Financial Services Authority Regulation Number 28/POJK.03/2019 on Banking Synergy in Single Ownership for the Development of Sharia Banking

COPY
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 28 /POJK.03/2019
ON
BANKING SYNERGY IN SINGLE OWNERSHIP
FOR THE DEVELOPMENT OF SHARIA BANKING
BY THE GRACE OF THE ALMIGHTY GOD
THE BOARD OF COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY, Considering:
a. that in order to increase the efficiency of the national banking industry and the development of Sharia banking, banking synergy is required in the form of cooperation between Sharia commercial banks and conventional banks that have an ownership relationship through the optimization of conventional bank resources to support the implementation of Sharia commercial bank activities that provide added value for Sharia commercial banks and conventional banks; b. that it is necessary to provide access to Sharia banking services for members of society who do not yet know, use, and/or receive Sharia banking services;
c. that banking synergy can increase risks for banks, so banks need to apply prudent principles in the implementation of banking synergy;
d. that based on the considerations as referred to in letters a, b, and c, it is necessary to establish a Financial Services Authority Regulation on Banking Synergy in Single Ownership for the Development of Sharia Banking; Recalling:

1. Law Number 7 of 1992 concerning Banking (State Gazette of the Republic of Indonesia Year 1992 Number 31, Supplement to the State Gazette of the Republic of Indonesia Number 3472) as amended by Law Number 10 of 1998 concerning Amendment to Law Number 7 of 1992 concerning Banking (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 2008 concerning Sharia Banking (State Gazette of the Republic of Indonesia Year 2008 Number 94, Supplement to the State Gazette of the Republic of Indonesia Number 4867);
3. Law Number 21 of 2011 concerning the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Supplement to the State Gazette of the Republic of Indonesia Number 5253);
   DECIDING:
   Establishing: FINANCIAL SERVICES AUTHABILITY REGULATION ON BANKING SYNERGY IN SINGLE OWNERSHIP FOR THE DEVELOPMENT OF SHARIA BANKING.

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

1. Commercial Bank is a business entity that collects funds from the public in the form of deposits and distributes them to the public in the form of credit or financing, and/or other forms as regulated in the Law on Banking and the Law on Sharia Banking, in order to improve the living standards of the people.
2. Conventional Commercial Bank, hereinafter abbreviated as BUK, is a Commercial Bank that conducts business activities on a conventional basis.
3. Sharia Commercial Bank, hereinafter abbreviated as BUS, is a Commercial Bank that conducts business activities based on Sharia principles.
4. Commercial Bank based on Business Activities, hereinafter called BUKU, is the classification of Commercial Banks based on business activities adjusted by the core capital owned.
5. Board of Directors is the organ of the BUS that has the authority and full responsibility for the management of the BUS for the interests of the BUS, in accordance with the intent and purpose of the BUS and representing the BUS, both inside and outside the court in accordance with the provisions of the articles of association.
6. Board of Commissioners is the organ of the BUS tasked with conducting general and/or specific supervision in accordance with the articles of association and providing advice to the Board of Directors.
7. Sharia Supervisory Board, hereinafter abbreviated as DPS, is a board tasked with providing advice and suggestions to the Board of Directors and supervising BUS activities to ensure compliance with Sharia principles.
8. Executive Officer is an officer who is directly responsible to the Board of Directors and/or has significant influence over the policy and/or operational activities of the BUS.
9. Banking Synergy is cooperation between the BUS and a Conventional Bank that has an ownership relationship through the optimization of Conventional Bank resources to support the implementation of BUS activities that provide added value for the BUS and the Conventional Bank.
10. Sharia Services of a Commercial Bank, hereinafter abbreviated as LSBU, is the activity of collecting funds, financing, and/or providing other banking services based on Sharia principles conducted at the office network of the Conventional Bank for and on behalf of the BUS.
11. Main Entity is the parent financial services institution of a financial conglomerate or a financial services institution designated by the controlling shareholders of the financial conglomerate.
12. Sharia Principles are Islamic legal principles in banking activities based on fatwas issued by institutions that have the authority to issue fatwas in the field of Sharia.

