,000.00 (two hundred million rupiah) are required to form a provision for Loan or Financing write-offs. (2) The provision for Loan or Financing write-offs as referred to in paragraph (1) is at least:
a. 0% (zero percent) of the remaining principal of Loans or Financing with performing quality; b. 50% (fifty percent) of the remaining principal of Loans or Financing with doubtful quality; and
c. 100% (one hundred percent) of the remaining principal of Loans or Financing with non-performing quality.
(3) MFIs that have a total amount of Savings and/or received Loans of at most Rp200,000,000.00 (two hundred million rupiah) are required to:
a. form a provision for Loan or Financing write-offs; or b. form a reserve allocated from net profit or surplus of business results every calendar year based on approval from the general meeting of shareholders or members' meeting. (4) The provision for Loan or Financing write-offs as referred to in paragraph (3) letter a follows the provisions as referred to in paragraph (2). (5) MFIs that:
a. form a provision as referred to in paragraph (3) letter a cannot make changes by forming a reserve as referred to in paragraph (3) letter b; or b. form a reserve as referred to in paragraph (3) letter b cannot make changes by forming a provision as referred to in paragraph (3) letter a. (6) The formation of a reserve allocated from net profit or surplus of business results as referred to in paragraph (3) letter b is carried out with the following provisions:
a. the reserve amount is set at a minimum of 15% (fifteen percent) of net profit or surplus of business results every calendar year; and b. the reserve as referred to in letter a can only be used to cover losses.

Article 11
(1) In the event that MFIs require credit guarantees or collateral in the disbursement of Loans or Financing, the provision for Loan or Financing write-offs as referred to in Article 10 paragraph (1) and paragraph (3) letter a is at least:
a. 0% (zero percent) of the remaining principal of Loans or Financing with performing quality; b. 50% (fifty percent) of the remaining principal of Loans or Financing with doubtful quality after being reduced by the value of credit guarantees or collateral; and
c. 100% (one hundred percent) of the remaining principal of Loans or Financing with non-performing quality after being reduced by the value of credit guarantees or collateral.
(2) The value of credit guarantees or collateral calculated as a reduction for the provision for Loan or Financing write-offs as referred to in paragraph (1) is at most:
a. 100% (one hundred percent) of collateral that is liquid in the form of savings and/or deposits blocked at the relevant MFI accompanied by a disbursement power of attorney; b. 80% (eighty percent) of the value of mortgage rights for collateral in the form of land and/or buildings that have certificates encumbered with a mortgage right;
c. 80% (eighty percent) for the portion of funds guaranteed by guarantee institutions owned by the Government or Regional Governments;
d. 60% (sixty percent) of the Value of Taxable Object or value based on assessment by an independent appraiser for collateral in the form of land and/or buildings that have certificates not encumbered with a mortgage right; e. 50% (fifty percent) of the Value of Taxable Object for collateral in the form of land and/or buildings with proof of ownership in the form of a customary land acknowledgment letter attached with a Tax Notification Letter for the last 1 (one) year or a Value of Taxable Object Certificate; and f. 50% (fifty percent) of the market value for collateral in the form of motor vehicles, ships, and/or motorboats, accompanied by proof of ownership and have been bound according to applicable regulations.

Article 12
(1) MFIs are required to:
a. conduct an assessment of collateral to determine its economic value; and b. have a collateral storage place that meets minimum security and safety standards.
(2) Collateral that can be calculated in the maximum disbursement limit of Loans or Financing as referred to in Article 7 paragraph (1) or as a reduction for the provision for Loan or Financing write-offs as referred to in Article 11 paragraph (2) if:
a. it has been assessed by the MFI as referred to in paragraph (1); b. its existence can be known; and
c. it can be executed.
(3) The Financial Services Authority is authorized to recalculate or not recognize the value of collateral that has been calculated in the maximum disbursement limit of Loans or Financing as referred to in Article 7 paragraph (1) or as a reduction for the provision for Loan or Financing write-offs as referred to in Article 11 paragraph (2), if MFIs do not meet the provisions as referred to in paragraph (1) and paragraph (2).

Third Section
Savings Management
Article 13
MFIs that conduct Savings management activities as referred to in Article 2 paragraph (1) are required to:
a. administer Depositor Savings; and b. provide proof of Savings.

CHAPTER III
FUNDING SOURCES
Article 14
(1) MFI funding sources come from:
a. Equity; b. Savings;
c. Loans; and/or
d. grants.
(2) MFIs are prohibited from receiving Loans as referred to in paragraph (1) letter c except from Indonesian citizens and/or business entities established and operating within the territory of the Republic of Indonesia based on a loan agreement.

CHAPTER IV
CONTRACTS USED IN BUSINESS ACTIVITIES AND FUNDING SOURCES BASED ON SHARIA PRINCIPLES
Article 15
(1) MFIs conducting business activities based on Sharia Principles are required to use contracts in accordance with Sharia Principles.
(2) Contracts in accordance with Sharia Principles as referred to in paragraph (1) include:
a. Savings collection business activities are conducted using wadi'ah, mudharabah, or other contracts that do not conflict with Sharia Principles and are approved by the Financial Services Authority; b. Financing disbursement business activities are conducted using mudharabah, musyarakah, murabahah, ijarah, salam, istishna, ijarah muntahiah bit tamlik, qardh, ijarah multijasa, or other contracts that do not conflict with Sharia Principles and are approved by the Financial Services Authority;
c. consulting and business development services are conducted using ijarah, ju'alah, or other contracts that do not conflict with Sharia Principles and are approved by the Financial Services Authority; and
d. funding sources through loan receipts are conducted using qardh, mudharabah, musyarakah, or other contracts that do not conflict with Sharia Principles and are approved by the Financial Services Authority. (3) To obtain approval as referred to in paragraph (2), MFIs submit a request to the Financial Services Authority by attaching a fatwa from the National Sharia Board of the Indonesian Ulema Council. (4) Financing disbursement can be conducted using single and/or combined contracts from the contracts as referred to in paragraph (2) letter b. (5) In addition to conducting business activities as referred to in paragraph (1) and paragraph (2), MFIs conducting business activities based on Sharia Principles may conduct the management of social and charitable funds in the form of zakat, infak, sedekah, and wakaf in accordance with applicable regulations. (6) Bookkeeping for the management of social and charitable funds as referred to in paragraph (5) is conducted separately.

Article 16
Further provisions regarding contracts used in business activities and funding sources based on Sharia Principles as referred to in Article 15 are established by the Financial Services Authority.

CHAPTER V
HEALTH LEVEL AND EQUITY OF MFIs
First Section
MFI Health Level
Article 17
(1) MFIs must maintain their health level.
(2) The health level as referred to in paragraph (1) includes:
a. liquidity ratio; and b. solvency ratio.

Article 18
(1) The liquidity ratio as referred to in Article 17 paragraph (2) letter a is set at a minimum of 4% (four percent).
(2) The liquidity ratio as referred to in paragraph (1) is calculated by comparing cash and cash equivalents owned with current liabilities.
(3) For MFIs conducting business activities based on Sharia Principles, the liquidity ratio as referred to in paragraph (1) is calculated by comparing cash and cash equivalents owned with current liabilities and temporary partnership funds less than 1 (one) year.

Article 19
(1) The solvency ratio as referred to in Article 17 paragraph (2) letter b is set at a minimum of 110% (one hundred ten percent).
(2) The solvency ratio as referred to in paragraph (1) is calculated by comparing total assets with total liabilities.
(3) For MFIs conducting business activities based on Sharia Principles, the solvency ratio as referred to in paragraph (1) is calculated by comparing total assets with total liabilities and temporary partnership funds.

Article 20
In the event that MFIs do not meet the provisions as referred to in Article 18 paragraph (1) and/or Article 19 paragraph (1), MFIs are given a notice letter to:
a. improve policies and implementation of MFI asset and liability management; b. improve policies and implementation of Loan or Financing disbursement business activities;
c. improve policies and implementation of Savings collection business activities;
d. strengthen MFI capital. Including through capital deposits; e. reduce or delay the distribution of profits or surplus of business results of MFIs; f. restrict the payment of remuneration or other forms equivalent to it to the Board of Directors and/or Board of Commissioners of MFIs; g. not add MFI office branches; and/or h. take other supervisory actions necessary to improve the liquidity ratio and/or solvency ratio of MFIs.

