FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 37 /POJK.03/2016

CONCERNING

BUSINESS PLAN OF RURAL BANKS AND SHARIA RURAL FINANCING BANKS

BY THE GRACE OF GOD THE ALMIGHTY,

THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that in order to direct the operational activities of Rural Banks and Sharia Rural Financing Banks in accordance with their vision and mission, Rural Banks and Sharia Rural Financing Banks need to establish strategic objectives and corporate values which are further elaborated in the business plan; b. that the business plan needs to be prepared carefully and realistically by considering external and internal factors that can affect the sustainability of the business of Rural Banks and Sharia Rural Financing Banks, prudential principles and sound banking principles, and for Sharia Rural Financing Banks, it is necessary to consider Sharia principles;
c. that the business plan serves as one of the references for the supervisors of Rural Banks and Sharia Rural Financing Banks in formulating optimal and effective supervisory plans;
d. that based on considerations as referred to in letters a, b, and c, it is necessary to establish a Financial Services Authority Regulation concerning the Business Plan of Rural Banks and Sharia Rural Financing Banks;

Recalling:

1. Law Number 7 of 1992 concerning Banking (State Gazette of the Republic of Indonesia Year 1992 Number 31, Supplement to the State Gazette of the Republic of Indonesia Number 3472) as amended by Law Number 10 of 1998 (State Gazette of the Republic of Indonesia Year 1998 Number 182, Supplement to the State Gazette of the Republic of Indonesia Number 3790);
2. Law Number 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);
4. Bank Indonesia Regulation Number 9/17/PBI/2007 concerning the System for Assessing the Health Level of Rural Banks Based on Sharia Principles (State Gazette of the Republic of Indonesia Year 2007 Number 146, Supplement to the State Gazette of the Republic of Indonesia Number 4787);
5. Financial Services Authority Regulation Number 20/POJK.03/2014 concerning Rural Banks (State Gazette of the Republic of Indonesia Year 2014 Number 351, Supplement to the State Gazette of the Republic of Indonesia Number 5629);
6. Financial Services Authority Regulation Number 4/POJK.03/2015 concerning the Implementation of Corporate Governance for Rural Banks (State Gazette of the Republic of Indonesia Year 2015 Number 72, Supplement to the State Gazette of the Republic of Indonesia Number 5685);
7. Financial Services Authority Regulation Number 5/POJK.03/2015 concerning Minimum Capital Provision Obligations and Core Capital Fulfillment of Rural Banks (State Gazette of the Republic of Indonesia Year 2015 Number 73, Supplement to the State Gazette of the Republic of Indonesia Number 5686);
8. Financial Services Authority Regulation Number 13/POJK.03/2015 concerning Risk Management Implementation for Rural Banks (State Gazette of the Republic of Indonesia Year 2015 Number 272, Supplement to the State Gazette of the Republic of Indonesia Number 5761);
9. Financial Services Authority Regulation Number 3/POJK.03/2016 concerning Sharia Rural Financing Banks (State Gazette of the Republic of Indonesia Year 2016 Number 15, Supplement to the State Gazette of the Republic of Indonesia Number 5839);

RESOLVING:
Decree: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING BUSINESS PLAN OF RURAL BANKS AND SHARIA RURAL FINANCING BANKS.

CHAPTER I

GENERAL PROVISIONS

Article 1

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

1. Rural Bank, hereinafter abbreviated as BPR, means a Bank that conducts conventional business activities and does not provide payment circulation services as referred to in Law Number 7 of 1992 concerning Banking as amended by Law Number 10 of 1998.

2. Sharia Rural Financing Bank, hereinafter abbreviated as BPRS, means a Sharia Bank that in its activities does not provide payment circulation services as referred to in Law Number 21 of 2008 concerning Sharia Banking.

3. Business Plan is a written document describing the development plan and business activities of BPR or BPRS over a certain period and the strategy to realize such plan according to the set targets and timeframes.

4. Business Plan Realization Report is a report prepared by the Board of Directors of BPR or BPRS regarding the realization of the Business Plan up to a certain period.

5. Business Plan Supervision Report is a report prepared by the Board of Commissioners of BPR or BPRS regarding the results of supervision concerning the implementation of the Business Plan up to a certain period.

6. Board of Directors:
   a. for BPR or BPRS in the form of a Limited Liability Company (Perseroan Terbatas), refers to the board of directors as referred to in Law Number 40 of 2007 concerning Limited Liability Companies; b. for BPR in the form of a legal entity:
   1) Regional Public Enterprise or Regional State-Owned Enterprise refers to the board of directors as referred to in Law Number 23 of 2014 concerning Regional Government as last amended by Law Number 9 of 2015;
   2) Regional Enterprise refers to the board of directors at BPRs that have not yet changed their legal entity status into a Regional Public Enterprise or Regional State-Owned Enterprise in accordance with Law Number 23 of 2014 concerning Regional Government as last amended by Law Number 9 of 2015;
   c. for BPR in the form of a Cooperative legal entity, refers to the managers as referred to in Law Number 25 of 1992 concerning Cooperatives.