Article 2
(1) The BUS and Conventional Bank may conduct Banking Synergy.
(2) Banking Synergy as referred to in paragraph (1) is conducted by the BUS and Conventional Bank that have an ownership relationship:
a. The Conventional Bank is the controlling shareholder of the BUS; or b. The Conventional Bank is owned by the same controlling shareholders as the BUS.
(3) Banking Synergy as referred to in paragraph (1) is excluded from the capitalization and management of the BUS.

Article 3
(1) In conducting Banking Synergy as referred to in Article 2 paragraph (1), the BUS may conduct business activities based on the BUKU of the Conventional Bank and/or the core capital of the Conventional Bank. (2) The implementation of business activities of the BUS based on the BUKU of the Conventional Bank and/or the core capital of the Conventional Bank does not include capitalization as referred to in Article 2 paragraph (3). (3) The business activities of the BUS as referred to in paragraph (1) may be implemented as long as the Conventional Bank is the controlling shareholder of the BUS and applies consolidated risk management.

Article 4
(1) The management of the BUS as referred to in Article 2 paragraph (3) consists of:
a. Board of Directors; b. Board of Commissioners;
c. DPS;
d. committees that must be formed by the BUS; and e. Executive Officers.
(2) Independent parties who are members of the committees that must be formed by the BUS as referred to in paragraph (1) letter d may hold concurrent positions as independent parties who are members of committees at the Conventional Bank. (3) In exercising its functions, the committees that must be formed by the BUS as referred to in paragraph (1) letter d may use human resources of the Conventional Bank as committee members outside the members required in accordance with the provisions of legislation.

Article 5
(1) In the event that the BUS and Conventional Bank conduct Banking Synergy in the form of LSBU, the BUS must meet certain requirements.
(2) Certain requirements as referred to in paragraph (1) include:
a. combining the financial reports of the LSBU online on the same day as the financial reports of the BUS branch offices that are the parent of the LSBU; and b. affixing the iB logo on every office network of the BUK that conducts LSBU. (3) The BUS conducting Banking Synergy in the form of LSBU as referred to in paragraph (1) is required to report the implementation of the opening, relocation, and/or cessation of LSBU to the Financial Services Authority. (4) The reporting obligation for the implementation of the opening, relocation, and/or cessation of LSBU as referred to in paragraph (3) is carried out as regulated in the Financial Services Authority Regulation concerning the reporting of commercial banks through the Financial Services Authority reporting system. (5) In the event that the reporting of the implementation of the opening, relocation, and/or cessation of LSBU as referred to in paragraph (4) cannot yet be performed, the BUS is required to report the implementation of the opening, relocation, and/or cessation of LSBU in accordance with the provisions of legislation concerning the reports of commercial bank headquarters.

Article 6
(1) In the event that the BUS and Conventional Bank conduct Banking Synergy in the form of using the office network of the Conventional Bank at the same address, the BUS must meet certain requirements.
(2) Certain requirements as referred to in paragraph (1) include:
a. there is a separation between the BUS office and the Conventional Bank office; and b. it does not cause operational risk and reputational risk for the BUS.

Article 7
The BUS is responsible for the risks from activities synergized with the Conventional Bank in Banking Synergy.

CHAPTER II
COOPERATION AGREEMENTS, POLICIES, AND PROCEDURES FOR BANKING SYNERGY
Article 8
(1) The BUS and Conventional Bank in implementing Banking Synergy must create a written cooperation agreement.
(2) The cooperation agreement as referred to in paragraph (1) must at least cover:
a. the objectives and scope of cooperation; b. the duration of the cooperation agreement; and
c. the rights and obligations of each party:

1. knowledge transfer plans, in the event that Banking Synergy involves human resources of the Conventional Bank;
2. the obligation of the Conventional Bank to maintain the confidentiality and security of the BUS and customer information;
3. responsibility for losses; and
4. handling customer complaints, in the event that Banking Synergy involves customers directly.
   (3) The BUS and Conventional Bank are required to ensure that the implementation of Banking Synergy complies with the cooperation agreement created.

