Financial Services Authority Regulation Number 41 of 2024 on Microfinance Institutions

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FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 41 OF 2024
CONCERNING
MICROFINANCE INSTITUTIONS
BY THE GRACE OF GOD THE ALMIGHTY
THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY,

Considering: that in order to implement the provisions of Article 7 paragraph (2), Article 9 paragraph (3), Article 10, Article 11 paragraph (2), Article 15, Article 16 paragraph (2), Article 22 paragraph (2), Article 23 paragraph (4), Article 27, Article 28 paragraph (2), Article 30 paragraph (2), Article 32, Article 33 paragraph (3) of Law Number 1 of 2013 concerning Microfinance Institutions as amended by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector and Article 252 paragraph (4), Article 269, and Article 270 paragraph (3) of Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector, as well as to support the development of the industry and the legal needs of the microfinance institution industry as regulated in Financial Services Authority Regulation Number 10/POJK.05/2021 concerning Business Licensing and Institutionalization of Microfinance Institutions, Financial Services Authority Regulation Number 19/POJK.05/2021 concerning the Conduct of Microfinance Institution Business, and Financial Services Authority Regulation Number 14/POJK.05/2014 concerning Guidance and Supervision of Microfinance Institutions, it is necessary to establish a Financial Services Authority Regulation concerning Microfinance Institutions;

Recalling: 1. 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) as amended by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (State Gazette of the Republic of Indonesia Year 2023 Number 4, Supplement to the State Gazette of the Republic of Indonesia Number 6845);
2. 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) as amended by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (State Gazette of the Republic of Indonesia Year 2023 Number 4, Supplement to the State Gazette of the Republic of Indonesia Number 6845);
3. Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (State Gazette of the Republic of Indonesia Year 2023 Number 4, Supplement to the State Gazette of the Republic of Indonesia Number 6845);

DECIDING:
Establishing: A FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING MICROFINANCE INSTITUTIONS.

CHAPTER I
GENERAL PROVISIONS
Article 1
In this Financial Services Authority Regulation:

1. 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 public, savings management, or providing business development consulting services, which is not solely profit-oriented.
2. Loan is the provision of funds by the MFI to the public that must be returned according to the agreement.
3. Financing is the provision of funds by the MFI to the public that must be returned according to the agreement with Sharia principles.
4. Savings are funds entrusted by the public to the MFI in the form of savings and/or deposits based on a fund storage agreement.
5. Depositor is the party that places its funds in the MFI based on an agreement.
6. Sharia Principle is Islamic legal principles based on fatwas and/or Sharia compliance statements issued by an institution that has the authority to issue fatwas in the Sharia field.
7. Board of Directors is the MFI organ that has the authority and is fully responsible for the management of the MFI for the interests of the MFI, in accordance with the purpose and objectives of the MFI and representing the MFI, both inside and outside the court, according to the provisions of the articles of association for MFIs in the form of a limited liability company or equivalent to the Board of Directors for MFIs in the form of a cooperative legal entity.
8. Board of Commissioners is the MFI 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 a limited liability company or equivalent to the Board of Commissioners for MFIs in the form of a cooperative legal entity.
9. Sharia Supervisory Board, hereinafter abbreviated as SSAB, is a party that has the task and function of supervising the implementation of MFI activities to ensure compliance with Sharia Principles.
10. Equity is equity based on the applicable financial accounting standards in Indonesia.
11. Professional Certification Institution, hereinafter abbreviated as PCI, is an institution that carries out professional certification activities that have met the requirements and have obtained a license from the National Professional Certification Agency.
12. Association is an MFI association that has obtained written approval from the Financial Services Authority.
13. Liquidation is the action to settle all assets and liabilities of the MFI as a result of the revocation of the business license and dissolution of the MFI.
14. Liquidation Team is a team tasked with carrying out Liquidation, formed by the general meeting of shareholders or members' meeting, or the Financial Services Authority.
15. Examination is a series of activities to collect, search, process, and evaluate data and information regarding MFI business activities.
16. Examiner is an employee of the Financial Services Authority, a district/city regional government employee, or another party designated by the Financial Services Authority.
17. Examination Order is a letter issued by the Financial Services Authority, district/city regional government, or another party designated by the Financial Services Authority, which is used by the Examiner as a basis for conducting Examination.
18. Examination Notification is a letter issued by the Financial Services Authority, district/city regional government, or another party designated by the Financial Services Authority, which is delivered to the MFI to be examined.

CHAPTER II
LEGAL ENTITY FORM, OWNERSHIP, NAME, AND CAPITAL First Section Legal Entity Form and Ownership
Article 2
(1) The legal entity of the MFI consists of:
a. cooperative; and b. limited liability company.
(2) The ownership provisions for MFIs in the form of a cooperative legal entity as referred to in paragraph (1) letter a are implemented in accordance with the provisions of legislation in the field of cooperatives. (3) The share ownership of the limited liability company as referred to in paragraph (1) letter b, at least 60% (sixty percent) must be owned by district/city regional governments, provincial regional governments, and/or village-owned enterprises. (4) The remaining share ownership of the limited liability company as referred to in paragraph (3) can be owned by:
a. Indonesian citizens; and/or b. cooperatives.
(5) The ownership of each Indonesian citizen over the shares of the limited liability company as referred to in paragraph (4) letter a is at most 20% (twenty percent).