7. Board of Commissioners:
   a. for BPR or BPRS in the form of a Limited Liability Company (Perseroan Terbatas), refers to the board of commissioners as referred to in Law Number 40 of 2007 concerning Limited Liability Companies; b. for BPR in the form of a legal entity:
   1) Regional Public Enterprise refers to the supervisory board as referred to in Law Number 23 of 2014 concerning Regional Government as last amended by Law Number 9 of 2015;
   2) Regional State-Owned Enterprise refers to the commissioners as referred to in Law Number 23 of 2014 concerning Regional Government as last amended by Law Number 9 of 2015;
   3) Regional Enterprise refers to the supervisors at BPRs that have not yet changed their legal entity status into a Regional Public Enterprise or Regional State-Owned Enterprise in accordance with Law Number 23 of 2014 concerning Regional Government as last amended by Law Number 9 of 2015;
   c. for BPR in the form of a Cooperative legal entity, refers to the supervisors as referred to in Law Number 25 of 1992 concerning Cooperatives.

Article 2

(1) BPR and BPRS are required to prepare a Business Plan realistically every year.

(2) The Business Plan as referred to in paragraph (1) must be prepared by the Board of Directors and approved by the Board of Commissioners.

(3) The Business Plan prepared by BPR and BPRS as referred to in paragraph (1) includes short-term, medium-term, and/or long-term strategic plans.

(4) Long-term strategic plans as referred to in paragraph (3) are prepared and established every 5 (five) years.

(5) The scope of material contained in the long-term strategic plan as referred to in paragraph (4) may be changed within that 5 (five) year period according to the needs of BPR and BPRS.

Article 3

(1) BPR and BPRS must prepare a Business Plan as referred to in Article 2 paragraph (1), by considering:
a. external and internal factors that can affect the sustainability of the business of BPR and BPRS; b. prudential principles; and
c. sound banking principles.

(2) In addition to considering the factors as referred to in paragraph (1), BPRS must prepare a Business Plan by considering Sharia principles.

Article 4

(1) The Board of Directors is required to implement the Business Plan effectively.

(2) The Board of Directors is required to communicate the Business Plan to:
a. shareholders of BPR or BPRS; and b. all levels of the organization within BPR or BPRS.

Article 5

The Board of Commissioners is required to supervise the implementation of the Business Plan.

CHAPTER II

SCOPE OF BUSINESS PLAN

Article 6

The Business Plan as referred to in Article 2 must include at least:
a. executive summary; b. business strategy and policies;
c. financial statement projections;
d. target ratios and financial items; e. fund gathering plan; f. fund disbursement plan; g. capital plan; h. organizational development, information technology, and Human Resources (HR) development plan;
i. plan for implementing new business activities or plan for issuing products and implementing new activities;
j. office network development and/or change plan; and k. other information.

Article 7

(1) The executive summary as referred to in Article 6 letter a must include at least:
a. strategic plans and steps to be taken by BPR or BPRS; b. key financial indicators; and
c. short-term and medium-term targets.

(2) Strategic plans and steps to be taken by BPR or BPRS as referred to in paragraph (1) letter a are explained for the short term for a 1 (one) year period, medium term for a 3 (three) year period, and long-term strategic plan for a 5 (five) year period.

(3) Key financial indicators as referred to in paragraph (1) letter b must include at least the performance of BPR or BPRS and projections from capital quality, asset quality, profitability, and liquidity in accordance with the health level assessment of BPR or BPRS.

(4) Key financial indicators as referred to in paragraph (3) for BPR or BPRS having core capital of less than Rp50,000,000,000.00 (fifty billion rupiah) must include at least the performance of BPR or BPRS:
a. actual position at the end of October of the year of preparation of the BPR or BPRS Business Plan; b. projection at the end of December of the year of preparation of the BPR or BPRS Business Plan; and
c. projection for 1 (one) year ahead presented semiannually,
from factors of capital quality, asset quality, profitability, and liquidity in accordance with the health level assessment of BPR or BPRS.

(5) Key financial indicators as referred to in paragraph (3) for BPR or BPRS having core capital of at least Rp50,000,000,000.00 (fifty billion rupiah) must include at least the performance of BPR or BPRS:
a. actual position at the end of October of the year of preparation of the BPR or BPRS Business Plan; b. projection at the end of December of the year of preparation of the BPR or BPRS Business Plan;
c. projection for 1 (one) year ahead presented semiannually; and
d. projection at the end of the second and third years presented annually, from factors of capital quality, asset quality, profitability, and liquidity in accordance with the health level assessment of BPR or BPRS.

(6) Short-term targets as referred to in paragraph (1) letter c are business activity targets of BPR or BPRS for the next 1 (one) year, including at least the reduction of Non Performing Loan (NPL) or Non Performing Financing (NPF), improvement of intermediary functions, and improvement of efficiency.

(7) Medium-term targets as referred to in paragraph (1) letter c for BPR or BPRS are business activity targets for the next 3 (three) years, including at least efforts to strengthen capital, and the application of corporate governance and risk management of BPR referring to regulations concerning corporate governance and risk management for BPR or BPRS.

(8) In the event that there are no specific regulations governing the application of corporate governance and risk management of BPRS, the targets for the application of corporate governance and risk management as referred to in paragraph (7) refer to regulations concerning the BPRS health level assessment system.

Article 8

(1) Business strategy and policies as referred to in Article 6 letter b must include at least:
a. vision and mission of BPR or BPRS; b. policy direction of BPR or BPRS;
c. corporate governance and risk management policy of BPR or BPRS;
d. analysis of the position of BPR or BPRS in business competition based on assets and/or location; e. credit disbursement or financing strategy based on business type; and f. business development strategy.

(2) In the event that there are no specific regulations governing the corporate governance and risk management policy of BPRS, the corporate governance and risk management policy as referred to in paragraph (1) letter c refers to regulations concerning the BPRS health level assessment system.

Article 9

(1) Financial statement projections as referred to in Article 6 letter c must include at least:
a. balance sheet; and b. income statement.