Article 9
The BUS and Conventional Bank are required to have written policies and procedures to manage risks inherent in Banking Synergy.

CHAPTER III
APPROVAL OF BANKING SYNERGY
Article 10
(1) The BUS and Conventional Bank conducting Banking Synergy are required to obtain approval from the Financial Services Authority.
(2) In the event of changes to the cooperation agreement that cause an increase in risk profile, the BUS and Conventional Bank are required to obtain approval from the Financial Services Authority.
(3) To obtain approval from the Financial Services Authority as referred to in paragraph (1) and paragraph (2), the BUS and Conventional Bank must include the Banking Synergy plan in the business plan of the BUS and in the business plan of the Conventional Bank. (4) The BUS submits the approval request as referred to in paragraph (1) and paragraph (2) to the Financial Services Authority with a copy to the Conventional Bank accompanied by supporting documents. (5) Supporting documents as referred to in paragraph (4) must at least contain:
a. photocopy of the cooperation agreement between the BUS and Conventional Bank as referred to in Article 8 paragraph (1); b. standard operating procedures for the BUS and for the Conventional Bank for the implementation of Banking Synergy;
c. DPS opinion regarding the implementation of Banking Synergy;
d. report on the readiness to implement Banking Synergy; and e. statement letter from the BUS director in charge of the compliance function regarding the completeness and truthfulness of the supporting documents for the approval request. (6) The approval request as referred to in paragraph (4) is submitted at the latest 60 (sixty) days before the implementation of Banking Synergy. (7) Approval or rejection of the request as referred to in paragraph (4) is given by the Financial Services Authority at the latest 60 (sixty) days after all requirements are met and the application documents are received completely by the Financial Services Authority. (8) In the event that additional scope of the cooperation agreement as referred to in Article 8 paragraph (2) is needed, supporting documents as referred to in paragraph (4), and/or explanations regarding the review of the approval request conducted by the Financial Services Authority, the 60 (sixty) day time limit is calculated from the time the BUS completes the cooperation agreement, supporting documents, and/or provides explanations requested by the Financial Services Authority. (9) Approval or rejection as referred to in paragraph (7) applies to the BUS and Conventional Bank. (10) In the event of changes to the cooperation agreement that do not cause an increase in risk profile, the BUS is required to submit changes to the cooperation agreement to the Financial Services Authority at the latest 7 (seven) working days since the change to the cooperation agreement.

Article 11
(1) The BUS and Conventional Bank implement Banking Synergy at the latest 6 (six) months since the date of approval from the Financial Services Authority.
(2) If within the time limit as referred to in paragraph (1) the BUS and Conventional Bank have not implemented Banking Synergy, the approval from the Financial Services Authority that has been granted is declared void and no longer valid.

Article 12
The BUS and Conventional Bank are required to report the realization of the implementation of Banking Synergy as referred to in Article 11 paragraph (1) in the business plan realization report of the BUS and in the business plan realization report of the Conventional Bank.

CHAPTER IV
MONITORING OF BANKING SYNERGY
Article 13
(1) The integrated governance committee monitors the implementation of Banking Synergy.
(2) The Main Entity is required to submit a report on the results of monitoring the implementation of Banking Synergy as referred to in paragraph (1) to the Financial Services Authority.
(3) The monitoring results report as referred to in paragraph (2) is submitted together with the report on the assessment of the implementation of integrated governance.

CHAPTER V
CESSATION OF BANKING SYNERGY
Article 14
(1) The BUS and Conventional Bank may cease Banking Synergy before the cooperation period ends.
(2) The BUS is required to report the plan to cease Banking Synergy as referred to in paragraph (1) to the Financial Services Authority with a copy to the Conventional Bank accompanied by supporting documents. (3) Supporting documents as referred to in paragraph (2) must at least contain:
a. reasons for cessation; and b. explanations regarding steps to be taken to settle or transfer all obligations to customers and/or other parties.
(4) The cessation plan report as referred to in paragraph (2) must be submitted to the Financial Services Authority at the latest 10 (ten) working days before the implementation of cessation.
(5) The Financial Services Authority provides confirmation of the cessation plan as referred to in paragraph (2) at the latest 10 (ten) working days after the cessation plan report and supporting documents are received completely. (6) In the event that the Financial Services Authority does not provide confirmation within the time limit as referred to in paragraph (5), the BUS and Conventional Bank may cease Banking Synergy.