Article 3
MFIs are prohibited from being owned by anyone other than:
a. Indonesian citizens; b. village-owned enterprises;
c. district/city regional governments;
d. provincial regional governments; and/or e. cooperatives.

Article 4
MFIs are prohibited from being owned, directly or indirectly, by foreign citizens and/or businesses that are partially or wholly owned by foreign citizens or foreign businesses.

Second Section
MFI Name
Article 5
(1) The name of the MFI must be clearly stated in the articles of association.
(2) MFIs must use an MFI name that starts with the form of the legal entity and contains the words:
a. "Microfinance Institution" and the name of the MFI for MFIs conducting conventional business activities; or b. "Sharia Microfinance Institution" and the name of the MFI for MFIs conducting business activities based on Sharia Principles. (3) In addition to meeting the provisions as referred to in paragraph (1), the use of the MFI name is implemented in accordance with the provisions of legislation concerning limited liability companies and cooperatives.

Article 6
The name of the MFI must be clearly stated on the MFI office building.

Third Section
Capital
Article 7
(1) Paid-up capital or the sum of basic savings, mandatory savings, and grants of the MFI is determined based on the scope of business operations covering villages/sub-districts, districts, or cities/regencies. (2) MFIs must have paid-up capital or the sum of basic savings, mandatory savings, and grants at the time of establishment of at least:
a. IDR 300,000,000.00 (three hundred million rupiah), for the scope of business operations covering villages/sub-districts; b. IDR 500,000,000.00 (five hundred million rupiah), for the scope of business operations covering districts; or
c. IDR 1,000,000,000.00 (one billion rupiah), for the scope of business operations covering cities/regencies.
(3) The paid-up capital or the sum of basic savings, mandatory savings, and grants as referred to in paragraph (2) must be paid in cash and in full, placed in the form of time deposits in the name of the MFI at one of the banks in Indonesia or one of the Sharia banks or Sharia business units in Indonesia for MFIs conducting business activities based on Sharia Principles. (4) The provisions as referred to in paragraph (3) are exempted for MFIs that apply for a business license with non-cash capital deposits. (5) MFI capital deposits are prohibited:
a. from loans; and b. from and for the purpose of money laundering, terrorism financing, proliferation financing of weapons of mass destruction, and other financial crimes.

Fourth Section
Administrative Sanctions
Article 8
(1) MFIs that violate the provisions as referred to in Article 2 paragraph (3), Article 3, Article 4, Article 6, and/or Article 7 paragraph (5) are subject to administrative sanctions in the form of:
a. written warning; b. dismissal and/or replacement of the MFI Board of Directors;
c. suspension of business activities for part or all of the business activities; and/or
d. administrative fine.
(2) Administrative sanctions as referred to in paragraph (1) letters b to d can be imposed with or without prior imposition of administrative sanctions in the form of a written warning as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of administrative fines as referred to in paragraph (1) letter d are imposed at most IDR 10,000,000.00 (ten million rupiah). (4) In the event that the MFI has fulfilled the provisions as referred to in Article 2 paragraph (3), Article 3, Article 4, Article 6, and/or Article 7 paragraph (5), the Financial Services Authority revokes the administrative sanction. (5) In the event of a violation of the provisions as referred to in paragraph (1) and the violation has been corrected, the Financial Services Authority provides an administrative sanction in the form of a written warning that ends automatically. (6) In addition to the administrative sanctions as referred to in paragraph (1), the Financial Services Authority has the authority to:
a. downgrade the health level assessment results; b. re-evaluate the main parties that caused the MFI to violate the provisions as referred to in paragraph (1); and/or
c. record the track record of the parties that caused the MFI to violate the provisions as referred to in paragraph (1) in the Financial Services Authority's electronic system.

CHAPTER III
BUSINESS LICENSING
First Section
MFI Business Licensing
Article 9
(1) Before conducting business activities, MFIs must have a business license from the Financial Services Authority.
(2) MFIs can conduct business activities conventionally or based on Sharia Principles.
(3) To obtain a business license as referred to in paragraph (1), the Board of Directors submits a business license application to the Financial Services Authority. (4) The business license application as referred to in paragraph (3) can be done through:
a. cash capital deposit; or b. non-cash capital deposit.