(2) BPR or BPRS having core capital of less than Rp50,000,000,000.00 (fifty billion rupiah) is required to submit financial statement projections as referred to in paragraph (1) for:
a. actual position at the end of October of the year of preparation of the BPR or BPRS Business Plan; b. projection at the end of December of the year of preparation of the BPR or BPRS Business Plan; and
c. projection for 1 (one) year ahead presented semiannually.

(3) BPR or BPRS having core capital of at least Rp50,000,000,000.00 (fifty billion rupiah) is required to submit financial statement projections as referred to in paragraph (1) for:
a. actual position at the end of October of the year of preparation of the BPR or BPRS Business Plan; b. projection at the end of December of the year of preparation of the BPR or BPRS Business Plan;
c. projection for 1 (one) year ahead presented semiannually; and
d. projection at the end of the second and third years presented annually.

Article 10

(1) Target ratios and financial items as referred to in Article 6 letter d must include at least:
a. target basic financial ratios; and b. target ratios of other specific items.

(2) BPR or BPRS having core capital of less than Rp50,000,000,000.00 (fifty billion rupiah) is required to submit target basic financial ratios and target ratios of other specific items as referred to in paragraph (1) for:
a. actual position at the end of October of the year of preparation of the BPR or BPRS Business Plan; b. target at the end of December of the year of preparation of the BPR or BPRS Business Plan; and
c. target for 1 (one) year ahead presented semiannually.

(3) BPR or BPRS having core capital of at least Rp50,000,000,000.00 (fifty billion rupiah) is required to submit target basic financial ratios and target ratios of other specific items as referred to in paragraph (1) for:
a. actual position at the end of October of the year of preparation of the BPR or BPRS Business Plan; b. target at the end of December of the year of preparation of the BPR or BPRS Business Plan;
c. target for 1 (one) year ahead presented semiannually; and
d. target at the end of the second and third years presented annually.

Article 11

The fund gathering plan as referred to in Article 6 letter e must include at least:
a. plan for gathering third-party funds; and b. plan for other funding.

Article 12

The fund disbursement plan as referred to in Article 6 letter f must include at least:
a. plan for disbursement of funds to related parties; b. plan for placement in other banks;
c. plan for disbursement of credit or financing to other banks;
d. plan for disbursement of credit or financing to core debtors; e. plan for disbursement of credit or financing based on economic sectors that are priorities in credit or financing disbursement; f. plan for disbursement of credit or financing based on type of use; g. plan for disbursement of credit or financing based on business type; and h. plan for disbursement of financing based on contracts for BPRS.

Article 13

(1) The capital plan as referred to in Article 6 letter g must include at least:
a. plan for fulfilling the Minimum Capital Provision Ratio (KPMM) and core capital ratio; b. plan for fulfilling minimum core capital; and
c. plan for capital increase.

(2) BPR or BPRS that has not fulfilled the obligation to fulfill minimum core capital as regulated in regulations concerning minimum capital provision obligations and minimum core capital fulfillment of BPR or BPRS, is required to submit a plan for fulfilling minimum core capital as referred to in paragraph (1) letter b for:
a. actual position at the end of October of the year of preparation of the BPR or BPRS Business Plan; b. plan at the end of December of the year of preparation of the BPR or BPRS Business Plan;
c. plan for 1 (one) year ahead presented semiannually; and
d. plan at the end of the second, third, fourth, and fifth years presented annually.

Article 14

The organizational development, information technology, and HR development plan as referred to in Article 6 letter h must include at least:
a. organizational development plan; b. plan for development and procurement of fundamental information technology;
c. HR development plan including HR fulfillment; and
d. plan for utilization of outsourced labor.

Article 15

(1) The plan for implementing new business activities for BPR as referred to in Article 6 letter i must include at least:
a. plan for implementing business activities requiring approval from the Financial Services Authority; and b. plan for implementing business activities that must be reported to the Financial Services Authority.

(2) The plan for issuing products and implementing new activities for BPRS as referred to in Article 6 letter i must include at least:
a. plan for issuing new products; and b. plan for implementing new activities.

Article 16

The office network development and/or change plan as referred to in Article 6 letter j must include at least:
a. plan for relocating the head office address; b. plan for opening, relocating address and/or closing branch offices and/or cash offices;
c. plan for implementing cash service activities and plan for closing cash service activities in the form of mobile cash, payment points, and electronic banking devices; and
d. plan for relocating payment points and locations of Automated Teller Machines and/or Automated Deposit Machines.

Article 17

Other information as referred to in Article 6 letter k must include at least information estimated to affect the business activities of BPR or BPRS, but not mentioned in the scope of the Business Plan as referred to in Article 6 letters a through j.

CHAPTER III

SUBMISSION, AMENDMENT, AND REPORTING OF BUSINESS PLAN

Article 18

(1) BPR and BPRS are required to submit the Business Plan as referred to in Article 2 to the Financial Services Authority no later than December 15 before the year the Business Plan begins.

(2) The Financial Services Authority may request BPR and BPRS to present or provide a comprehensive explanation regarding the Business Plan submitted by BPR and BPRS.

Article 19

(1) The Financial Services Authority is authorized to request BPR and BPRS to make adjustments to the Business Plan submitted by BPR and BPRS, if:
a. the Business Plan is assessed to not meet the scope of the Business Plan as regulated in this Financial Services Authority Regulation; and/or b. the projections, targets, or plans submitted in the Business Plan are assessed to be unrealistic.