CHAPTER VI
SUBMISSION OF APPROVAL REQUESTS AND SUBMISSION OF REPORTS
Article 15
(1) The BUS submits the approval request as referred to in Article 10 paragraph (4) and the plan to cease Banking Synergy as referred to in Article 14 paragraph (2) online through the integrated licensing and registration system of the Financial Services Authority. (2) In the event that the submission of the approval request and the plan to cease Banking Synergy through the integrated licensing and registration system of the Financial Services Authority as referred to in paragraph (1) cannot yet be performed, the BUS submits the approval request to the Financial Services Authority as referred to in Article 10 paragraph (4) and the plan to cease Banking Synergy as referred to in Article 14 paragraph (2) offline to:
a. the bank supervision department that supervises the BUS with a copy to the bank supervision department, Regional Office of the Financial Services Authority, or Financial Services Authority Office that supervises the Conventional Bank, for BUS headquartered in the working area of the Financial Services Authority Headquarters office; or b. the Regional Office of the Financial Services Authority or Financial Services Authority Office that supervises the BUS with a copy to the bank supervision department, Regional Office of the Financial Services Authority, or Financial Services Authority Office that supervises the Conventional Bank, for BUS headquartered in the working area of the Regional Office of the Financial Services Authority or Financial Services Authority Office.

Article 16
(1) The BUS submits changes to the cooperation agreement that do not cause an increase in risk profile to the Financial Services Authority as referred to in Article 10 paragraph (10) offline to:
a. the bank supervision department that supervises the BUS with a copy to the bank supervision department, Regional Office of the Financial Services Authority, or Financial Services Authority Office that supervises the Conventional Bank, for BUS headquartered in the working area of the Financial Services Authority Headquarters office; or b. the Regional Office of the Financial Services Authority or Financial Services Authority Office that supervises the BUS with a copy to the bank supervision department, Regional Office of the Financial Services Authority, or Financial Services Authority Office that supervises the Conventional Bank, for BUS headquartered in the working area of the Regional Office of the Financial Services Authority or Financial Services Authority Office. (2) The Main Entity submits a report on the results of monitoring the implementation of Banking Synergy to the Financial Services Authority as referred to in Article 13 paragraph (2) offline to:
a. the supervision department that supervises the Main Entity with a copy to the bank supervision department, Regional Office of the Financial Services Authority, or Financial Services Authority Office that supervises the BUS, for Main Entity headquartered in the working area of the Financial Services Authority Headquarters office; or b. the Regional Office of the Financial Services Authority or Financial Services Authority Office that supervises the Main Entity with a copy to the bank supervision department, Regional Office of the Financial Services Authority, or Financial Services Authority Office that supervises the BUS, for Main Entity headquartered in the working area of the Regional Office of the Financial Services Authority or Financial Services Authority Office.

CHAPTER VII
OTHER PROVISIONS
Article 17
In the implementation of Banking Synergy, the use of Conventional Bank resources by the BUS, in addition to referring to this Financial Services Authority Regulation, also refers to the provisions of legislation concerning the use of Conventional Bank resources.

CHAPTER VIII
ADMINISTRATIVE SANCTIONS
Article 18
The BUS violating the provisions of Article 10 paragraph (1) and Article 10 paragraph (2) is subject to administrative sanctions in the form of the cessation of Banking Synergy.

Article 19
(1) The BUS and/or Conventional Bank violating the provisions of Article 8 paragraph (3), Article 9, Article 10 paragraph (10), Article 13 paragraph (2), and/or Article 14 paragraph (2) is subject to administrative sanctions in the form of a written warning. (2) In the event that the BUS and/or Conventional Bank do not meet the requirements and have been subject to administrative sanctions as referred to in paragraph (1), the BUS and/or Conventional Bank is subject to administrative sanctions in the form of:
a. reduction of the health level of the BUS and/or Conventional Bank; and/or b. suspension of certain business activities.