Article 10
(1) Business license applications with cash capital deposits as referred to in Article 9 paragraph (4) letter a, by attaching business licensing document requirements with cash capital deposits contained in Appendix I in Table 1 which is an integral part of this Financial Services Authority Regulation. (2) The business license application as referred to in paragraph (1) is submitted simultaneously with the application for competency and propriety assessment for prospective Board of Directors members, prospective Board of Commissioners members, and prospective SSAB members, for MFIs with city/regency business scope as large-scale MFIs at the time of establishment. (3) The Financial Services Authority provides approval or rejection of the business license application with cash capital deposits as referred to in paragraph (1) at the latest 20 (twenty) working days since the business license application was received in complete form. (4) To provide approval or rejection of the business license application as referred to in paragraph (3), the Financial Services Authority conducts:
a. research on document completeness; b. feasibility analysis of the work plan;
c. competency and propriety assessment for prospective Board of Directors members, prospective Board of Commissioners members, and prospective SSAB members, for MFIs with city/regency business scope as large-scale MFIs at the time of establishment as referred to in paragraph (2); and
d. analysis of compliance with legislation in the field of MFIs.
(5) The Financial Services Authority can conduct verification and interviews regarding the business license application as referred to in paragraph (4) letter a. (6) In the event that the business license application has missing documents as referred to in paragraph (4) letter a, the Financial Services Authority submits a request for document completeness to the MFI. (7) The MFI submits missing documents at the latest 20 (twenty) working days since the date of the document completeness request letter submitted by the Financial Services Authority. (8) If within the time period as referred to in paragraph (7) the Financial Services Authority has not received document completeness, the MFI is considered to have cancelled the business license application. (9) In the event that the business license application is approved, the Financial Services Authority establishes a decision on the granting of the MFI business license in accordance with the business scale and scope of business operations. (10) The business scale and scope of business operations as referred to in paragraph (9) are established as:
a. small-scale MFI, for MFIs with village/sub-district business scope; b. medium-scale MFI, for MFIs with district business scope; or
c. large-scale MFI, for MFIs with city/regency business scope.
(11) The establishment of the MFI business scale as referred to in paragraph (10) is valid for 3 (three) years.
(12) The business license from the Financial Services Authority must be stated on the MFI office.
(13) Rejection of the business license application as referred to in paragraph (3) is accompanied by reasons for rejection.
(14) In the event that the MFI business license application is rejected, the applicant can submit the MFI business license application again.

Article 11
(1) Business license applications with non-cash capital deposits as referred to in Article 9 paragraph (4) letter b, by attaching business licensing document requirements with non-cash capital deposits contained in Appendix I in Table 2 which is an integral part of this Financial Services Authority Regulation. (2) The business license application as referred to in paragraph (1) is submitted simultaneously with the application for competency and propriety assessment for prospective Board of Directors members, prospective Board of Commissioners members, and prospective SSAB members, for MFIs with city/regency business scope as large-scale MFIs at the time of establishment. (3) MFI business license applications with non-cash capital deposits must meet the requirements of the Non-performing Loan ratio or Net Non-performing Financing ratio of at most 5% (five percent). (4) The Non-performing Loan ratio or Net Non-performing Financing ratio as referred to in paragraph (3) is calculated based on the opening balance sheet report. (5) The Equity amount of the MFI applying for a business license as an MFI as referred to in paragraph (1) must meet the provisions:
a. IDR 300,000,000.00 (three hundred million rupiah), for the scope of business operations covering villages/sub-districts; b. IDR 500,000,000.00 (five hundred million rupiah), for the scope of business operations covering districts; or
c. IDR 1,000,000,000.00 (one billion rupiah), for the scope of business operations covering cities/regencies.
(6) The Financial Services Authority provides approval or rejection of the business license application within a time limit of at most 20 (twenty) working days since the business license application as referred to in paragraph (1) was received in complete form. (7) To provide approval or rejection of the business license application as referred to in paragraph (1), the Financial Services Authority conducts:
a. research on document completeness; b. analysis of compliance with legislation in the field of MFIs; and
c. competency and propriety assessment for prospective Board of Directors members, prospective Board of Commissioners members, and prospective SSAB members, for MFIs with city/regency business scope as large-scale MFIs at the time of establishment.
(8) The Financial Services Authority can conduct verification and interviews regarding the business license application as referred to in paragraph (7) letter a. (9) In the event that the business license application has missing documents as referred to in paragraph (7) letter a, the Financial Services Authority submits a request for document completeness to the MFI. (10) The MFI submits missing documents at the latest 20 (twenty) working days since the date of the document completeness request letter submitted by the Financial Services Authority. (11) If within the time period as referred to in paragraph (10) the Financial Services Authority has not received document completeness, the MFI is considered to have cancelled the business license application. (12) In the event that the business license application is approved, the Financial Services Authority establishes a decision on the granting of the MFI business license in accordance with the business scale and scope of business operations. (13) The business scale and scope of business operations as referred to in paragraph (12) are established as:
a. small-scale MFI, for MFIs with village/sub-district business scope; b. medium-scale MFI, for MFIs with district business scope; or
c. large-scale MFI, for MFIs with city/regency business scope.
(14) The establishment of the MFI business scale as referred to in paragraph (13) is valid for 3 (three) years.
(15) The business license from the Financial Services Authority must be stated on the MFI office.
(16) Rejection of the business license application as referred to in paragraph (3) is accompanied by reasons for rejection.
(17) In the event that the MFI business license application is rejected, the applicant can submit the MFI business license application again as referred to in paragraph (1).

Second Section
Incubated MFI Business Licensing
Article 12
(1) Incubated MFIs can apply for a business license as an MFI.
(2) To obtain a business license as referred to in paragraph (1), the Board of Directors submits a business license application to the Financial Services Authority. (3) The incubated MFI business license application as referred to in paragraph (1) can be implemented through:
a. cash capital deposit; or b. non-cash capital deposit.
(4) The business license application as referred to in paragraph (3) is submitted simultaneously with the application for competency and propriety assessment for prospective Board of Directors members, prospective Board of Commissioners members, and prospective SSAB members, for MFIs with city/regency business scope as large-scale MFIs at the time of establishment.