Second Section
MFI Equity
Article 21
(1) MFIs must maintain Equity of at least 75% (seventy-five percent) of:
a. paid-up capital for MFIs in the form of limited liability companies; or b. basic savings, mandatory savings, and grants for MFIs in the form of cooperative legal entities.
(2) In the event that MFIs do not meet the provisions as referred to in paragraph (1), MFIs are given a notice letter to:
a. strengthen MFI capital including through capital deposits; b. improve policies and implementation of Loan or Financing disbursement business activities;
c. improve policies and implementation of Savings collection business activities;
d. reduce or delay the distribution of profits or surplus of business results of MFIs; e. restrict the payment of remuneration or other forms equivalent to it to the Board of Directors and/or Board of Commissioners of MFIs; f. not add MFI office branches; g. transfer MFI ownership to other parties willing to take over all MFI obligations; h. replace the Board of Directors and/or Board of Commissioners of MFIs; and/or
i. take other supervisory actions necessary to address the decline in MFI Equity.

(3) Microfinance Institutions that form reserves as referred to in Article 10 paragraph (3) letter b must have Equity greater than 25% (twenty-five percent) of paid-up capital or principal deposits, mandatory deposits, and grants.

CHAPTER VI
PLACEMENT OF EXCESS FUNDS

Article 22
(1) Microfinance Institutions are prohibited from placing their excess funds other than in savings, demand deposits, time deposits, and/or deposit certificates at banks.
(2) For Microfinance Institutions conducting business activities based on Sharia Principles, excess funds in the form of savings, demand deposits, time deposits, and/or deposit certificates must be placed at Sharia commercial banks, Sharia business units, and/or Sharia people's financing banks. (3) In the event that Sharia commercial banks, Sharia business units, and/or Sharia people's financing banks are not available in the business area of the Microfinance Institution, the Microfinance Institution conducting business activities based on Sharia Principles may place its excess funds at conventional banks.

CHAPTER VII
PROCEDURES FOR OBTAINING INFORMATION ABOUT DEPOSITORS AND DEPOSITS AT MICROFINANCE INSTITUTIONS

Article 23
(1) Members of the Board of Commissioners, Board of Directors, employees, and affiliated parties of Microfinance Institutions are required to keep information about Depositors and Deposits confidential. (2) The obligation to keep information confidential as referred to in paragraph (1) does not apply if the information about Depositors and Deposits is for:
a. tax interests; b. judicial interests in criminal cases;
c. judicial interests in civil cases; or
d. information requests from legal heirs if the Depositor has passed away.

Article 24
The provisions regarding the opening of information about Depositors and Deposits for tax interests as referred to in Article 23 paragraph (2) letter a shall be implemented in accordance with regulations concerning access to financial information for tax interests.

Article 25
(1) Requests for the opening of information about Depositors and Deposits for judicial interests in criminal cases as referred to in Article 23 paragraph (2) letter b are submitted based on a written request from the prosecutor's office, police, or court to the Financial Services Authority, stating:
a. the name and position of the prosecutor, police officer, or judge; b. the name of the Depositor as a witness, suspect, or defendant;
c. the name of the Microfinance Institution where the Depositor holds Deposits;
d. the information requested; e. the relationship between the criminal case in question and the information needed; and f. the reasons for the need for the information.
(2) The written request as referred to in paragraph (1) is submitted by the head of the prosecutor's office, head of the police, or chairman of the court.
(3) Approval or rejection of the request as referred to in paragraph (1) is given by the Financial Services Authority within a maximum period of 15 (fifteen) working days after the request letter is received completely. (4) For serious criminal cases, approval or rejection of the opening of information is given by the Financial Services Authority within a maximum period of 10 (ten) working days after the request letter is received completely.

Article 26
The opening of information about Depositors and Deposits for judicial interests in civil cases as referred to in Article 23 paragraph (2) letter c does not require approval from the Financial Services Authority.

Article 27
The opening of information about Depositors and Deposits for information requests from legal heirs if the Depositor has passed away as referred to in Article 23 paragraph (2) letter d does not require approval from the Financial Services Authority.

Article 28
Microfinance Institutions are prohibited from providing information about Depositors and Deposits without approval from the Financial Services Authority, except in cases of information requests as referred to in Article 24, Article 26, and Article 27 of this Financial Services Authority Regulation.

CHAPTER VIII
FINANCIAL REPORTS

Article 29
Microfinance Institutions are required to prepare financial reports in accordance with applicable financial accounting standards.

Article 30
(1) Microfinance Institutions are required to submit financial reports periodically every 4 (four) months for periods ending on April 30, August 31, and December 31 to the Financial Services Authority. (2) Submission of financial reports as referred to in paragraph (1) is done no later than the end of the following month. (3) If a Microfinance Institution obtains a business license less than 4 (four) months from the reporting obligation as referred to in paragraph (1), the reporting obligation as referred to in paragraph (2) begins to apply for the next financial report submission period. (4) If the deadline for submitting financial reports as referred to in paragraph (2) falls on a holiday, the submission deadline is on the next working day.

Article 31
(1) Microfinance Institutions with total assets of at least IDR 10,000,000,000.00 (ten billion rupiah) are required to submit annual financial reports audited by a public accountant to the Financial Services Authority no later than 5 (five) months after the last fiscal year. (2) In the event that shareholders or members of the Microfinance Institution require the Microfinance Institution to be audited by a public accountant, the annual financial reports audited by a public accountant must be submitted to the Financial Services Authority. (3) The fiscal year as referred to in paragraph (1) must be based on the calendar year. (4) If the deadline for submitting annual financial reports as referred to in paragraph (1) falls on a holiday, the submission deadline is on the next working day. (5) The public accountant as referred to in paragraph (1) must be registered with the Financial Services Authority. (6) In the event that there is no public accountant as referred to in paragraph (5) in the district/city where the Microfinance Institution is located, the Microfinance Institution may use a public accountant who has a license from the Ministry of Finance. (7) If a Microfinance Institution obtains a business license less than 6 (six) months until the end of the calendar year, the obligation to submit annual financial reports as referred to in paragraph (1) begins to apply in the next calendar year.

Article 32
(1) In applying the principle of transparency, Microfinance Institutions are required to announce the financial position report and profit and loss report for each fiscal year period on the announcement board at the respective Microfinance Institution's office, which is easily accessible to the public, or through a local daily newspaper no later than 5 (five) months after the end of the fiscal year. (2) The fiscal year as referred to in paragraph (1) must be based on the calendar year. (3) If a Microfinance Institution obtains a business license less than 6 (six) months until the end of the calendar year, the announcement obligation as referred to in paragraph (1) begins to apply in the next calendar year. (4) Proof of announcement of the financial position report and profit and loss report as referred to in paragraph (1) must be reported to the Financial Services Authority no later than 20 (twenty) working days after the announcement date.

Article 33
Further provisions regarding the form, structure, and procedures for submitting financial reports as referred to in Article 30 are determined by the Financial Services Authority.

CHAPTER IX
PROHIBITIONS

Article 34
In conducting business activities, Microfinance Institutions are prohibited from:
a. accepting Deposits in the form of giro and participating in payment transactions; b. conducting business activities in foreign currency;
c. conducting insurance business as an insurer;
d. acting as a guarantor; e. giving Loans or Financing to other Microfinance Institutions, except to overcome liquidity difficulties for other Microfinance Institutions in the same district/city; f. distributing Loans or Financing outside the scope of their business area; and/or g. conducting business outside the business activities as referred to in Article 2.

CHAPTER X
MICROFINANCE INSTITUTION HEALTH PROCEDURES

Article 35
(1) In the event that a Microfinance Institution experiences liquidity and solvency difficulties that endanger the continuity of its business, the Financial Services Authority may take actions to:
a. have shareholders or members increase capital; b. have the General Meeting of Shareholders or General Meeting of Members replace the Board of Directors and/or Board of Commissioners of the Microfinance Institution;
c. have the Microfinance Institution write off Non-Performing Loans or Financing and calculate losses against its capital;
d. have the Microfinance Institution merge or consolidate with another Microfinance Institution; e. have the ownership of the Microfinance Institution transferred to another party willing to take over all obligations; f. have the Microfinance Institution hand over the management of all or part of its activities to another party; g. have the Microfinance Institution sell part or all of its assets and/or liabilities to another Microfinance Institution or another party; and/or h. have the Microfinance Institution or another party take other actions determined by the Financial Services Authority. (2) Liquidity and solvency deemed to endanger the continuity of the Microfinance Institution's business as referred to in paragraph (1) if:
a. the liquidity ratio is less than 3% (three percent); and b. the solvency ratio is less than 100% (one hundred percent).
(3) In the event that a Microfinance Institution experiences conditions deemed to endanger the continuity of its business as referred to in paragraph (1) and paragraph (2), the Financial Services Authority issues a notification letter. (4) Actions as referred to in paragraph (1) are carried out within a maximum period of 1 (one) year from the date of the notification letter as referred to in paragraph (3). (5) The Financial Services Authority may extend the period as referred to in paragraph (4) by 1 (one) time for a maximum period of 1 (one) year. (6) In the event that the actions as referred to in paragraph (1) cannot overcome the liquidity and solvency difficulties as referred to in paragraph (2), the Financial Services Authority revokes the business license of the concerned Microfinance Institution and orders the Board of Directors of the Microfinance Institution to immediately convene the General Meeting of Shareholders or General Meeting of Members to dissolve the legal entity of the Microfinance Institution and form a liquidation team. (7) Provisions regarding the dissolution of the Microfinance Institution and the formation of a liquidation team as referred to in paragraph (6) are regulated in the Financial Services Authority Regulation concerning Microfinance Institution business licensing and institutional structure.