Article 20
(1) The BUS violating the provisions of Article 5 paragraph (3) is subject to administrative sanctions as regulated in the Financial Services Authority Regulation concerning the reporting of commercial banks through the Financial Services Authority reporting system. (2) The BUS violating the provisions of Article 5 paragraph (5) is subject to administrative sanctions as regulated in the provisions of legislation concerning the reports of commercial bank headquarters. (3) The BUS and/or Conventional Bank violating the provisions of Article 12 is subject to administrative sanctions as regulated in the Financial Services Authority Regulation concerning bank business plans.

CHAPTER IX
TRANSITIONAL PROVISIONS
Article 21
(1) The BUS and BUK that have implemented cooperation for the use of BUK resources before this Financial Services Authority Regulation takes effect may continue to implement cooperation until the end of the cooperation period. (2) The BUS and BUK that extend cooperation for the use of BUK resources as referred to in paragraph (1) and do not cause an increase in risk profile are exempt from the obligation to obtain approval from the Financial Services Authority. (3) The extension of cooperation for the use of BUK resources as referred to in paragraph (2) is reported to the Financial Services Authority at the latest 7 (seven) working days since the extension of cooperation. (4) Cooperation for the use of BUK resources as referred to in paragraph (1) or paragraph (2) must comply with the provisions of this Financial Services Authority Regulation as of July 1, 2021.

Article 22
Approval requests for cooperation between the BUS and BUK that have been submitted to the Financial Services Authority before this Financial Services Authority Regulation takes effect, but have not yet received approval or rejection, must comply with the provisions of this Financial Services Authority Regulation.

CHAPTER X
CLOSING PROVISIONS
Article 23
(1) At the time this Financial Services Authority Regulation takes effect:
a. Article 52A through Article 52E and Article 75B paragraph (1) letter e of Bank Indonesia Regulation Number 15/13/PBI/2013 concerning Amendment to Bank Indonesia Regulation Number 11/3/PBI/2009 concerning Sharia Commercial Banks; and b. Roman VA related to the study of plans for the opening, relocation, and/or cessation of Sharia banking services and Roman VIA Letter of Bank Indonesia Number 15/50/DPbS concerning Amendment to Bank Indonesia Letter Number 11/9/DPbS dated April 7, 2009 concerning Sharia Commercial Banks; are revoked and declared invalid. (2) The provisions as referred to in paragraph (1) are exempted for BUS and BUK that have implemented cooperation for the use of BUK resources before this Financial Services Authority Regulation takes effect and for BUS and BUK that extend cooperation for the use of BUK resources that do not cause an increase in risk profile, in the form of Sharia banking services and consulting services, until June 30, 2021.

Article 24
This Financial Services Authority Regulation takes effect on the date of enactment.

This copy is consistent with the original
Legal Director 1
Legal Department signed
Yuliana

In order that everyone may know 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 November 14, 2019
CHAIRMAN OF THE BOARD OF COMMISSIONERS
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO

Enacted in Jakarta on November 19, 2019
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY
STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2019 NUMBER 221

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 28 /POJK.03/2019
ON
BANKING SYNERGY IN SINGLE OWNERSHIP
FOR THE DEVELOPMENT OF SHARIA BANKING

I. GENERAL
Banking Synergy in the form of cooperation between the BUS and Conventional Bank in single ownership conducted through the optimization of Conventional Bank resources so as to minimize the capital needs of the BUS for investment, which in turn can increase the efficiency of the national banking industry. Banking Synergy is also intended to increase the competitiveness of the BUS in providing services to BUS customers so that it is equivalent to the services provided by the Conventional Bank to Conventional Bank customers. Increased efficiency and competitiveness of the BUS in providing services to BUS customers will encourage the development of Sharia banking.