Article 13
(1) Business license applications with cash capital deposits as referred to in Article 12 paragraph (3) letter a, by attaching business licensing document requirements with cash capital deposits contained in Appendix I in Table 3 which is an integral part of this Financial Services Authority Regulation. (2) The capital amount in the business license application with cash capital deposits as referred to in paragraph (1) must meet the capital amount provisions as referred to in Article 7 paragraph (2).

Article 14
(1) Business license applications with non-cash capital deposits as referred to in Article 12 paragraph (3) letter b, by attaching business licensing document requirements with non-cash capital deposits contained in Appendix I in Table 4 which is an integral part of this Financial Services Authority Regulation. (2) Incubated MFI business license applications with non-cash capital deposits must meet the requirements of the Non-performing Loan ratio or Net Non-performing Financing ratio of at most 5% (five percent). (3) The Non-performing Loan ratio or Net Non-performing Financing ratio as referred to in paragraph (2) is calculated based on the opening balance sheet report. (4) The Equity amount of the incubated MFI applying for a business license as an MFI as referred to in paragraph (1) must meet the provisions:
a. IDR 300,000,000.00 (three hundred million rupiah), for the scope of business operations covering villages/sub-districts; b. IDR 500,000,000.00 (five hundred million rupiah), for the scope of business operations covering districts; or
c. IDR 1,000,000,000.00 (one billion rupiah), for the scope of business operations covering cities/regencies.

Article 15
(1) The Financial Services Authority provides approval or rejection of the business license application within a time limit of at most 20 (twenty) working days since the business license application as referred to in Article 13 paragraph (1) and Article 14 paragraph (1) was received in complete form. (2) To provide approval or rejection as referred to in paragraph (1), the Financial Services Authority conducts:
a. research on document completeness; b. analysis of compliance with legislation in the field of MFIs; and
c. competency and propriety assessment for prospective Board of Directors members, Board of Commissioners members, and SSAB members, for incubated MFIs with city/regency business scope as large-scale MFIs at the time of establishment.

business area of a district/city as a large-scale LKM at the time of establishment.
(3) The Financial Services Authority may conduct verification and interviews.
(4) In the event that the business license application has incomplete documents, the Financial Services Authority submits a request for document completeness to the incubated LKM. (5) The incubated LKM submits the missing documents no later than 20 (twenty) working days from the date of the document completeness request letter submitted by the Financial Services Authority. (6) If within the time period as referred to in paragraph (5) the Financial Services Authority has not received the complete documents, the incubated LKM is deemed to have cancelled the business license application. (7) In the event that the business license application is approved, the Financial Services Authority establishes a decision on the granting of the business license for the LKM in accordance with the business scale and business area coverage. (8) The business scale and business area coverage as referred to in paragraph (7) are established as:
a. Small-scale LKM, for LKM with business area coverage at the village/sub-district level; b. Medium-scale LKM, for LKM with business area coverage at the district level; or
c. Large-scale LKM, for LKM with business area coverage at the district/city level.
(9) The establishment of the LKM business scale as referred to in paragraph (8) applies for 3 (three) years.
(10) The business license from the Financial Services Authority must be displayed at the LKM office.
(11) Rejection of the business license application is accompanied by the reasons for rejection.
(12) In the event that the incubated LKM business license application is rejected, the applicant may resubmit the LKM business license application as referred to in Article 13 paragraph (1) and Article 14 paragraph (1).

Third Section
Obligations for the Implementation of LKM Business Activities
Article 16
(1) LKM that has obtained a business license from the Financial Services Authority must carry out business activities within a period of no later than 4 (four) months counted from the date the business license is established. (2) LKM must submit a report on the implementation of business activities as referred to in paragraph (1) to the Financial Services Authority no later than 20 (twenty) working days from the date the business activities commence. (3) The report on the implementation of business activities as referred to in paragraph (2) must be submitted by the Board of Directors by attaching the reporting requirement documents for the implementation of business activities contained in Appendix I in table 5 which is an integral part of this Financial Services Authority Regulation. (4) If after the time period as referred to in paragraph (1) the LKM has not carried out business activities, the Financial Services Authority revokes the business license that has been issued.

Fourth Section
Administrative Sanctions
Article 17
(1) LKM that violates the provisions as referred to in Article 10 paragraph (12), Article 11 paragraph (15), Article 15 paragraph (10), and/or Article 16 paragraph (2) and paragraph (3) are subject to administrative sanctions in the form of:
a. written warning; b. dismissal and/or replacement of the LKM Board of Directors;
c. suspension of business activities for part or all of the business activities; and/or
d. administrative fine.
(2) Administrative sanctions as referred to in paragraph (1) letters b to d may be imposed with or without being preceded by the imposition of an administrative sanction in the form of a written warning as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of administrative fines as referred to in paragraph (1) letter d are imposed at most Rp10,000,000.00 (ten million rupiah). (4) In the event that the LKM has fulfilled the provisions as referred to in Article 10 paragraph (12), Article 11 paragraph (15), Article 15 paragraph (10), and/or Article 16 paragraph (2), and paragraph (3), the Financial Services Authority revokes the administrative sanction. (5) In the event that a violation of the provisions as referred to in paragraph (1) occurs and the violation has been corrected, the Financial Services Authority provides an administrative sanction in the form of a written warning that ends automatically. (6) In addition to the administrative sanctions as referred to in paragraph (1), the Financial Services Authority has the authority to:
a. lower the health level assessment results; b. conduct a re-evaluation of the main party that caused the LKM to violate the provisions as referred to in paragraph (1); and/or
c. record the track record of the party that caused the LKM to violate the provisions as referred to in paragraph (1) in the Financial Services Authority's electronic system.