CHAPTER XI
COMPLIANCE ENFORCEMENT

Article 36
(1) Microfinance Institutions that violate the provisions as referred to in Article 3 paragraph (1), paragraph (4), Article 4 paragraph (2), paragraph (3), paragraph (4), paragraph (5), Article 5, Article 6 paragraph (1), Article 8 paragraph (1), Article 10 paragraph (1), paragraph (3), Article 12 paragraph (1), Article 13, Article 14 paragraph (2), Article 15 paragraph (1), Article 22 paragraph (1), paragraph (2), Article 28, Article 29, Article 30 paragraph (1), Article 31 paragraph (1), paragraph (5), Article 32 paragraph (1), paragraph (4), Article 34 letter a, letter b, letter c, letter d, letter e, and/or letter g, are given a notification letter. (2) Microfinance Institutions are required to fulfill the provisions as referred to in paragraph (1) no later than 40 (forty) working days from the date of the notification letter. (3) If by the end of the period of the notification letter as referred to in paragraph (2), the Microfinance Institution has not fulfilled the provisions in Article 3 paragraph (1), paragraph (4), Article 4 paragraph (2), paragraph (3), paragraph (4), paragraph (5), Article 5, Article 6 paragraph (1), Article 8 paragraph (1), Article 10 paragraph (1), paragraph (3), Article 12 paragraph (1), Article 13, Article 14 paragraph (2), Article 15 paragraph (1), Article 22 paragraph (1), paragraph (2), Article 28, Article 29, Article 30 paragraph (1), Article 31 paragraph (1), paragraph (5), Article 32 paragraph (1), paragraph (4), Article 34 letter a, letter b, letter c, letter d, letter e, and/or letter g, the Microfinance Institution is subject to administrative sanctions.

Article 37
(1) Microfinance Institutions that violate the provisions in Article 34 letter f are given a notification letter.
(2) Microfinance Institutions with a business coverage area of villages/sub-districts/districts are required to fulfill the provisions of Article 34 letter f no later than 40 (forty) working days from the date of the notification letter. (3) If by the end of the period of the notification letter as referred to in paragraph (2), Microfinance Institutions with a business coverage area of villages/sub-districts/districts have not fulfilled the provisions in Article 34 letter f, the Microfinance Institution is subject to administrative sanctions. (4) Microfinance Institutions with a business coverage area of districts/cities that do not fulfill the provisions in Article 34 letter f are required to transform into rural credit banks or Sharia people's financing banks, as regulated in Financial Services Authority regulations concerning:
a. Microfinance Institution business licensing and institutional structure; and b. transformation of conventional Microfinance Institutions into rural credit banks and Sharia Microfinance Institutions into Sharia people's financing banks.

CHAPTER XII
ADMINISTRATIVE SANCTIONS

Article 38
Every Microfinance Institution that violates the provisions in this Financial Services Authority Regulation is subject to administrative sanctions in the form of:
a. written warning; b. suspension of business activities;
c. dismissal of the Microfinance Institution's Board of Directors and subsequently appointing and appointing a temporary replacement until the General Meeting of Shareholders or General Meeting of Members appoints a permanent replacement with the approval of the Financial Services Authority;
d. monetary fine; or e. revocation of business license.

Article 39
(1) Microfinance Institutions that violate the provisions in Article 9 paragraph (5) and/or Article 21 paragraph (3) are subject to administrative sanctions in the form of:
a. written warning; b. suspension of business activities;
c. dismissal of the Microfinance Institution's Board of Directors and subsequently appointing and appointing a temporary replacement until the General Meeting of Shareholders or General Meeting of Members appoints a permanent replacement with the approval of the Financial Services Authority; and
d. revocation of business license.
(2) Written warning sanctions as referred to in paragraph (1) letter a are given at most 3 (three) times consecutively with a validity period of each at most 30 (thirty) working days. (3) If before the end of the warning sanction period as referred to in paragraph (2), the Microfinance Institution has fulfilled the provisions as referred to in Article 9 paragraph (5) and/or Article 21 paragraph (3), the Financial Services Authority revokes the written warning sanction. (4) If the validity period of the third written warning as referred to in paragraph (2) ends and the Microfinance Institution does not fulfill the provisions as referred to in Article 9 paragraph (5) and/or Article 21 paragraph (3), the Microfinance Institution is subject to administrative sanctions in the form of:
a. suspension of business activities; or b. dismissal of the Microfinance Institution's Board of Directors and subsequently appointing and appointing a temporary replacement until the General Meeting of Shareholders or General Meeting of Members appoints a permanent replacement with the approval of the Financial Services Authority. (5) The business suspension sanction as referred to in paragraph (4) letter a is given for a maximum period of 6 (six) months. (6) If before the end of the business suspension sanction period as referred to in paragraph (5), the Microfinance Institution has fulfilled the provisions as referred to in Article 9 paragraph (5) and/or Article 21 paragraph (3), the Financial Services Authority revokes the business suspension sanction. (7) If the period of the administrative sanction in the form of business suspension as referred to in paragraph (5) ends and the Microfinance Institution does not fulfill the provisions as referred to in Article 9 paragraph (5) and/or Article 21 paragraph (3), the Financial Services Authority revokes the business license of the concerned Microfinance Institution and orders the Board of Directors of the Microfinance Institution to immediately convene the General Meeting of Shareholders or General Meeting of Members to dissolve the legal entity of the Microfinance Institution and form a liquidation team. (8) In the event that a Microfinance Institution is subject to the Board of Directors dismissal sanction as referred to in paragraph (4) letter b, the Microfinance Institution:
a. dismisses and appoints and appoints a temporary replacement no later than 6 (six) months from the date of the sanction imposition; and b. appoints and appoints a permanent replacement no later than 6 (six) months from the date of the appointment of the temporary replacement. (9) If the period as referred to in paragraph (8) ends and the Microfinance Institution has not:
a. dismissed and appointed and appointed a temporary replacement; and b. appointed and appointed a permanent replacement, the Financial Services Authority revokes the business license of the concerned Microfinance Institution and orders the Board of Directors of the Microfinance Institution to immediately convene the General Meeting of Shareholders or General Meeting of Members to dissolve the legal entity of the Microfinance Institution and form a liquidation team.

Article 40
(1) Microfinance Institutions that do not fulfill the provisions in Article 36 paragraph (2) for the fulfillment of the provisions of Article 13 and/or Article 28 are subject to administrative sanctions in the form of written warnings. (2) In addition to the sanctions as referred to in paragraph (1), the Financial Services Authority may provide additional measures in the form of:
a. suspension of Deposit gathering business activities; b. prohibition on opening new branch offices; and/or
c. prohibition on expanding the business coverage area.
(3) Written warning sanctions as referred to in paragraph (1) are given at most 3 (three) times consecutively with a validity period of each at most 30 (thirty) working days.
(4) If before the end of the warning sanction period as referred to in paragraph (3), the Microfinance Institution has fulfilled the provisions as referred to in Article 13 and/or Article 28, the Financial Services Authority revokes the written warning sanction.