Banking Synergy can increase risks for banks, both the BUS and the Conventional Bank. Risks for the BUS include operational risk, reputational risk, and compliance risk, particularly compliance with the fulfillment of Sharia Principles, while risks for the Conventional Bank include operational risk, among others.

Banking Synergy can be conducted by the BUS and Conventional Bank that have an ownership relationship with restrictions on the scope of Banking Synergy. The BUS and Conventional Bank must also create a written cooperation agreement and comply with the provisions as regulated in this Financial Services Authority Regulation.

II. ARTICLE BY ARTICLE

Article 1
This is clear enough.

Article 2
Paragraph (1)
Forms of Banking Synergy include, among others, the establishment of a Sharia Business Unit (LSBU), the use of Human Resources from a Commercial Bank by a Sharia Business Unit (BUS) as customer consultation services in specific sectors, and the use of a data center and/or disaster recovery center of a Commercial Bank by a BUS.

Paragraph (2)
The term "controlling shareholder" refers to the definition in the Financial Services Authority Regulation regarding the assessment of competence and propriety of key parties of financial service institutions.

Paragraph (3)
Capitalization includes, among others, the use of Commercial Bank capital in the calculation of the maximum limit for fund disbursement by the BUS.

Article 3
Paragraph (1)
The business activities of the BUS based on the Commercial Bank's Book and/or the Commercial Bank's core capital are carried out in accordance with the provisions of legislation regarding banking.

Examples:

1. Financial Services Authority Regulation regarding business activities and office networks based on bank core capital;
2. Financial Services Authority Regulation regarding Sharia bank products and business activities and Sharia business units;
3. Financial Services Authority Regulation regarding bank business activities in the form of custody with management (trust); and
4. Provisions of legislation regarding the approval of a commercial bank as a custodian.

Example:
BUS "A" and Commercial Bank "B" have obtained approval for Banking Synergy regarding the use of the Commercial Bank's Book for the business activities of BUS "A". BUS "A" is in Book Group 2 and Commercial Bank "B" is in Book Group 3. Consequently, BUS "A" can conduct Commercial Bank business in Book Group 3, such as a custodian bank, provided that BUS "A" meets the provisions as regulated in the legislation regarding the approval of a commercial bank as a custodian.

Paragraph (2)
This is clear enough.

Paragraph (3)
The term "consolidated risk management" refers to the definition in the Financial Services Authority Regulation regarding the implementation of consolidated risk management for banks that control subsidiaries.

Article 4
Paragraph (1)
Letter a
This is clear enough.

Letter b
This is clear enough.

Letter c
This is clear enough.

Letter d
The term "committee that must be formed by the BUS" refers to the provisions of legislation regarding banking.

Examples:

1. Provisions of legislation regarding the implementation of good corporate governance for Sharia commercial banks and Sharia business units;
2. Financial Services Authority Regulation regarding the implementation of risk management for Sharia commercial banks and Sharia business units; and
3. Financial Services Authority Regulation regarding the implementation of risk management in the use of information technology by commercial banks.

Letter e
Executive Officials include, among others, division heads, regional office heads, branch office heads, functional office heads whose position is at least equivalent to a branch office head, heads of risk management units, heads of compliance units, and heads of internal audit units or other equivalent officials.

Paragraph (2)
Independent parties include, among others, independent parties in the risk monitoring committee and audit committee in accordance with the provisions of legislation regarding the implementation of good corporate governance for Sharia commercial banks and Sharia business units.

Paragraph (3)
Provisions of legislation include, among others, provisions of legislation regarding the implementation of good corporate governance for Sharia commercial banks and Sharia business units, the Financial Services Authority Regulation regarding the implementation of risk management for Sharia commercial banks and Sharia business units, and the Financial Services Authority Regulation regarding the implementation of risk management in the use of information technology by commercial banks.

Article 5
Paragraph (1)
This is clear enough.

Paragraph (2)
Letter a
This is clear enough.

Letter b
The placement of the iB logo can be done, among others, through signage and/or on the walls or front glass of the BUK office network to be clearly visible to customers.

Paragraph (3)
This is clear enough.

Paragraph (4)
This is clear enough.

Paragraph (5)
This is clear enough.