CHAPTER IV
CONVERSION OF MICROFINANCE INSTITUTIONS
Article 18
(1) LKM that conducts business activities conventionally may convert into an LKM that conducts business activities based on Sharia Principles.
(2) LKM that conducts business activities conventionally converting into an LKM that conducts business activities based on Sharia Principles as referred to in paragraph (1) must first obtain a conversion license from the Financial Services Authority.

Article 19
The implementation of conversion from LKM that conducts business activities conventionally to LKM that conducts business activities based on Sharia Principles must fulfill the provisions:
a. meet the required Minimum Equity; and b. the conversion carried out does not harm customers.

Article 20
LKM that conducts business activities conventionally must announce the conversion plan and the impact of the conversion on customers through a notice board at the LKM office in a place easily accessible to the public.

Article 21
(1) To obtain a conversion license as referred to in Article 18 paragraph (2), the Board of Directors must submit a conversion application to the Financial Services Authority by attaching the conversion requirement documents contained in Appendix I in table 6 which is an integral part of this Financial Services Authority Regulation. (2) The conversion license application as referred to in paragraph (1) is submitted together with the application for fitness and propriety assessment for prospective members of the Board of Directors, prospective members of the Board of Commissioners, and prospective members of the DPS for large-scale LKM that conducts business activities based on Sharia Principles.

Article 22
(1) The Financial Services Authority provides approval or rejection of the conversion license application as referred to in Article 21 paragraph (1) within a period of no later than 20 (twenty) working days from the date the application is received completely. (2) To provide approval or rejection as referred to in paragraph (1), the Financial Services Authority conducts:
a. analysis and research on document completeness; b. feasibility analysis of the conversion implementation plan;
c. fitness and propriety assessment for prospective members of the Board of Directors, prospective members of the Board of Commissioners, and prospective members of the DPS for large-scale LKM that conducts business activities based on Sharia Principles; and
d. analysis of compliance with statutory provisions.
(3) The Financial Services Authority may conduct an inspection at the LKM office to ensure the operational readiness of the LKM that conducts business activities based on Sharia Principles. (4) In the event that there are incomplete documents, the Financial Services Authority submits a request for document completeness to the LKM. (5) The LKM submits the missing documents no later than 20 (twenty) working days from the date of the document completeness request letter submitted by the Financial Services Authority. (6) If within the time period as referred to in paragraph (5) the Financial Services Authority has not received the complete documents, the LKM is deemed to have cancelled the conversion license application. (7) In the event that the conversion license application is approved, the Financial Services Authority issues a conversion license letter to the relevant LKM. (8) In the event that the conversion license application is rejected, the Financial Services Authority submits written notification accompanied by the reasons for rejection.

Article 23
(1) LKM that has obtained a conversion license from the Financial Services Authority must hold a members' meeting or general meeting of shareholders no later than 60 (sixty) working days counted from the date the Financial Services Authority's license letter is established. (2) If the LKM has not held a members' meeting or general meeting of shareholders within the time period as referred to in paragraph (1) has expired, the Financial Services Authority has the authority to cancel the conversion license that has been granted.

Article 24
(1) LKM must report in writing the implementation of the members' meeting or general meeting of shareholders as referred to in Article 23 to the Financial Services Authority no later than 20 (twenty) working days counted from the date the members' meeting or general meeting of shareholders is held. (2) The reporting of the implementation of the members' meeting or general meeting of shareholders that approves the conversion into an LKM that conducts business activities based on Sharia Principles as referred to in paragraph (1) must be submitted by the Board of Directors by attaching the reporting requirement documents for the implementation of the members' meeting or general meeting of shareholders contained in Appendix I in table 7 which is an integral part of this Financial Services Authority Regulation. (3) Based on the reporting of the implementation of the members' meeting or general meeting of shareholders that approves the conversion as referred to in paragraph (2), the Financial Services Authority conducts analysis and research on the completeness of the documents as referred to in paragraph (2). (4) The Financial Services Authority provides approval or rejection of the business license as an LKM that conducts business activities based on Sharia Principles which becomes effective counted from the date the articles of association are approved, agreed upon by, or notified to the competent authority, within a period of no later than 20 (twenty) working days after the complete reporting documents as referred to in paragraph (2) are received. (5) In the event that the Financial Services Authority approves the business license as referred to in paragraph (4), the Financial Services Authority establishes a business license decision. (6) In the event that the Financial Services Authority refuses to establish the business license, the Financial Services Authority submits written notification accompanied by the reasons for rejection.

Article 25
(1) LKM that conducts business activities based on Sharia Principles resulting from conversion must report in writing the implementation of the conversion as referred to in Article 23 to the Financial Services Authority no later than 20 (twenty) working days counted from the date the articles of association are approved, agreed upon by, or notified to the competent authority. (2) The reporting of the implementation of the conversion as referred to in paragraph (1) must be submitted by the Board of Directors to the Financial Services Authority by attaching the reporting requirement documents for the implementation of the conversion contained in Appendix I in table 8 which is an integral part of this Financial Services Authority Regulation.