Article 41
(1) Microfinance Institutions that do not fulfill the provisions in Article 36 paragraph (2) for the fulfillment of the provisions of Article 3 paragraph (1), Article 6 paragraph (1), Article 8 paragraph (1), Article 10 paragraph (1), paragraph (3), Article 12 paragraph (1), Article 14 paragraph (2), Article 22 paragraph (1) and/or paragraph (2) are subject to administrative sanctions in the form of:
a. written warning; b. suspension of business activities;
c. dismissal of the Microfinance Institution's Board of Directors and subsequently appointing and appointing a temporary replacement until the General Meeting of Shareholders or General Meeting of Members appoints a permanent replacement with the approval of the Financial Services Authority; and
d. revocation of business license.
(2) In addition to the sanctions as referred to in paragraph (1), the Financial Services Authority may provide additional measures in the form of:
a. prohibition on opening new branch offices; and/or b. prohibition on expanding the business coverage area.
(3) Written warning sanctions as referred to in paragraph (1) letter a are given at most 3 (three) times consecutively with a validity period of each at most 30 (thirty) working days. (4) If before the end of the warning sanction period as referred to in paragraph (3), the Microfinance Institution has fulfilled the provisions as referred to in Article 3 paragraph (1), Article 6 paragraph (1), Article 8 paragraph (1), Article 10 paragraph (1) and paragraph (3), Article 12 paragraph (1), Article 14 paragraph (2), Article 22 paragraph (1) and/or paragraph (2), the Financial Services Authority revokes the written warning sanction. (5) If the validity period of the third written warning as referred to in paragraph (3) ends and the Microfinance Institution does not fulfill the provisions as referred to in Article 3 paragraph (1), Article 6 paragraph (1), Article 8 paragraph (1), Article 10 paragraph (1) and paragraph (3), Article 12 paragraph (1), Article 14 paragraph (2), Article 22 paragraph (1) and/or paragraph (2), the Microfinance Institution is subject to administrative sanctions in the form of:
a. suspension of business activities; or b. dismissal of the Microfinance Institution's Board of Directors and subsequently appointing and appointing a temporary replacement until the General Meeting of Shareholders or General Meeting of Members appoints a permanent replacement with the approval of the Financial Services Authority. (6) The business suspension sanction as referred to in paragraph (5) letter a is given for a maximum period of 1 (one) year. (7) If before the end of the sanction period as referred to in paragraph (6), the Microfinance Institution has fulfilled the provisions as referred to in Article 3 paragraph (1), Article 6 paragraph (1), Article 8 paragraph (1), Article 10 paragraph (1) and paragraph (3), Article 12 paragraph (1), Article 14 paragraph (2), Article 22 paragraph (1) and/or paragraph (2), the Financial Services Authority revokes the business suspension sanction. (8) If the period of the business suspension sanction as referred to in paragraph (6) ends without fulfilling the provisions as referred to in Article 3 paragraph (1), Article 6 paragraph (1), Article 8 paragraph (1), Article 10 paragraph (1) and paragraph (3), Article 12 paragraph (1), Article 14 paragraph (2), Article 22 paragraph (1), and/or paragraph (2), the Financial Services Authority revokes the business license of the concerned Microfinance Institution and orders the Board of Directors of the Microfinance Institution to immediately convene the General Meeting of Shareholders or General Meeting of Members to dissolve the legal entity of the Microfinance Institution and form a liquidation team. (9) In the event that a Microfinance Institution is subject to the Board of Directors dismissal sanction as referred to in paragraph (5) letter b, the Microfinance Institution:
a. dismisses and appoints and appoints a temporary replacement no later than 6 (six) months from the date of the sanction imposition; and b. appoints and appoints a permanent replacement no later than 6 (six) months from the date of the appointment of the temporary replacement. (10) If the period as referred to in paragraph (9) ends and the Microfinance Institution has not:
a. dismissed and appointed and appointed a temporary replacement; and b. appointed and appointed a permanent replacement, the Financial Services Authority revokes the business license of the concerned Microfinance Institution and orders the Board of Directors of the Microfinance Institution to immediately convene the General Meeting of Shareholders or General Meeting of Members to dissolve the legal entity of the Microfinance Institution and form a liquidation team.

Article 42
Microfinance Institutions that do not fulfill the provisions in Article 36 paragraph (2) for the fulfillment of the provisions of Article 3 paragraph (4), Article 4 paragraph (2), paragraph (3), paragraph (4), paragraph (5), Article 5, Article 29, Article 31 paragraph (5), Article 32 paragraph (1), paragraph (4), and/or Article 34 letter e are subject to administrative sanctions in the form of written warnings.

Article 43
(1) Microfinance Institutions that do not fulfill the provisions in Article 36 paragraph (2) for the fulfillment of the provisions of Article 15 paragraph (1), Article 34 letter a, letter b, letter c, letter d, letter g, and/or Article 37 paragraph (3) for the fulfillment of the provisions of Article 34 letter f are subject to administrative sanctions in the form of:
a. written warning; b. suspension of business activities;
c. dismissal of the Microfinance Institution's Board of Directors and subsequently appointing and appointing a temporary replacement until the General Meeting of Shareholders or General Meeting of Members appoints a permanent replacement with the approval of the Financial Services Authority; and
d. revocation of business license.
(2) Written warning sanctions as referred to in paragraph (1) letter a are given at most 3 (three) times consecutively with a validity period of each at most 30 (thirty) working days. (3) If before the end of the warning sanction period as referred to in paragraph (2), the Microfinance Institution has fulfilled the provisions as referred to in Article 15 paragraph (1), Article 34 letter a, letter b, letter c, letter d, letter f, and/or letter g, the Financial Services Authority revokes the written warning sanction. (4) If the validity period of the third written warning as referred to in paragraph (2) ends and the Microfinance Institution does not fulfill the provisions as referred to in

Article 15 paragraph (1), Article 34 letters a, b, c, d, f, and/or g, MFIs are subject to administrative sanctions in the form of:
a. suspension of business activities; or b. dismissal of the MFI Board of Directors and subsequently appointing and appointing temporary replacements until the General Meeting of Shareholders or Member Meeting appoints permanent replacements with the approval of the Financial Services Authority. (5) The suspension of business activities sanction as referred to in paragraph (4) letter a is given for a maximum period of 6 (six) months. (6) If before the end of the suspension period as referred to in paragraph (5), the MFI has fulfilled the provisions as referred to in Article 15 paragraph (1), Article 34 letters a, b, c, d, f, and/or g, the Financial Services Authority revokes the suspension of business activities sanction. (7) If the administrative sanction period for suspension of business activities as referred to in paragraph (5) expires and the MFI does not fulfill the provisions as referred to in Article 15 paragraph (1), Article 34 letters a, b, c, d, f, and/or g, the Financial Services Authority revokes the business license of the relevant MFI and orders the MFI Board of Directors to immediately hold a General Meeting of Shareholders or Member Meeting to dissolve the MFI legal entity and form a liquidation team. (8) In the event that an MFI is subject to the dismissal of the Board of Directors sanction as referred to in paragraph (4) letter b, the MFI:
a. dismisses and appoints and appoints temporary replacements for a maximum of 6 (six) months from the date the sanction is imposed; and b. appoints and appoints permanent replacements for a maximum of 6 (six) months from the date of appointment of the temporary replacement.

(9) If the period as referred to in paragraph (8) expires and the MFI has not:
a. dismissed and appointed and appointed temporary replacements; and b. appointed and appointed permanent replacements, the Financial Services Authority revokes the business license of the relevant MFI and orders the MFI Board of Directors to immediately hold a General Meeting of Shareholders or Member Meeting to dissolve the MFI legal entity and form a liquidation team.