Article 6
Paragraph (1)
The term "office network" refers to the definition in the Financial Services Authority Regulation regarding business activities and office networks based on bank core capital.

Paragraph (2)
This is clear enough.

Article 7
Banking Synergy does not eliminate the responsibility of the BUS for risks resulting from actions taken by the Commercial Bank in carrying out synergized activities.

Example 1:
In the event that the BUS conducts Banking Synergy with a BUK for the marketing of Sharia products, the BUS remains responsible, among others, for the fulfillment of Sharia Principles, the confidentiality of BUS customer information, and the potential for mis-selling due to the lack of Sharia knowledge among the BUK marketing personnel.

Example 2:
In the event that the BUS conducts Banking Synergy with a Commercial Bank in the form of financing consultation services for the risk analysis of prospective customers and/or projects to be financed by the BUS, the decision to provide financing and the risks arising from the provision of financing are the responsibility of the BUS.

Article 8
Paragraph (1)
This is clear enough.

Paragraph (2)
Letter a
The scope of cooperation includes, among others, the types of activities being synergized.

Letter b
This is clear enough.

Letter c
Number 1)
Knowledge transfer is carried out, among others, through training activities, workshops, focus group discussions, socialization, and seminars.
Knowledge transfer is conducted by:

1. The BUS to the human resources of the BUK so that the human resources of the BUK understand and can carry out the synergized activities in accordance with Sharia Principles; and/or
2. The Commercial Bank to the human resources of the BUS so that the human resources of the BUS understand and can at some point carry out the activities synergized with the Commercial Bank independently.

Number 2)
The term "confidentiality and security of BUS and BUS customer information" refers to actions that provide protection, maintain the confidentiality and security of BUS and BUS customer information, and only use such information in accordance with the interests and purposes agreed upon by the BUS customer, unless otherwise determined by provisions of legislation. Obligations to maintain the confidentiality and security of customer information include, among others, provisions of legislation regarding bank secrecy in the Law regarding Islamic banking and the Financial Services Authority Regulation regarding consumer protection in the financial service sector.

Number 3)
Responsibility for losses includes, among others, responsibility for losses in the event of system failure, fraud, or external factors.

Number 4)
The term "handling customer complaints" refers to the definition in the Financial Services Authority Regulation regarding consumer complaint services in the financial service sector.

Paragraph (3)
This is clear enough.

Article 9
This is clear enough.

Article 10
Paragraph (1)
This is clear enough.

Paragraph (2)
The term "increase in risk profile" refers to an increase in the risk profile for the BUS and/or for the Commercial Bank.

Example:
BUS "A" and BUK "B" conduct Banking Synergy in the form of cooperation to market BUS "A" products at the office of BUK "B" (referral). Subsequently, BUS "A" and BUK "B" agree to change the cooperation agreement into Banking Synergy in the form of opening an LSBU at the office of BUK "B".

Paragraph (3)
The inclusion of the Banking Synergy plan in the business plan of the BUS and in the business plan of the Commercial Bank is part of the plan for issuing products and/or carrying out new activities.
In the event that the Banking Synergy plan involves an LSBU, in addition to being included as part of the plan for issuing products and/or carrying out new activities in the business plan of the BUS and the business plan of the Commercial Bank, the plan for the opening, relocation, and/or cessation of the LSBU is also included as part of the plan for the development and/or change of the office network in the business plan of the BUS.

Paragraph (4)
In the event that the Commercial Bank is not the Main Entity, the application for approval is also copied to the Main Entity.

Paragraph (5)
Letter a
This is clear enough.

Letter b
Standard operating procedures include, among others, definitions and schemes, process flows (flowcharts), responsible work units, related work units, implementation procedures, supervision procedures including the fulfillment of Sharia Principles, and problem handling procedures.

Letter c
The DPS opinion aims to ensure that the implementation of Banking Synergy does not contradict Sharia Principles.