(2) BPR and BPRS are required to submit adjustments to the Business Plan as referred to in paragraph (1) to the Financial Services Authority no later than 30 (thirty) days after the date of the Financial Services Authority's letter.

Article 20

(1) BPR and BPRS may only make changes to the Business Plan as referred to in Article 2, if:
a. there are external and internal factors that significantly affect the operations of BPR or BPRS; and/or b. there are factors that significantly affect the performance of BPR or BPRS, based on the consideration of the Financial Services Authority.

(2) The Financial Services Authority may request BPR and BPRS to present or provide a comprehensive explanation regarding changes to the Business Plan.

(3) Changes to the Business Plan as referred to in paragraph (1) letter a may only be made 1 (one) time, and must be submitted to the Financial Services Authority no later than the end of June of the current year.

(4) Changes to the Business Plan as referred to in paragraph (3) may only be implemented no earlier than 30 (thirty) days after the date of submission of the changes to the Business Plan.

Article 21

(1) BPR and BPRS are required to submit the Business Plan Realization Report semiannually.

(2) The report as referred to in paragraph (1) must be submitted to the Financial Services Authority no later than 1 (one) month after the relevant semester ends.

(3) The report as referred to in paragraph (1) includes:
a. achievement of the Business Plan, namely the comparison between the plan and the realization; b. explanation regarding the causes and obstacles causing differences between the plan and the realization of the Business Plan; and
c. follow-up measures that have been and will be taken to improve the achievement of the Business Plan realization.

Article 22

(1) BPR and BPRS are required to submit the Business Plan Supervision Report semiannually.

(2) The report as referred to in paragraph (1) must be submitted to the Financial Services Authority no later than 2 (two) months after the relevant semester ends.

(3) The report as referred to in paragraph (1) must include at least the assessment of the Board of Commissioners regarding:
a. the implementation of the Business Plan both quantitatively and qualitatively; b. factors affecting the performance of BPR or BPRS;
c. the application of corporate governance and risk management of BPR or BPRS; and
d. efforts to improve the performance of BPR or BPRS.

(4) In the event that there are no regulations governing the application of corporate governance and risk management of BPRS, the Board of Commissioners' assessment report regarding the application of corporate governance and risk management of BPRS as referred to in paragraph (3) letter c refers to regulations concerning the BPRS health level assessment.

Article 23

(1) Submission, adjustment, and changes to the Business Plan, as well as the Business Plan Realization Report, as referred to in Article 18 paragraph (1), Article 19 paragraph (1), Article 20 paragraph (1), and Article 21 paragraph (1) are submitted

by BPR and BPRS to the Financial Services Authority (OJK) online.
(2) The obligation to submit the Business Plan and Business Plan Realization online as referred to in paragraph (1) is exempted in the event:
a. the reporting BPR is located in an area where communication facilities are not yet available, making it impossible to submit the Business Plan and Business Plan Realization online; b. the reporting BPR has newly commenced operations with a maximum time limit of 2 (two) months after commencing operational activities;
c. the reporting BPR experiences technical disturbances; or
d. there is damage and/or disturbance to the database or communication network at the Financial Services Authority.
(3) The reporting BPR obtains the exemption as referred to in paragraph (2) letters a, b, and c after submitting a prior written notification to the Financial Services Authority accompanied by reasons and documents for the Business Plan, adjustment of the Business Plan, changes to the Business Plan, and the Business Plan Realization Report. (4) In the event that the Financial Services Authority has not yet provided an online system, the submission, adjustment, and changes to the Business Plan, as well as the Business Plan Realization Report as referred to in paragraph (1), are submitted offline. (5) The Business Plan Supervision Report as referred to in Article 22 paragraph (1) is submitted by the Board of Commissioners of BPR and BPRS offline.

Article 24
(1) BPR and BPRS are stated to have been late in submitting the Business Plan as referred to in Article 18 paragraph (1) if BPR and BPRS submit the Business Plan past the submission deadline up to 30 (thirty) days after the end of the Business Plan submission deadline. (2) BPR and BPRS are stated to have been late in submitting the adjustment of the Business Plan as referred to in Article 19 paragraph (2) if BPR and BPRS submit the adjustment of the Business Plan past the submission deadline up to 20 (twenty) days after the end of the submission deadline for the adjustment of the Business Plan. (3) BPR and BPRS are stated to have not submitted the Business Plan as referred to in Article 18 paragraph (1) or the adjustment of the Business Plan as referred to in Article 19 paragraph (2) if, until the end of the late submission period as referred to in paragraph (1) or paragraph (2), BPR and BPRS have not yet submitted the Business Plan or the adjustment of the Business Plan. (4) BPR and BPRS stated to have not submitted the Business Plan or its adjustment as referred to in paragraph (3) remain obligated to submit the Business Plan or the adjustment of the Business Plan to the Financial Services Authority.

Article 25
(1) BPR and BPRS are stated to have been late in submitting the Business Plan Realization Report as referred to in Article 21 paragraph (1) if BPR and BPRS submit the Business Plan Realization Report past the submission deadline up to a maximum of 30 (thirty) days after the end of the submission deadline for the Business Plan Realization Report. (2) BPR and BPRS are stated to have been late in submitting the Business Plan Supervision Report as referred to in Article 22 paragraph (1) if BPR and BPRS submit the Business Plan Supervision Report past the submission deadline up to a maximum of 30 (thirty) working days after the end of the submission deadline for the Business Plan Supervision Report. (3) BPR and BPRS are stated to have not submitted the Business Plan Realization Report as referred to in Article 21 paragraph (1) or the Business Plan Supervision Report as referred to in Article 22 paragraph (1), if until the end of the submission period for BPR and BPRS being declared late as referred to in paragraph (1) or paragraph (2), BPR and BPRS have not yet submitted the Business Plan Realization Report and the Business Plan Supervision Report. (4) BPR and BPRS stated to have not submitted the Business Plan Realization Report and/or the Business Plan Supervision Report as referred to in paragraph (3) remain obligated to submit said reports to the Financial Services Authority.