Article 44
(1) MFIs that do not fulfill the provisions in Article 36 paragraph (2) for the fulfillment of the provisions in Article 30 paragraph (1) and/or Article 31 paragraph (1) are subject to administrative sanctions in the form of:
a. written warning; b. monetary fine; and/or
c. revocation of business license.
(2) The written warning sanction as referred to in paragraph (1) is given once with a validity period of a maximum of 30 (thirty) working days.
(3) If before the end of the warning period as referred to in paragraph (2), the MFI has fulfilled the provisions as referred to in Article 30 paragraph (1) and/or Article 31 paragraph (1), the Financial Services Authority revokes the written warning sanction. (4) If the validity period of the warning as referred to in paragraph (2) expires and the MFI still does not fulfill the provisions as referred to in Article 30 paragraph (1) and/or Article 31 paragraph (1), the MFI is subject to administrative sanctions in the form of a monetary fine. (5) The imposition of administrative sanctions in the form of a monetary fine as referred to in paragraph (4) is implemented with the following provisions:
a. for MFIs whose operational coverage is in 1 (one) village/sub-district, a monetary fine of Rp5,000.00 (five thousand rupiah) is imposed for each day of delay and a maximum of Rp200,000.00 (two hundred thousand rupiah); b. for MFIs whose operational coverage is in 1 (one) district, a monetary fine of Rp10,000.00 (ten thousand rupiah) is imposed for each day of delay and a maximum of Rp400,000.00 (four hundred thousand rupiah); or
c. for MFIs whose operational coverage is in 1 (one) Regency/City, a monetary fine of Rp50,000.00 (fifty thousand rupiah) is imposed for each day of delay and a maximum of Rp2,500,000.00 (two million five hundred thousand rupiah).
(6) In the imposition of administrative sanctions in the form of a monetary fine as referred to in paragraph (4), the date of submission of the report is:
a. the date of receipt by the Financial Services Authority or the Local Regency/City Government or other parties designated by the Financial Services Authority, if the report is submitted directly; or b. the date of sending with proof of sending via post or courier/courier service company, if the report is not submitted directly. (7) The monetary fine as referred to in paragraph (5) is deposited to the Financial Services Authority. (8) In the event that the MFI has not paid the monetary fine as referred to in paragraph (5), the monetary fine is declared as the MFI's debt to the Financial Services Authority and must be included in the financial report of the relevant MFI. (9) If the MFI does not fulfill the provisions as referred to in paragraph (1) to 3 (three) times consecutively, the Financial Services Authority revokes the business license of the relevant MFI and orders the MFI Board of Directors to immediately hold a General Meeting of Shareholders or Member Meeting to dissolve the MFI legal entity and form a liquidation team.

CHAPTER XIII
TRANSITIONAL PROVISIONS

Article 45
MFIs must fulfill the provisions of Article 6 paragraph (1), Article 9 paragraph (5), Article 10 paragraph (1) and paragraph (3), Article 21 paragraph (3), Article 22, Article 30 paragraph (1), Article 31 paragraph (1), and Article 32 paragraph (1) and paragraph (4) no later than 2 (two) years from the enactment of this Financial Services Authority Regulation.

Article 46
(1) Every administrative sanction that has been imposed against MFIs based on Financial Services Authority Regulation Number 13/POJK.05/2014 concerning the Management of Microfinance Institution Business and Financial Services Authority Regulation Number 62/POJK.05/2014 concerning Amendment to Financial Services Authority Regulation Number 13/POJK.05/2014 concerning the Management of Microfinance Institution Business, is declared valid and in force. (2) MFIs that have not been able to overcome the causes of the imposition of administrative sanctions as referred to in paragraph (1) are subject to further sanctions in accordance with this Financial Services Authority Regulation.

CHAPTER XIV
CLOSING PROVISIONS

Article 47
At the time this Financial Services Authority Regulation comes into force:

a. Financial Services Authority Regulation Number 13/POJK.05/2014 concerning the Management of Microfinance Institution Business (State Gazette of the Republic of Indonesia Year 2014 Number 343, Supplement to the State Gazette of the Republic of Indonesia Number 5622) as amended by Financial Services Authority Regulation Number 62/POJK.05/2014 concerning Amendment to Financial Services Authority Regulation Number 13/POJK.05/2014 concerning the Management of Microfinance Institution Business (State Gazette of the Republic of Indonesia Year 2015 Number 413, Supplement to the State Gazette of the Republic of Indonesia Number 5831), is revoked and declared invalid; and b. all implementing regulations of Financial Services Authority Regulation Number 13/POJK.05/2014 concerning the Management of Microfinance Institution Business (State Gazette of the Republic of Indonesia Year 2014 Number 343, Supplement to the State Gazette of the Republic of Indonesia Number 5622) as amended by Financial Services Authority Regulation Number 62/POJK.05/2014 concerning Amendment to Financial Services Authority Regulation Number 13/POJK.05/2014 concerning the Management of Microfinance Institution Business (State Gazette of the Republic of Indonesia Year 2015 Number 413, Supplement to the State Gazette of the Republic of Indonesia Number 5831), are declared to remain in force insofar as they do not conflict with the provisions in this Financial Services Authority Regulation.

Article 48
This Financial Services Authority Regulation comes into force on the date of enactment.

This copy is in accordance with the original
Director of Law 1
Legal Department signed
Mufli Asmawidjaja

In order that everyone knows it, orders the enactment of this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.
Determined in Jakarta on 14 September 2021
CHAIRMAN OF THE COMMISSIONERS BOARD
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO

Enacted in Jakarta on 15 September 2021
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2021 NUMBER 217

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION OF THE REPUBLIC OF INDONESIA NUMBER 19 /POJK.05/2021 CONCERNING THE MANAGEMENT OF MICROFINANCE INSTITUTION BUSINESS

I. GENERAL
The financial services sector is a sector that has interconnections with almost all sectors in the national economy. Although the performance of the financial sector in Indonesia in recent times has shown significant growth, equitable growth has not been achieved because in reality, the accessibility of low-income communities and micro entrepreneurs to financing facilities, especially from banks, is still very low. The limited access to the banking sector can become an entry point for informal creditors who apply high interest rates. Thus, to meet the need for affordable financial services, especially for low-income communities and micro entrepreneurs, the existence of institutions specializing in empowering low-income communities and micro entrepreneurs is very important.

The Government has established Law Number 1 of 2013 concerning Microfinance Institutions (MFIs) on January 8, 2013. The Law on MFIs mandates several further technical regulatory materials related to MFI business activities, procedures for obtaining information regarding depositors and savings, and the guidance, regulation, and supervision of MFIs in the form of Financial Services Authority Regulations. This is because based on the mandate of the Law on MFIs which states that the Financial Services Authority is the authority that guides, regulates, and supervises MFIs. Thus, with the regulation regarding the management of business activities by the Financial Services Authority, it is hoped that MFIs can continue to contribute to empowering low-income communities and micro entrepreneurs while still paying attention to prudential aspects and protection for customers.

In this regard, the Financial Services Authority established Financial Services Authority Regulation Number 13/POJK.05/2014 concerning the Management of Microfinance Institution Business and Financial Services Authority Regulation Number 62/POJK.05/2014 concerning Amendment to Financial Services Authority Regulation Number 13/POJK.05/2014 concerning the Management of Microfinance Institution Business.

Along with dynamics and input from various parties, regulations regarding the management of Microfinance Institution business need to be adjusted in order to provide greater access for the community to financing sources and provide certainty of business continuity.

II. ARTICLE BY ARTICLE

Article 1
Clear enough.

Article 2
Paragraph (1)
Clear enough.

Paragraph (2)
What is meant by "fee-based activities" are MFI business activities that receive income other than interest or profit-sharing income, including:
a. marketing financial service products such as micro insurance; b. cooperating with financing companies through financing channeling; and
c. becoming an agent of financial service institutions providing Officeless Financial Services in the context of Inclusive Finance (Laku Pandai).

Paragraph (3)
Clear enough.

Article 3
Paragraph (1)
Analysis of the feasibility of Loan or Financing disbursement can be carried out based on assessment of:
a. The customer's ability to repay the Loan or Financing (capacity); and b. The customer's track record/character (character), which is part of the principle in 5C (character, capital, capacity, condition of economy, and collateral).

Paragraph (2)
Clear enough.

Paragraph (3)
What is meant by "credit guarantee" is a guarantee carried out conventionally or based on Sharia Principles.

Paragraph (4)
Clear enough.

Article 4
Clear enough.

Article 5
Clear enough.

Article 6
Paragraph (1)
Clear enough.

Paragraph (2)
Example:
On April 30, 2021, the MFI had Equity of Rp200,000,000.00 (two hundred million rupiah) so the maximum limit for Loan or Financing disbursement is Rp20,000,000.00 (twenty million rupiah) for 1 (one) customer.

If on April 30, 2021, the MFI provides a Loan of Rp25,000,000.00 (twenty-five million rupiah) to 1 (one) customer, the MFI violates the maximum limit for Loan or Financing disbursement provisions.

Paragraph (3)
Example:
Loan or Financing disbursement carried out in June 2021 is calculated using the MFI's Equity based on the financial report period ending on April 30, 2021.
On June 15, 2021, the MFI had Equity of Rp200,000,000.00 (two hundred million rupiah). Based on the financial report, the MFI's Equity on April 30, 2021 was Rp100,000,000.00 (one hundred million rupiah). Based on this information, the maximum limit for Loan or Financing disbursement is Rp10,000,000.00 (ten million rupiah) for 1 (one) customer.