Article 26
(1) LKM that violates the provisions as referred to in Article 18 paragraph (2), Article 20, Article 24 paragraph (1), and/or Article 25 paragraph (1), are subject to administrative sanctions in the form of:
a. written warning; b. dismissal and/or replacement of the LKM Board of Directors;
c. suspension of business activities for part or all of the business activities; and/or
d. administrative fine.
(2) Administrative sanctions as referred to in paragraph (1) letters b to d may be imposed with or without being preceded by the imposition of an administrative sanction in the form of a written warning as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of administrative fines as referred to in paragraph (1) letter d are imposed at most Rp10,000,000.00 (ten million rupiah). (4) In the event that the LKM has fulfilled the provisions as referred to in Article 18 paragraph (2), Article 20, Article 24 paragraph (1), and/or Article 25 paragraph (1), the Financial Services Authority revokes the administrative sanction. (5) In the event that a violation of the provisions as referred to in paragraph (1) occurs and the violation has been corrected, the Financial Services Authority provides an administrative sanction in the form of a written warning that ends automatically. (6) In addition to the administrative sanctions as referred to in paragraph (1), the Financial Services Authority has the authority to:
a. lower the health level assessment results; b. conduct a re-evaluation of the main party that caused the LKM to violate the provisions as referred to in paragraph (1); and/or
c. record the track record of the party that caused the LKM to violate the provisions as referred to in paragraph (1) in the Financial Services Authority's electronic system.

CHAPTER V
HUMAN RESOURCES
First Section
Board of Directors and Board of Commissioners
Article 27
The Board of Directors and Board of Commissioners must fulfill the requirements:
a. are not included in the list of parties prohibited from becoming key management parties; b. are not recorded in the list of non-performing loans in the financial services sector;
c. have never been sentenced for committing criminal acts in the financial services business sector based on a court decision that has had permanent legal force in the last 20 (twenty) years;
d. have never been sentenced for committing criminal acts based on a court decision that has had permanent legal force in the last 5 (five) years; e. have never been declared bankrupt or caused a business entity to be declared bankrupt based on a court decision that has had permanent legal force within 5 (five) years; f. one of the Directors must have operational experience in the field of microfinance institutions or other financial service institutions for at least 1 (one) year; and g. one of the Directors must have operational experience in the field of Sharia microfinance institutions or other Sharia financial service institutions for at least 1 (one) year for LKM that conducts business activities based on Sharia Principles.

Article 28
(1) LKM must ensure that Directors do not hold concurrent positions as directors or equivalent in other companies.
(2) LKM must ensure that Directors do not hold concurrent positions as members of the board of commissioners or equivalent in more than 2 (two) other companies. (3) LKM must ensure that the Board of Commissioners does not hold concurrent positions as members of the board of commissioners or equivalent in more than 3 (three) other companies.

Article 29
(1) LKM in the form of a limited liability company that conducts Savings collection activities must have at least 2 (two) members of the Board of Directors. (2) LKM in the form of a limited liability company that conducts Savings collection activities must have at least 2 (two) members of the Board of Commissioners and at most equal to the number of Board of Directors members.

Second Section
Sharia Supervisory Board
Article 30
(1) LKM that conducts business activities based on Sharia Principles must form a DPS.
(2) The DPS as referred to in paragraph (1) is appointed in a members' meeting or general meeting of shareholders based on a recommendation from an institution that has authority in the determination of fatwas in the Sharia field or DPS training certification from an institution that has authority in the determination of fatwas in the Sharia field. (3) The formation of the DPS as referred to in paragraph (1) can be carried out by several LKMs. (4) The DPS as referred to in paragraph (1) carries out supervision duties and provides advice to the Board of Directors so that the LKM's business activities are in accordance with Sharia Principles. (5) The supervision and advice duties as referred to in paragraph (4) are carried out in the form of:
a. supervising the suitability of LKM operational activities against fatwas and/or Sharia suitability statements that have been established by an institution that has authority in the determination of fatwas in the Sharia field; b. assessing Sharia aspects against operational guidelines and products issued by the LKM; and
c. studying new products and services that do not yet have fatwas to request Sharia alignment statements from an institution that has authority in the determination of fatwas in the Sharia field.
(6) Provisions regarding the requirements for the Board of Directors and Board of Commissioners as referred to in Article 27 apply mutatis mutandis to the DPS, except for letters f and g.

Third Section
Administrative Sanctions
Article 31
(1) LKM that violates the provisions as referred to in Article 28, Article 29, and/or Article 30 paragraph (1), are subject to administrative sanctions in the form of:
a. written warning; b. dismissal and/or replacement of the LKM Board of Directors;
c. suspension of business activities for part or all of the business activities; and/or
d. administrative fine.
(2) Administrative sanctions as referred to in paragraph (1) letters b to d may be imposed with or without being preceded by the imposition of an administrative sanction in the form of a written warning as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of administrative fines as referred to in paragraph (1) letter d are imposed at most Rp10,000,000.00 (ten million rupiah). (4) In the event that the LKM has fulfilled the provisions as referred to in Article 28, Article 29, and/or Article 30 paragraph (1), the Financial Services Authority revokes the administrative sanction. (5) In the event that a violation of the provisions as referred to in paragraph (1) occurs and the violation has been corrected, the Financial Services Authority provides an administrative sanction in the form of a written warning that ends automatically. (6) In addition to the administrative sanctions as referred to in paragraph (1), the Financial Services Authority has the authority to:
a. lower the health level assessment results; b. conduct a re-evaluation of the main party that caused the LKM to violate the provisions as referred to in paragraph (1); and/or
c. record the track record of the party that caused the LKM to violate the provisions as referred to in paragraph (1) in the Financial Services Authority's electronic system.