Article 26
In the event that the final deadline for submitting the Business Plan Supervision Report as referred to in Article 22 paragraph (2) falls on a Saturday, Sunday, or holiday, the Business Plan Supervision Report may be submitted on the next working day.

Article 27
(1) Submission of letters and reports offline as referred to in Article 23 paragraph (3), Article 23 paragraph (4), and Article 23 paragraph (5) with the address:
a. Regional Office of the Financial Services Authority, for BPR and BPRS whose headquarters are in the working area of the Regional Office of the Financial Services Authority; or b. Office of the Financial Services Authority, for BPR and BPRS whose headquarters are in the working area of the Office of the Financial Services Authority.

(2) Specifically for BPRS, the address for submission of letters and reports as referred to in paragraph (1) becomes effective after the Financial Services Authority sends an official notification letter to the BPRS. (3) Before the official notification letter as referred to in paragraph (2) is sent to the BPRS, the BPRS submits letters and reports offline as referred to in Article 23 paragraph (3), Article 23 paragraph (4), and Article 23 paragraph (5) with the address:
a. Department of Sharia Banking, for BPRS whose headquarters are in the Special Capital Region of Jakarta, Bogor Regency/City, Depok City, Bekasi Regency/City, and Banten Province; or b. Regional Office of the Financial Services Authority or the local Office of the Financial Services Authority, for BPRS whose headquarters are outside the Special Capital Region of Jakarta, Bogor Regency/City, Depok City, Bekasi Regency/City, and Banten Province.

CHAPTER IV
SANCTIONS

Article 28
(1) BPR and BPRS that are late in submitting the Business Plan or its adjustment as referred to in Article 24 paragraph (1) or paragraph (2), or the Business Plan Realization Report as referred to in Article 25 paragraph (1), are each subject to administrative sanctions in the form of a written warning and a fine:
a. amounting to IDR 100,000.00 (one hundred thousand rupiah) per day of delay and at most IDR 3,000,000.00 (three million rupiah) for BPR or BPRS having core capital of less than IDR 50,000,000,000.00 (fifty billion rupiah); or b. amounting to IDR 300,000.00 (three hundred thousand rupiah) per day of delay and at most IDR 9,000,000.00 (nine million rupiah) for BPR or BPRS having core capital of at least IDR 50,000,000,000.00 (fifty billion rupiah). (2) BPR and BPRS that are late in submitting the Business Plan Supervision Report as referred to in Article 25 paragraph (2) are subject to administrative sanctions in the form of a written warning and a fine:
a. amounting to IDR 100,000.00 (one hundred thousand rupiah) per working day of delay and at most IDR 3,000,000.00 (three million rupiah) for BPR or BPRS having core capital of less than IDR 50,000,000,000.00 (fifty billion rupiah); or b. amounting to IDR 300,000.00 (three hundred thousand rupiah) per working day of delay and at most IDR 9,000,000.00 (nine million rupiah) for BPR or BPRS having core capital of at least IDR 50,000,000,000.00 (fifty billion rupiah). (3) BPR and BPRS that do not submit the Business Plan or the adjustment of the Business Plan as referred to in Article 24 paragraph (3) or the Business Plan Realization Report and the Business Plan Supervision Report as referred to in Article 25 paragraph (3) are each subject to administrative sanctions in the form of a written warning and a fine:
a. amounting to IDR 5,000,000.00 (five million rupiah) for BPR or BPRS having core capital of less than IDR 50,000,000,000.00 (fifty billion rupiah); or b. amounting to IDR 15,000,000.00 (fifteen million rupiah) for BPR or BPRS having core capital of at least IDR 50,000,000,000.00 (fifty billion rupiah). (4) BPR and BPRS that submit the adjustment of the Business Plan as referred to in Article 19 paragraph (2), however:
a. are assessed as incomplete; and/or b. are not accompanied by documents and information in accordance with the scope established in this Financial Services Authority Regulation and/or other related implementation regulations, are subject to administrative sanctions in the form of a fine amounting to IDR 3,000,000.00 (three million rupiah) for BPR or BPRS having core capital of less than IDR 50,000,000,000.00 (fifty billion rupiah) or amounting to IDR 9,000,000.00 (nine million rupiah) for BPR or BPRS having core capital of at least IDR 50,000,000,000.00 (fifty billion rupiah). (5) BPR and BPRS are subject to sanctions as referred to in paragraph (4) after:
a. BPR and BPRS are given 2 (two) warning letters by the Financial Services Authority with a grace period of at most 14 (fourteen) days for each warning letter; and b. BPR and BPRS do not correct the adjustment of the Business Plan within a period of 7 (seven) days after the second warning letter.

Article 29
BPR and BPRS that do not comply with the provisions as established in Article 2 paragraph (1) and paragraph (2), Article 4, Article 5, Article 9 paragraph (2) and paragraph (3), Article 10 paragraph (2) and paragraph (3), Article 13 paragraph (2), Article 24 paragraph (4), and/or Article 25 paragraph (4) are subject to administrative sanctions in the form of:
a. written warning; b. downgrade of the health level of BPR and BPRS; and/or
c. temporary suspension of part of the business activities of BPR and BPRS.