If on June 15, 2021, the MFI provides a Loan of Rp20,000,000.00 (twenty million rupiah) to 1 (one) customer, the MFI violates the maximum limit for Loan or Financing disbursement provisions.

Paragraph (4)
Clear enough.

Article 7
Paragraph (1)
Clear enough.

Paragraph (2)
Clear enough.

Paragraph (3)
Clear enough.

Paragraph (4)
A loan value of Rp100,000,000.00 (one hundred million rupiah) means the collateral must have an economic value of at least 120% (one hundred twenty percent) x Rp100,000,000.00 (one hundred million rupiah) = Rp120,000,000.00 (one hundred twenty million rupiah).

What is meant by "economic value" is:
a. for collateral in the form of savings and/or fixed deposits, the nominal value is used; b. for collateral in the form of land and/or buildings, among others, the value from the assessment by an independent appraiser or the tax sale value of the object is used;
c. for collateral in the form of motor vehicles, ships, and/or motorized boats, the market value is used, which is the money estimated to be obtained from a buy-sell transaction or the result of exchanging an asset on the date of assessment after deducting transaction costs. Market value information can be obtained from print media or electronic media.

Paragraph (5)
Clear enough.

Article 8
Clear enough.

Article 9
Paragraph (1)
Clear enough.

Paragraph (2)
Example calculation of the ratio of Problematic Loans or Problematic Financing:
Based on the quality assessment of Loans or Financing, the results are:

Performing
Rp142,500,000.00 (one hundred forty-two million five hundred thousand rupiah).
Doubtful
Rp4,000,000.00 (four million rupiah).
Non-performing
Rp3,500,000.00 (three million five hundred thousand rupiah).
Total Loans or Financing to the public
Rp150,000,000.00 (one hundred fifty million rupiah).

Then the ratio of Problematic Loans or Problematic Financing:

7,500,000.00
150,000,000.00 x 100% = 5%

Paragraph (3)
Clear enough.

Paragraph (4)
Letter a
What is meant by "Loan or Financing disbursement policy and implementation" includes:
a. authority for Loan or Financing disbursement; b. Loan or Financing disbursement procedures (application, analysis, collateral assessment, approval, agreement, and disbursement);
c. Loan or Financing disbursement documentation and administration procedures;
d. Loan or Financing monitoring and supervision procedures; and e. Problematic Loan or Financing handling and settlement procedures.

Letter b
Clear enough.

Letter c
Clear enough.

Letter d
Clear enough.

Letter e
Clear enough.

Paragraph (5)
Clear enough.

Article 10
Paragraph (1)
Savings for MFIs conducting business activities based on Sharia Principles include wadi'ah savings and temporary partnership funds.
What is meant by "loans received" is funding received by the MFI in the form of debt or that is equated with it, either conventionally or based on Sharia Principles.

Example:

If MFI A has Savings of Rp250,000,000.00 (two hundred fifty million rupiah) but has no Loans received, then MFI A forms a provision for Loan or Financing write-off.
If MFI B has no Savings but has Loans received of Rp250,000,000.00 (two hundred fifty million rupiah), then MFI B forms a provision for Loan or Financing write-off.
MFI C has Savings of Rp150,000,000.00 (one hundred fifty million rupiah) and Loans received of Rp150,000,000.00 (one hundred fifty million rupiah) so the total Savings and Loans received by MFI C becomes Rp300,000,000.00 (three hundred million rupiah). Thus, MFI C forms a provision for Loan or Financing write-off.

Paragraph (2)
Clear enough.

Paragraph (3)
Clear enough.

Paragraph (4)
Clear enough.

Paragraph (5)
Example:
Based on the financial report in April 2021, MFI D has Savings and/or Loans with an amount of Rp150,000,000.00 (one hundred fifty million rupiah). If MFI D forms a reserve set aside from net profit or surplus, then MFI D cannot make changes by forming a provision for Loan or Financing write-off or vice versa. Subsequently, in the financial report for August 2021, the amount of Savings and/or loans increased to Rp210,000,000.00 (two hundred ten million rupiah), thus MFI D is required to form a provision for Loan or Financing write-off. If in the financial report for December 2021 the amount of Savings and/or Loans decreased to Rp170,000,000.00 (one hundred seventy million rupiah), MFI D is not allowed to make changes by forming a reserve, but still forms a provision for Loan or Financing write-off.

Paragraph (6)
Letter a
Example:
MFI has a surplus of Rp20,000,000.00 (twenty million rupiah), so the minimum reserve amount = 15% x Rp20,000,000.00 = Rp3,000,000.00 (three million rupiah).

Letter b
Clear enough.

Article 11
Paragraph (1)
Example Borrower A:

Amount of Loan or Financing: Rp10,000,000.00 (ten million rupiah).
Quality of Loan or Financing: doubtful.
Provision percentage: 50% (fifty percent).
Type of collateral: none.
Provision value after deducting collateral: 50% x (Rp10,000,000.00 – Rp0,00) = Rp5,000,000.00 (five million rupiah).

Example Borrower B:

Amount of Loan or Financing: Rp10,000,000.00 (ten million rupiah).
Quality of Loan or Financing: performing.
Provision percentage: 0% (zero percent).
Because the provision percentage is 0% (zero percent), the provision value is Rp0,00 (zero rupiah), both with or without collateral.

Example Borrower C:

Amount of Loan or Financing: Rp10,000,000.00 (ten million rupiah).
Quality of Loan or Financing: doubtful.
Provision percentage: 50% (fifty percent).
Type of collateral: savings.
Percentage refers to Article 11 paragraph (2): 100% (one hundred percent).
Collateral value: Rp 15,000,000.00 (fifteen million rupiah).
Collateral value calculated as a reduction in provision: 100% x Rp15,000,000.00 = Rp15,000,000.00 (fifteen million rupiah).
Provision value after deducting collateral: 50% x (Rp10,000,000.00 – Rp15,000,000.00) = Rp0,00 (zero rupiah), the collateral value as a reduction in provision is larger than the provision value so the provision calculation becomes Rp0,00 (zero rupiah).

Example Borrower D:

Amount of Loan or Financing: Rp10,000,000.00 (ten million rupiah).
Quality of Loan or Financing: non-performing.
Provision percentage: 100% (one hundred percent).
Type of collateral: motorcycle accompanied by BPKB and has been subject to fiduciary registration.
Percentage refers to Article 11 paragraph (2): 50% (fifty percent).
Market value of collateral: Rp12,500,000.00 (twelve million five hundred thousand rupiah).
Collateral value calculated as a reduction in provision: 50% x Rp12,500,000.00 = Rp6,250,000.00 (six million two hundred fifty thousand rupiah).
Provision value after deducting collateral:
100% x (Rp10,000,000.00 – Rp6,250,000.00) =
Rp3,750,000.00 (three million seven hundred fifty thousand rupiah).

Paragraph (2)
Letter a
Clear enough.

Letter b
What is meant by "land and/or buildings with certificates" is land and/or buildings attached with land rights in the form of ownership rights, business use rights, building use rights, or use rights over State land. Included in buildings are residential houses, apartment buildings, apartments, shops, and office houses.

Letter c
Clear enough.

Letter d
Clear enough.

Letter e
What is meant by "certificate of customary land recognition" includes among others girik letters, petok d, letter c, rincik, and ketitir.

Letter f
Clear enough.

Article 12
Paragraph (1)
Letter a
What is meant by "collateral assessment" is the estimation and opinion by the MFI's internal appraiser or independent appraiser on the economic value of the collateral based on analysis of objective and relevant facts according to generally accepted methods and principles.

Letter b
What is meant by "collateral storage place meeting minimum safety and security standards" is a storage place that can protect the collateral from weather hazards, theft risks, and fire.

Paragraph (2)
Letter a
Clear enough.

Letter b
Examples of collateral whose existence can be known, for example, vehicles whose physical form is still present.

Letter c
Examples of collateral that can be executed:

collateral not used for public facilities;
collateral not in dispute;
collateral not seized by the state; and/or
no fire or accident has occurred that eliminates the economic value of the collateral.

Paragraph (3)
Clear enough.

Article 13
Clear enough.

Article 14
Clear enough.

Article 15
Paragraph (1)
Clear enough.

Paragraph (2)
Clear enough.

Paragraph (3)
Clear enough.

Paragraph (4)
Clear enough.

Paragraph (5)
The management of social and charitable funds in the form of zakat, infak, sedekah, and waqf carried out by MFIs conducting business activities based on Sharia Principles, must be carried out separately from the main activities of collecting Savings and disbursing Financing of the relevant MFI.