CHAPTER VI
FITNESS AND PROPRIETY ASSESSMENT
First Section
Fitness and Propriety Assessment of LKM
Article 32
(1) Large-scale LKM must ensure that members of the Board of Directors, managers, members of the Board of Commissioners, and members of the DPS fulfill the fitness and propriety assessment provisions. (2) In the event that a large-scale LKM with cooperative legal status has a manager as referred to in paragraph (1), the fulfillment of the fitness and propriety assessment follows the fitness and propriety assessment procedures for prospective members of the Board of Directors. (3) The fitness and propriety assessment as referred to in paragraph (1) and paragraph (2) is carried out in accordance with the Financial Services Authority Regulation regarding fitness and propriety assessment for key parties of financial service institutions.

Article 33
(1) Medium-scale LKM must ensure that prospective members of the Board of Directors, prospective members of the Board of Commissioners, and prospective members of the DPS undergo an interview process before being appointed by a members' meeting or general meeting of shareholders. (2) For prospective members of the Board of Directors, prospective members of the Board of Commissioners, and prospective members of the DPS of small-scale LKM, an interview process may be conducted before being appointed by a members' meeting or general meeting of shareholders.

Article 34
Further provisions regarding the interview process as referred to in Article 33 are established by the Financial Services Authority.

Second Section
Re-evaluation of LKM Key Parties
Article 35
(1) In the event that members of the Board of Directors, managers, members of the Board of Commissioners, and members of the DPS of large-scale LKM are indicated to be involved and/or responsible for integrity, financial feasibility, financial reputation, and/or competence issues, the Financial Services Authority conducts a re-evaluation of the members of the Board of Directors, managers, members of the Board of Commissioners, and members of the DPS. (2) In the event that a large-scale LKM with cooperative legal status has a manager as referred to in paragraph (1), the re-evaluation of the manager follows the re-evaluation procedures for members of the Board of Directors. (3) The re-evaluation of members of the Board of Directors, managers, members of the Board of Commissioners, and members of the DPS as referred to in paragraph (1) is carried out in accordance with the Financial Services Authority Regulation regarding re-evaluation for key parties of financial service institutions.

Third Section
Administrative Sanctions
Article 36
(1) LKM that violates the provisions as referred to in Article 32 paragraph (1) and/or Article 33 paragraph (1), are subject to administrative sanctions in the form of:
a. written warning; b. dismissal and/or replacement of the LKM Board of Directors;
c. suspension of business activities for part or all of the business activities; and/or
d. administrative fine.
(2) Administrative sanctions as referred to in paragraph (1) letters b to d may be imposed with or without being preceded by the imposition of an administrative sanction in the form of a written warning as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of administrative fines as referred to in paragraph (1) letter d are imposed at most Rp10,000,000.00 (ten million rupiah). (4) In the event that the LKM has fulfilled the provisions as referred to in Article 32 paragraph (1) and/or Article 33 paragraph (1), the Financial Services Authority revokes the administrative sanction. (5) In the event that a violation of the provisions as referred to in paragraph (1) occurs and the violation has been corrected, the Financial Services Authority provides an administrative sanction in the form of a written warning that ends automatically. (6) In addition to the administrative sanctions as referred to in paragraph (1), the Financial Services Authority has the authority to:
a. lower the health level assessment results; b. conduct a re-evaluation of the main party that caused the LKM to violate the provisions as referred to in paragraph (1); and/or
c. record the track record of the party that caused the LKM to violate the provisions as referred to in paragraph (1) in the Financial Services Authority's electronic system.

CHAPTER VII
BRANCH OFFICES
Article 37
(1) LKM whose business area coverage is in a district/city may open branch offices in

within the scope of its business area by meeting the requirement of not experiencing losses in the annual financial position report as of December 31 of the previous year. (2) The opening of branch offices as referred to in paragraph (1) must be reported to the Financial Services Authority no later than 20 (twenty) working days from the date of the branch office opening implementation, by attaching the reporting requirement documents for branch office opening contained in Appendix I in Table 9 which is an integral part of this Financial Services Authority Regulation.

Article 38
(1) Plans to close branch offices must be announced to the public through a notice board at the LKM office, in a place easily accessible to the public, no later than 20 (twenty) working days before the branch office closure. (2) LKMs are required to ensure the Board of Directors reports the branch office closure to the Financial Services Authority no later than 20 (twenty) working days after the date of the branch office closure implementation. (3) The branch office closure report as referred to in paragraph (2) is submitted by attaching the reporting requirement documents for branch office closure contained in Appendix I in Table 10 which is an integral part of this Financial Services Authority Regulation.