Article 30
Sanctions for:
a. late submission of the Business Plan and Business Plan Supervision Report of BPR and BPRS as referred to in Article 28 paragraph (1) or Article 28 paragraph (2); and b. non-submission of the Business Plan and Business Plan Supervision Report of BPR and BPRS as referred to in Article 28 paragraph (3), become effective as of December 2017.

Article 31
The imposition of full sanctions as referred to in Article 28 and Article 29 begins to apply for the Business Plan for the year 2019.

CHAPTER V
TRANSITIONAL PROVISIONS

Article 32
(1) BPR and BPRS for the first time submit the Business Plan to the Financial Services Authority at the latest on December 15, 2017 for the Business Plan for the year 2018.
(2) BPR and BPRS for the first time submit the Business Plan Realization Report to the Financial Services Authority at the latest 1 (one) month after the end of June 2018.
(3) BPR and BPRS for the first time submit the Business Plan Supervision Report to the Financial Services Authority at the latest 2 (two) months after the end of June 2018.

Article 33
Sanctions for late submission or non-submission of the Implementation Report of the Work Plan as referred to in Article 8 paragraph (2) of the Board of Directors Decision of Bank Indonesia Number 31/60/KEP/DIR dated July 9, 1998 concerning the Work Plan and Implementation Report of the Work Plan of Rural Banks for the end of December 2017 position refer to sanctions as referred to in Article 28 paragraph (2) and paragraph (3) of this Financial Services Authority Regulation.

CHAPTER VI
CLOSING PROVISIONS

Article 34
Further provisions from this Financial Services Authority Regulation are regulated in a Circular Letter of the Financial Services Authority.

Article 35
The Board of Directors Decision of Bank Indonesia Number 31/60/KEP/DIR dated July 9, 1998 concerning the Work Plan and Implementation Report of the Work Plan of Rural Banks is repealed and declared invalid as of March 1, 2018.

Article 36
This Financial Services Authority Regulation begins to apply on the date of its promulgation.
To ensure that everyone knows it, it is ordered to promulgate this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.
Determined in Jakarta on November 25, 2016
CHAIRMAN OF THE BOARD OF COMMISSIONERS
FINANCIAL SERVICES AUTHORITY, signed
MULIAMAN D. HADAD
Promulgated in Jakarta on November 30, 2016
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY
STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2016 NUMBER 258 Copy in accordance with the original Director of Law 1 Department of Law signed Yuliana

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 37 /POJK.03/2016
CONCERNING
BUSINESS PLAN OF RURAL BANKS AND SHARIA RURAL FINANCING INSTITUTIONS

I. GENERAL
In order to direct the operational activities of Rural Banks (BPR) and Sharia Rural Financing Institutions (BPRS) in accordance with their vision and mission, Rural Banks and Sharia Rural Financing Institutions need to take steps to improve good corporate governance. As one of the steps in implementing good corporate governance principles, Rural Banks and Sharia Rural Financing Institutions need to formulate and establish strategic objectives and company values which are further elaborated in the business plan. In order to achieve business objectives in accordance with the established vision and mission, Rural Banks and Sharia Rural Financing Institutions need to formulate business plans by considering external and internal factors that can affect the continuity of the business of Rural Banks and Sharia Rural Financing Institutions, the principle of prudence, and the principles of healthy banking, and for Sharia Rural Financing Institutions, it is necessary to consider Sharia principles. The business plan must be formulated carefully, realistically, and comprehensively, so that it can be used as a basis for providing policy direction in carrying out business activities to achieve the vision and mission of Rural Banks and Sharia Rural Financing Institutions. The business plan is one of the very important references for the supervisors of Rural Banks and Sharia Rural Financing Institutions in formulating optimal and effective supervision plans. In addition, the earlier formulation of the business plan will also help the smooth implementation of operational activities of Rural Banks and Sharia Rural Financing Institutions from the beginning of the year. In relation to the above matters, in order for the business plan to be used as one of the means to achieve the vision and mission of Rural Banks and Sharia Rural Financing Institutions and supervision strategies against individual Rural Banks and Sharia Rural Financing Institutions, it is necessary to regulate a Financial Services Authority Regulation concerning the business plan of Rural Banks and Sharia Rural Financing Institutions.

II. ARTICLE BY ARTICLE
Article 1
It is clear enough.

Article 2
Paragraph (1)
What is meant by "Realistic Business Plan" is a Business Plan formulated by considering external and internal factors that can affect the continuity of the business of BPR and BPRS, the principle of prudence, and the principles of healthy banking, including Sharia principles for BPRS, so that it is measurable and achievable. Paragraph (2) It is clear enough. Paragraph (3) What is meant by "short-term plan" is the business activity plan of BPR and BPRS in a 1 (one) year period. What is meant by "medium-term plan" is the business activity plan of BPR and BPRS in a 3 (three) year period. What is meant by "long-term strategic plan" is the business activity plan for BPR and BPRS in a 5 (five) year period, with a scope including among others policy directions for the development and strengthening of capital, information technology, and human resources. Paragraph (4) The 5 (five) year period is calculated from the submission of the Business Plan of BPR or BPRS for the first time to the Financial Services Authority. Paragraph (5) It is clear enough.

Article 3
Paragraph (1)
Letter a
What is meant by "external factors" includes among others economic conditions, social and political developments, and technological developments.
What is meant by "internal factors" includes among others financial conditions, management and human resources, and other infrastructure capabilities including information technology.
Letter b
It is clear enough.
Letter c
It is clear enough.
Paragraph (2)
It is clear enough.