Paragraph (6)
Clear enough.

Article 16
Clear enough.

Article 17
Clear enough.

Article 18
Paragraph (1)
Clear enough.

Paragraph (2)
What is meant by "cash and cash equivalents" includes cash, savings, fixed deposits, and certificates of deposit.
What is meant by "current liabilities" includes all obligations that must be paid within a period of less than 1 (one) year, for example, debts that must be paid immediately and Savings.

Paragraph (3)
What is meant by "cash and cash equivalents" includes cash, savings, fixed deposits, and certificates of deposit. What is meant by "current liabilities" includes all obligations that must be paid within a period of less than 1 (one) year, for example, debts that must be paid immediately and wadi'ah savings.

Article 19
Clear enough.

Article 20
Clear enough.

Article 21
Clear enough.

Article 22
Clear enough.

Article 23
Paragraph (1)
What is meant by "affiliated parties" is:
a. shareholders, members, and parties who provide their services to the MFI, including public accountants, appraisers, and legal consultants; and b. parties who participate in influencing the management of the MFI, including shareholders and their families, families of the Board of Commissioners members, or families of the Board of Directors members.

Paragraph (2)
Clear enough.

Article 24
Clear enough.

Article 25
Paragraph (1)
Clear enough.

Paragraph (2)
What is meant by:

"prosecution leadership" includes the Head of District Prosecutor's Office, Head of Provincial Prosecutor's Office, and Attorney General;
"police leadership" includes the Head of Regency/City Police Resort, Head of Regional Police, and Head of the Indonesian National Police; or
"court chairman" includes the Chairman of the District Court, Chairman of the High Court, and Chairman of the Supreme Court.

Paragraph (3)
Clear enough.

Paragraph (4)
Clear enough.

Article 26
Clear enough.

Article 27
Clear enough.

Article 28
Clearly stated.

Article 29
Clearly stated.

Article 30
Clearly stated.

Article 31
Clearly stated.

Article 32
Paragraph (1)
Financial position reports or balance sheets are part of an entity's financial statements generated for a specific accounting period, showing the entity's financial position at the end of that period. Meanwhile, income statements are part of an entity's financial statements generated for a specific accounting period, showing the revenue and expense elements of the Microfinance Institution (LKM).

Paragraph (2)
Clearly stated.

Paragraph (3)
Clearly stated.

Paragraph (4)
Clearly stated.

Article 33
Clearly stated.

Article 34
Clearly stated.

Article 35
Paragraph (1)
Letter a
Clearly stated.

Letter b
Clearly stated.

Letter c
Clearly stated.

Letter d
Clearly stated.

Letter e
Clearly stated.

Letter f
Clearly stated.

Letter g
Clearly stated.

Letter h
The term "other parties" includes, among others, shareholders or members.

Paragraph (2)
Clearly stated.

Paragraph (3)
Clearly stated.

Paragraph (4)
Clearly stated.

Paragraph (5)
Clearly stated.

Paragraph (6)
Clearly stated.

Paragraph (7)
Clearly stated.

Article 36
Clearly stated.

Article 37
Clearly stated.

Article 38
Letter a
Clearly stated.

Letter b
Clearly stated.

Letter c
The term "termination of the LKM Board of Directors and subsequently appointing and appointing temporary replacements" refers to the order of the Otoritas Jasa Keuangan (OJK) to the LKM to terminate the Board of Directors, and to appoint and appoint temporary replacements in accordance with applicable laws and regulations. As an example, for a corporate legal entity LKM, this is done through the mechanism of a General Meeting of Shareholders.

Letter d
Clearly stated.

Letter e
Clearly stated.

Article 39
Clearly stated.

Article 40
Clearly stated.

Article 41
Clearly stated.

Article 42
Clearly stated.

Article 43
Clearly stated.

Article 44
Clearly stated.

Article 45
Clearly stated.

Article 46
Clearly stated.

Article 47
Clearly stated.

Article 48
Clearly stated.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6724

ANNEX
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 19 /POJK.05/2021
ON
THE BUSINESS OPERATION OF MICROFINANCE INSTITUTIONS

FORMAT 1 MAXIMUM LOAN INTEREST RATE OR MAXIMUM FINANCING RETURN REPORT (QUARTERLY)

I. LKM (Conventional)
To
Yth.
Director of Microfinance Institution/Head of Regional OJK Office/Head of OJK Office/Regent/Mayor/Other parties designated by OJK*) Address ...........*)
....................
....................

In accordance with the Financial Services Authority Regulation Number .../POJK.05/2021 on the Business Operation of Microfinance Institutions, we hereby submit the report on the maximum interest rate for Loans for a 4 (four) month period ending in May/September/January*) year ... , namely:

No.	Loan Type	Payment Period	Maximum Loan Interest Rate (%)
1.	Investment/Working Capital/Consumptive	Daily/Weekly/Monthly/Selapan/Musim/Annual	Per day/Per week/Per month/Per selapan/Per musim/Per year
2.
3.
etc.

We hereby submit this report and thank you for your attention, Sir/Madam*).

....................., date, month, year
Board of Directors PT/Cooperative*) LKM ........
………………………………
*) Strike out what is not necessary
) Fill in the name of the Regional Office of the Financial Services Authority or the name of the Financial Services Authority Office according to the location of the LKM *) Fill in the address of the Regional Office of the Financial Services Authority or the name of the Financial Services Authority Office according to the location of the LKM

II. LKM conducting business activities based on Sharia Principles
To
Yth.
Director of Microfinance Institution/Head of Regional OJK Office/Head of OJK Office/Regent/Mayor/Other parties designated by OJK*) Address ...........*)
....................
....................

In accordance with the Financial Services Authority Regulation Number .../POJK.05/2021 on the Business Operation of Microfinance Institutions, we hereby submit the report on the maximum return for Financing for a 4 (four) month period ending in May/September/January*) year ... , namely:

No.	Contract Type (Akad)	Financing Type	Payment Period	Maximum Financing Return (%)
1.	Murabahah	Investment/Working Capital/Consumptive	Daily/Weekly/Monthly/Selapan/Musim/Annual	Per day/Per week/Per month/Per selapan/Per musim/Per year
2.	Istishna’	Investment/Working Capital/Consumptive	Daily/Weekly/Monthly/Selapan/Musim/Annual	Per day/Per week/Per month/Per selapan/Per musim/Per year
3.	Mudharabah	Investment/Working Capital/Consumptive	Daily/Weekly/Monthly/Selapan/Musim/Annual	Per day/Per week/Per month/Per selapan/Per musim/Per year
4.	Musyarakah	Investment/Working Capital/Consumptive	Daily/Weekly/Monthly/Selapan/Musim/Annual	Per day/Per week/Per month/Per selapan/Per musim/Per year
etc.

We hereby submit this report and thank you for your attention, Sir/Madam*).

....................., date, month, year
Board of Directors
PT/Cooperative*) LKMS ...........
………………………………
*) Strike out what is not necessary
) Fill in the name of the Regional Office of the Financial Services Authority or the name of the Financial Services Authority Office according to the location of the LKMS *) Fill in the address of the Regional Office of the Financial Services Authority or the name of the Financial Services Authority Office according to the location of the LKMS

FORMAT 2 MAXIMUM LOAN INTEREST RATE INCREASE OR MAXIMUM FINANCING RETURN INCREASE REPORT

In accordance with the Financial Services Authority Regulation Number .../POJK.05/2021 on the Business Operation of Microfinance Institutions, we hereby submit the report on the increase in the maximum interest rate for Loans for a 4 (four) month period ending in May/September/January*) year ......,

Previously:

No.	Loan Type	Payment Period	Maximum Loan Interest Rate (%)
1.	Investment/Working Capital/Consumptive	Daily/Weekly/Monthly/Selapan/Musim/Annual	Per day/Per week/Per month/Per selapan/Per musim/Per year
2.
3.
etc.

Becoming:

No.	Loan Type	Payment Period	Maximum Loan Interest Rate (%)
1.	Investment/Working Capital/Consumptive	Daily/Weekly/Monthly/Selapan/Musim/Annual	Per day/Per week/Per month/Per selapan/Per musim/Per year
2.
3.
etc.

The increase in the maximum interest rate for Loans mentioned above is carried out with the consideration....

We hereby submit this report and thank you for your attention, Sir/Madam*).