Letter d
The term "readiness report" refers to the readiness of the BUS and the Commercial Bank, including operational readiness which covers human resource readiness, information technology readiness, and other supporting facilities, as well as test results (if any). Human resource readiness includes, among others, Commercial Bank human resources who have adequate knowledge regarding BUS products and activities, including an understanding of Sharia Principles and the contracts used in the products and activities of the BUS. Information technology readiness includes, among others, information system technology that enables the online recording of BUS customer transactions separately from the recording of Commercial Bank transactions.

Letter e
This is clear enough.

Paragraph (6)
This is clear enough.

Paragraph (7)
This is clear enough.

Paragraph (8)
Additional scope of the cooperation agreement includes, among others, the charging of costs and/or the determination of remuneration, as well as the size and standards of activity implementation or Service Level Agreement (SLA). In the charging of costs and/or determination of remuneration, it is regulated, among others, regarding the party that must pay the costs arising from the Banking Synergy, the amount of remuneration that the BUS must pay to the Commercial Bank, and the payment method. The size of activity implementation includes, among others, the size of the quantity, quality, and/or time frame for completing the work. Standards of activity implementation are procedures that must be met at a minimum in the process of implementing the synergized activities. Additional supporting documents include, among others, letters of approval or recommendations from other authorities in accordance with the provisions of legislation.

Paragraph (9)
This is clear enough.

Paragraph (10)
This is clear enough.

Article 11
This is clear enough.

Article 12
The term "report on the realization of the business plan" refers to the definition in the Financial Services Authority Regulation regarding bank business plans.

Article 13
Paragraph (1)
The term "integrated governance committee" refers to the definition in the Financial Services Authority Regulation regarding the implementation of integrated governance for financial conglomerates.

Paragraph (2)
Results of monitoring the implementation of Banking Synergy that must be reported include, among others, the conformity of the implementation of Banking Synergy with the cooperation agreement and the impact of the implementation of Banking Synergy on the development of the BUS.

Paragraph (3)
The term "report on the assessment of integrated governance implementation" refers to the definition in the Financial Services Authority Regulation regarding the implementation of integrated governance for financial conglomerates.

Article 14
Paragraph (1)
This is clear enough.

Paragraph (2)
This is clear enough.

Paragraph (3)
Letter a
This is clear enough.

Letter b
An explanation of the steps to be taken for the settlement or transfer of all obligations to customers and/or other parties is provided in the event that Banking Synergy involves customers and/or other parties directly.

Paragraph (4)
This is clear enough.

Paragraph (5)
This is clear enough.

Paragraph (6)
This is clear enough.

Article 15
This is clear enough.

Article 16
This is clear enough.

Article 17
Provisions of legislation regarding the use of Commercial Bank resources include, among others, the Financial Services Authority Regulation regarding the implementation of risk management in the use of information technology by commercial banks and the Law regarding labor.

Article 18
The term "cessation of banking synergy" refers to the cessation of Banking Synergy that has not obtained approval from the Financial Services Authority.

Example:
BUS "X" has obtained approval for Banking Synergy for the use of the data center of Commercial Bank "Y". BUS "X" implements an LSBU at the branch office of Commercial Bank "Y" without obtaining approval for Banking Synergy for the implementation of the LSBU from the Financial Services Authority. BUS "X" must cease the implementation of the LSBU.

Article 19
Paragraph (1)
This is clear enough.

Paragraph (2)
Letter a
The decline in the health level of the BUS and/or the Commercial Bank occurs through mechanisms in accordance with the Financial Services Authority Regulation regarding the assessment of the health level of Sharia commercial banks and Sharia business units or the Financial Services Authority Regulation regarding the assessment of the health level of commercial banks.

Letter b
The term "specific business activities" refers to business activities related to Banking Synergy, including, among others, acting as a custodian bank.

Article 20
This is clear enough.

Article 21
Paragraph (1)
This is clear enough.

Paragraph (2)
An example of a cooperation agreement for the use of BUK resources that does not cause an increase in risk profile is the change in the number and location of Sharia bank services.

Paragraph (3)
This is clear enough.

Paragraph (4)
This is clear enough.

Article 22
This is clear enough.

Article 23
This is clear enough.

Article 24
This is clear enough.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6419