Article 4
Paragraph (1)
The Business Plan is implemented effectively if between the realization and the Business Plan there is:
a. a difference that is not material; or b. a material difference, however BPR and BPRS have made maximum efforts to fulfill it accompanied by adequate and acceptable explanations (reasonable). Paragraph (2) Letter a Communication with shareholders can be carried out among others through the General Meeting of Shareholders or Annual General Meeting, or other forms of communication evidenced by written documents. Letter b Communication of the Business Plan to all levels of organization in BPR or BPRS is carried out with the aim so that policies and implementation by each party involved in the operationalization of the Business Plan are in line with the vision and mission of BPR or BPRS. Communication with all levels of organization in BPR or BPRS can be carried out among others through the organization of meetings or other forms of communication evidenced by written documents.

Article 5
It is clear enough.

Article 6
It is clear enough.

Article 7
It is clear enough.

Article 8
Paragraph (1)
Letter a
The Vision and Mission of BPR or BPRS are formulated for a 5 (five) year period and submitted by BPR and BPRS every year.
Letter b
The policy direction of BPR or BPRS is explained in the short term for a 1 (one) year period, medium term for a 3 (three) year period, and long-term strategic plan for a 5 (five) year period, including general information on BPR or BPRS policies established by management in the development of BPR or BPRS business in the future. For BPRS, it also includes policy directions in strengthening the implementation of Sharia principles. Letter c The description regarding governance and risk management policies of BPR or BPRS includes information on steps in implementing risk management and policies in implementing governance, including remuneration policies which include the provision of salaries, bonuses, and other facilities to the Board of Directors and Board of Commissioners, and for BPRS including the provision of salaries, bonuses, and other facilities to the Sharia Supervisory Board. Letter d In the position analysis, the problems and obstacles of BPR or BPRS in facing competition with other BPR and/or BPRS are also explained. Letter e What is meant by "type of business" includes micro, small, and medium enterprises which refer to business criteria based on laws concerning micro, small, and medium enterprises. Letter f The description regarding business development strategies among others contains information on strategic steps to achieve the business objectives of BPR or BPRS that have been established, including explanations regarding organizational development strategies and information technology strategies, and strategies to anticipate changes in external conditions. Paragraph (2) It is clear enough.

Article 9
It is clear enough.

Article 10
Paragraph (1)
Letter a
Target basic financial ratios include ratios that at least provide information for the assessment of capital conditions, asset quality, profitability, and liquidity which refer to regulations concerning the assessment of the health level of BPR or BPRS. Letter b Target ratios for certain other items at least include targets for several ratios related to credit or financing of micro, small, and medium enterprises to total credit or financing, the ratio of education and training funds to total labor costs of the previous year, the ratio of realization of education and training funds to total education and training funds budgeted, and the ratio of taken-over collateral to total credit or financing. Paragraph (2) It is clear enough. Paragraph (3) It is clear enough.

Article 11
Letter a
The plan for the collection of third-party funds includes the plan for the collection of savings and deposits both from related parties and unrelated parties, as well as information on core depositors. Letter b Other funding plans include among others loans from other banks and/or loans that do not come from banks.

Article 12
Letter a
What is meant by "related party" is a related party as regulated in regulations concerning the maximum limit for granting credit or the maximum limit for distributing funds.
Letter b
For BPR, placements in other banks in the form of:

1. current accounts, time deposits, deposit certificates, and/or savings in commercial banks and/or Sharia commercial banks; and/or
2. time deposits, and/or savings in BPR and/or BPRS.
   For BPRS, placements in other banks in the form of:
3. current accounts and/or savings in conventional commercial banks;
4. current accounts, savings, deposits, and/or Sharia deposit certificates in Sharia commercial banks, and Sharia business units; and/or
5. savings and/or deposits in other BPRS.
   Letter c
   It is clear enough.
   Letter d
   Core debtors are individual debtors or group debtors that fall into the category of the 25 (twenty-five) largest debtors in BPR or BPRS outside related parties.
   Letter e
   What is meant by "type of business that is a priority in the distribution of credit or financing" of BPR or BPRS is at most 5 (five) economic sectors with the largest percentage of credit or financing distribution from the total portfolio of credit or financing distribution of BPR or BPRS. Letter f It is clear enough. Letter g What is meant by "type of business" includes micro, small, and medium enterprises which refer to business criteria based on laws concerning micro, small, and medium enterprises. Letter h It is clear enough.

Article 13
Paragraph (1)
Letter a
The plan for fulfilling the KPMM ratio and core capital ratio refers to Financial Services Authority regulations concerning the obligation to provide minimum capital and fulfill minimum core capital for BPR or BPRS. Letter b Fulfillment of minimum core capital refers to Financial Services Authority regulations concerning the obligation to provide minimum capital and fulfill minimum core capital for BPR or BPRS. Letter c Included in the capital addition plan is the plan for capital addition from existing shareholders and other capital addition plans. Paragraph (2) It is clear enough.