.........., date, month, year
Board of Directors PT/Cooperative*) LKM..........
………………………………
*) Strike out what is not necessary
) Fill in the name of the Regional Office of the Financial Services Authority or the name of the Financial Services Authority Office according to the location of the LKM *) Fill in the address of the Regional Office of the Financial Services Authority or the name of the Financial Services Authority Office according to the location of the LKM

In accordance with the Financial Services Authority Regulation Number .../POJK.05/2021 on the Business Operation of Microfinance Institutions, we hereby submit the report on the increase in the maximum return for Financing for a 4 (four) month period ending in May/September/January*) year ......,

Previously:

No.	Contract Type (Akad)	Financing Type	Payment Period	Maximum Financing Return (%)
1.	Murabahah	Investment/Working Capital/Consumptive	Daily/Weekly/Monthly/Selapan/Musim/Annual	Per day/Per week/Per month/Per selapan/Per musim/Per year
2.	Istishna’	Investment/Working Capital/Consumptive	Daily/Weekly/Monthly/Selapan/Musim/Annual	Per day/Per week/Per month/Per selapan/Per musim/Per year
3.	Mudharabah	Investment/Working Capital/Consumptive	Daily/Weekly/Monthly/Selapan/Musim/Annual	Per day/Per week/Per month/Per selapan/Per musim/Per year
4.	Musyarakah	Investment/Working Capital/Consumptive	Daily/Weekly/Monthly/Selapan/Musim/Annual	Per day/Per week/Per month/Per selapan/Per musim/Per year
etc.

Becoming:

No.	Contract Type (Akad)	Financing Type	Payment Period	Maximum Financing Return (%)
1.	Murabahah	Investment/Working Capital/Consumptive	Daily/Weekly/Monthly/Selapan/Musim/Annual	Per day/Per week/Per month/Per selapan/Per musim/Per year
2.	Istishna’	Investment/Working Capital/Consumptive	Daily/Weekly/Monthly/Selapan/Musim/Annual	Per day/Per week/Per month/Per selapan/Per musim/Per year
3.	Mudharabah	Investment/Working Capital/Consumptive	Daily/Weekly/Monthly/Selapan/Musim/Annual	Per day/Per week/Per month/Per selapan/Per musim/Per year
4.	Musyarakah	Investment/Working Capital/Consumptive	Daily/Weekly/Monthly/Selapan/Musim/Annual	Per day/Per week/Per month/Per selapan/Per musim/Per year
etc.

The increase in the maximum return for Financing mentioned above is carried out with the consideration....

We hereby submit this report and thank you for your attention, Sir/Madam*).

.........., date, month, year
Board of Directors PT/Cooperative*) LKM..........
………………………………

*) Strike out what is not necessary
) Fill in the name of the Regional Office of the Financial Services Authority or the name of the Financial Services Authority Office according to the location of the LKMS *) Fill in the address of the Regional Office of the Financial Services Authority or the name of the Financial Services Authority Office according to the location of the LKMS

FORMAT 3 LOAN OR FINANCING QUALITY MEASUREMENT PARAMETERS

I. LKM (Conventional)

Loan Quality	Installment Type	Parameter: Installment Arrears*	Parameter: Loan Maturity
Good (Lancar)	Daily/Weekly	There are installment arrears not exceeding 3 (three) months.	and/or Loan has not matured for not more than 1 (one) month.
	Monthly/Selapan	There are installment arrears not exceeding 6 (six) installments.
	Musim	There is 1 (one) payment arrears.
Doubtful (Diragukan)	Daily/Weekly	There are installment arrears more than 3 (three) months but not more than 6 (six) months.	and/or Loan has matured more than 1 (one) month but not more than 2 (two) months.
	Monthly/Selapan	There are installment arrears more than 6 (six) installments but not more than 12 (twelve) installments.
	Musim	There are 2 (two) payment arrears.
Bad (Macet)	Daily/Weekly	There are installment arrears more than 6 (six) months.	and/or Loan has matured more than 2 (two) months.
	Monthly/Selapan	There are installment arrears more than 12 (twelve) installments.
	Musim	There are payment arrears more than 2 (two) times.

II. LKM conducting business activities based on Sharia Principles

A. Murabahah Receivables, Istishna Receivables, Salam Receivables, and Other Receivables/Financing

Financing Quality	Installment Type	Parameter: Installment Arrears*	Parameter: Financing Maturity
Good (Lancar)	Daily/Weekly	There are installment arrears not exceeding 3 (three) months.	and/or Financing has not matured for not more than 1 (one) month.
	Monthly/Selapan	There are installment arrears not exceeding 6 (six) months.
	Musim	There is 1 (one) payment arrears.
Doubtful (Diragukan)	Daily/Weekly	There are installment arrears more than 3 (three) months but not more than 6 (six) months.	and/or Financing has matured more than 1 (one) month but not more than 2 (two) months.
	Monthly/Selapan	There are installment arrears more than 6 (six) months but not more than 12 (twelve) months.
	Musim	There are 2 (two) payment arrears.
Bad (Macet)	Daily/Weekly	There are installment arrears more than 6 (six) months.	and/or Financing has matured more than 2 (two) months.
	Monthly/Selapan	There are installment arrears more than 12 (twelve) months.
	Musim	There are payment arrears more than 2 (two) times.

If there is a difference in the assessment results of loan or financing quality based on installment arrears and based on loan or financing maturity, then the loan or financing quality is determined based on the assessment result that is worse.

B. Mudharabah Financing and Musyarakah Financing

Financing Quality	Installment Type	Parameter: Installment Arrears*	Parameter: Financing Maturity	Parameter: Ratio of Realized Profit Sharing (RBH) to Projected Profit Sharing (PBH)*
Good (Lancar)	Daily/Weekly	There are installment arrears not exceeding 3 (three) months.	and/or Financing has not matured for not more than 2 (two) months.	and/or Ratio of RBH to PBH is more than 30% (thirty percent) and less than 80%. (30% < RBH/PBH < 80%)
	Monthly/Selapan	There are installment arrears not exceeding 6 (six) months.
	Musim	There is 1 (one) payment arrears.
Doubtful (Diragukan)	Daily/Weekly	There are installment arrears more than 3 (three) months but not more than 6 (six) months.	and/or Financing has matured more than 2 (two) months but not more than 3 (three) months.	and/or Ratio of RBH to PBH is equal to or less than 30% (thirty percent) for 3 (three) payment periods. (RBH/PBH ≤ 30% for 3 (three) payment periods)
	Monthly/Selapan	There are installment arrears more than 6 (six) months but not more than 12 (twelve) months.
	Musim	There are 2 (two) payment arrears.
Bad (Macet)	Daily/Weekly	There are installment arrears more than 6 (six) months.	and/or Financing has matured more than 3 (three) months.	and/or Ratio of RBH to PBH is equal to or less than 30% (thirty percent) for more than 3 (three) payment periods. (RBH/PBH ≤ 30% for more than 3 (three) payment periods)
	Monthly/Selapan	There are installment arrears more than 12 (twelve) months.
	Musim	There are payment arrears more than 2 (two) times.

This copy is consistent with the original
Director of Law 1
Department of Law signed
Mufli Asmawidjaja

Notes:
() Installment arrears are principal and/or interest/return installment arrears.
() RBH = Realized Profit Sharing
() PBH = Projected Profit Sharing

If there is a difference in the assessment results of financing quality based on installment arrears, based on financing maturity, or based on the magnitude of realized profit sharing to projected profit sharing, the financing quality is determined based on the assessment result that is worse.

Example:

Murabahah receivables by customer A with monthly installment type have 7 (seven) months of installment payment arrears, so they are categorized as "Doubtful"; however, customer A's receivables have not yet matured, so the receivable quality based on payment maturity can be categorized as "Good". For this condition, the quality of receivables to customer A is determined based on the worse quality, which is "Doubtful".
Mudharabah financing by customer B with monthly installment type has 8 (eight) months of installment payment arrears, so they are categorized as "Doubtful"; based on payment maturity, they have been in arrears for 1 (one) month, so they are categorized as "Good"; while based on Realized Profit Sharing to Projected Profit Sharing for customer B, the value is less than 30% for 4 (four) payment periods, so they can be categorized as "Bad". For this condition, the quality of financing to customer B is determined based on the worse quality, which is "Bad".

Established in Jakarta on 14 September 2021
CHAIRMAN OF THE COMMISSIONERS BOARD
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO

Financial Services Authority Regulation Number 19/POJK.05/2021 Concerning the Conduct of Business of Microfinance Institutions

Lineage: Superseded

Timeline