Article 14
Letter a
For BPR, included in the organizational development plan among others is the plan for the formation or change of work units and/or committees, which is adjusted to the size and complexity of the BPR business with reference to Financial Services Authority regulations concerning the implementation of governance and risk management for BPR. Letter b What is meant by "information technology development" is the process of developing new information technology systems including the replacement or repair of existing information technology systems, whether carried out independently by BPR or BPRS or in cooperation with information technology service providers. What is meant by "information technology procurement" is the process of fulfilling or providing goods and/or services related to information technology. Included in fundamental information technology development and procurement among others are significant changes to information technology configuration or core banking applications, procurement of new core banking applications, cooperation with information technology service providers, and other fundamental information technology development and procurement that can add and/or increase the risk of BPR or BPRS. Letter c Included in the human resource development plan among others is the fulfillment of human resources, the plan for the need for human resource education and training, including the plan for education and training costs/budgets as regulated in provisions concerning the obligation to provide education and training funds for the development of human resources of BPR or BPRS. Letter d What is meant by "outsourcing" is the handing over of part of the work execution to a service provider company through a work contract and/or through a labor service provision agreement. The plan for the utilization of outsourced labor among others is the plan for the utilization of labor outside permanent labor, which includes the number and scope of work assignments.

Article 15
Paragraph (1)
The submission of the implementation of new business activities refers to Financial Services Authority regulations regarding business activities and the network area of BPR offices based on core capital. Paragraph (2) The plan for issuing new products and implementing new activities that must be included in the Business Plan refers to Financial Services Authority regulations regarding products and activities of Sharia Banks and Sharia Business Units.

Article 16
The definitions of branch offices, cash offices, and cash service activities consisting of mobile cash, payment points, and electronic banking devices refer to Financial Services Authority regulations regarding BPR or BPRS.

Article 17
Other information includes, among others, steps for resolving problematic credits or financing, including through the takeover of collateral and/or write-off, resolution of Taken-Over Collateral and write-off, and reports from BPR or BPRS as Officeless Financial Service Providers in the Context of Inclusive Finance (Laku Pandai).

Article 18
It is clear enough.

Article 19
It is clear enough.

Article 20
Paragraph (1)
Changes to the Business Plan submitted by BPR and BPRS are accompanied by written reasons for the changes.

Letter a
The term "external factors" includes, among others, economic conditions, social and political developments, and technological developments.
The term "internal factors" includes, among others, financial conditions, management, and ownership changes.

Letter b
Factors that significantly affect the performance of BPR and BPRS include, among others, solvency issues, liquidity issues, and/or external issues that significantly impact the performance of BPR or BPRS.

Paragraph (2)
It is clear enough.

Paragraph (3)
The restriction on the frequency of changes and the time limit in this paragraph is intended so that BPR and BPRS can create realistic plans when preparing the Business Plan.

Paragraph (4)
It is clear enough.

Article 21
Paragraph (1)
The term "semi-annual" refers to the position at the end of June and December.
Reports are submitted in the form of a comparison between the Business Plan and the realization of the Business Plan.

Paragraph (2)
It is clear enough.

Paragraph (3)
It is clear enough.

Article 22
Paragraph (1)
The term "semi-annual" refers to the position at the end of June and December.

Paragraph (2)
It is clear enough.

Paragraph (3)
Letter a
It is clear enough.

Letter b
Factors influencing the performance of BPR or BPRS include, among others, capital factors, asset quality, profitability, and liquidity, which refer to regulations regarding the assessment of the health level of BPR or BPRS.

Letter c
It is clear enough.

Letter d
Efforts to improve the performance of BPR or BPRS are improvements to the factors referred to in letter b.

Paragraph (4)
It is clear enough.

Article 23
Paragraph (1)
It is clear enough.

Paragraph (2)
It is clear enough.

Paragraph (3)
It is clear enough.

Paragraph (4)
The submission, adjustment, and changes to the Business Plan, as well as the Business Plan Realization Report, submitted offline are delivered in the form of hardcopy and softcopy.

Paragraph (5)
The Business Plan Supervision Report is delivered in the form of hardcopy and softcopy.

Article 24
Paragraph (1)
It is clear enough.

Paragraph (2)
It is clear enough.

Paragraph (3)
It is clear enough.

Paragraph (4)
BPR and BPRS are required to continue submitting the Business Plan, considering that for BPR and BPRS, the Business Plan is used as a basis for providing policy direction in carrying out business activities to achieve vision and mission. Meanwhile, for the Financial Services Authority, the Business Plan of BPR and BPRS is used as a reference in the planning and implementation of BPR and BPRS supervision strategies.

Article 25
Paragraph (1)
It is clear enough.

Paragraph (2)
It is clear enough.

Paragraph (3)
It is clear enough.

Paragraph (4)
BPR and BPRS are required to continue submitting the Business Plan Realization Report and/or the Business Plan Supervision Report, considering that for the Financial Services Authority, these reports are one of the means of supervising BPR and BPRS, specifically to monitor the effectiveness and consistency of the implementation of the BPR and BPRS Business Plan.

Article 26
The term "holiday" refers to national holidays and/or local holidays established by the local government.

Article 27
It is clear enough.

Article 28
Paragraph (1)
It is clear enough.

Paragraph (2)
It is clear enough.

Paragraph (3)
BPR and BPRS that have been subjected to administrative sanctions in the form of fines in this paragraph are not subjected to late submission sanctions as referred to in paragraph (1) and/or paragraph (2).

Paragraph (4)
Letter a
The term "incomplete" means not in accordance with the items that need to be adjusted by BPR and BPRS as requested by the Financial Services Authority.

Letter b
It is clear enough.

Paragraph (5)
It is clear enough.

Article 29
It is clear enough.

Article 30
It is clear enough.

Article 31
It is clear enough.

Article 32
It is clear enough.

Article 33
It is clear enough.

Article 34
It is clear enough.

Article 35
It is clear enough.

Article 36
It is clear enough.
SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5955 ---