Article 39
(1) LKMs that violate the provisions as referred to in Article 37 paragraph (2) and/or Article 38 paragraph (2) are subject to administrative sanctions in the form of:
a. written warning; b. dismissal and/or replacement of the LKM Board of Directors;
c. suspension of business activities for part or all of the business activities; and/or
d. administrative fines.
(2) Administrative sanctions as referred to in paragraph (1) letters b through d may be imposed with or without prior imposition of administrative sanctions in the form of written warnings as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of administrative fines as referred to in paragraph (1) letter d are imposed at most Rp10,000,000.00 (ten million rupiah). (4) In the event that LKMs have met the provisions as referred to in Article 37 paragraph (2) and/or Article 38 paragraph (2), the Financial Services Authority revokes the administrative sanctions. (5) In the event that violations of the provisions as referred to in paragraph (1) occur and the violations have been corrected, the Financial Services Authority provides administrative sanctions in the form of written warnings that end automatically. (6) In addition to administrative sanctions as referred to in paragraph (1), the Financial Services Authority has the authority to:
a. lower the health level assessment results; b. conduct a re-evaluation of the main parties that caused the LKM to violate the provisions as referred to in paragraph (1); and/or
c. record the track record of the parties that caused the LKM to violate the provisions as referred to in paragraph (1) in the Financial Services Authority's electronic system.

CHAPTER VIII
CHANGE OF BUSINESS AREA SCOPE

Article 40
(1) LKMs whose domicile and business area scope change as a result of region expansion or merger are required to submit a report to the Financial Services Authority regarding the region expansion or merger, accompanied by information on Loans/Financing and/or Deposits, within a period of no later than 20 (twenty) working days from the establishment of the said region expansion or merger, by attaching the reporting requirement documents for region expansion contained in Appendix I in Table 11 which is an integral part of this Financial Services Authority Regulation. (2) In the event of region expansion or merger as referred to in paragraph (1):
a. Loans or Financing that have been disbursed by the LKM outside its business area may continue until the Loan or Financing repayment period ends; and b. Deposits that have been received by the LKM from Depositors outside its business area may continue until the closure of the Deposits.

Article 41
(1) LKMs that violate the provisions as referred to in Article 40 paragraph (1) are subject to administrative sanctions in the form of:
a. written warning; b. dismissal and/or replacement of the LKM Board of Directors;
c. suspension of business activities for part or all of the business activities; and/or
d. administrative fines.
(2) Administrative sanctions as referred to in paragraph (1) letters b through d may be imposed with or without prior imposition of administrative sanctions in the form of written warnings as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of administrative fines as referred to in paragraph (1) letter d are imposed at most Rp10,000,000.00 (ten million rupiah). (4) In the event that LKMs have met the provisions as referred to in Article 40 paragraph (1), the Financial Services Authority revokes the administrative sanctions. (5) In the event that violations of the provisions as referred to in paragraph (1) occur and the violations have been corrected, the Financial Services Authority provides administrative sanctions in the form of written warnings that end automatically. (6) In addition to administrative sanctions as referred to in paragraph (1), the Financial Services Authority has the authority to:
a. lower the health level assessment results; b. conduct a re-evaluation of the main parties that caused the LKM to violate the provisions as referred to in paragraph (1); and/or
c. record the track record of the parties that caused the LKM to violate the provisions as referred to in paragraph (1) in the Financial Services Authority's electronic system.

CHAPTER IX
LKM TRANSFORMATION

Article 42
(1) LKMs are required to transform into rural economic banks or Sharia rural economic banks if:
a. they conduct business activities exceeding 1 (one) district/city area where the LKM is domiciled; or b. the LKM has:

1. Equity of at least 5 (five) times the minimum paid-up capital requirements for rural economic banks or Sharia rural economic banks in accordance with applicable legislation; and
2. The amount of third-party funds in the form of Deposits collected in the last 1 (one) year of at least 25 (twenty-five) times the minimum paid-up capital requirements for rural economic banks or Sharia rural economic banks in accordance with applicable legislation.
   (2) LKMs as referred to in paragraph (1) are required to submit an application for business license as a rural economic bank or Sharia rural economic bank within a period of no later than 3 (three) years from the date of notification from the Financial Services Authority. (3) If before the end of the period as referred to in paragraph (2) the LKM no longer meets the criteria as referred to in paragraph (1), the LKM is not required to transform into a rural economic bank or Sharia rural economic bank. (4) LKMs as referred to in paragraph (2) are prohibited from disbursing Loans or Financing outside the scope of their business area. (5) The procedures for the transformation of LKMs into rural economic banks or Sharia rural economic banks are carried out in accordance with Financial Services Authority Regulations regarding the transformation of conventional microfinance institutions into rural economic banks and Sharia microfinance institutions into Sharia rural economic banks. (6) In the event that the application as referred to in paragraph (2) is rejected, the LKM may still conduct its business activities. (7) LKMs as referred to in paragraph (6) are prohibited from conducting their business activities outside the scope of their business area.

Article 43
(1) LKMs that violate the provisions as referred to in Article 42 paragraph (1), paragraph (2), paragraph (4), and paragraph (7) are subject to administrative sanctions in the form of:
a. written warning; b. dismissal and/or replacement of the LKM Board of Directors;
c. suspension of business activities for part or all of the business activities; and/or
d. administrative fines.
(2) Administrative sanctions as referred to in paragraph (1) letters b through d may be imposed with or without prior imposition of administrative sanctions in the form of written warnings as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of administrative fines as referred to in paragraph (1) letter d are imposed at most Rp10,000,000.00 (ten million rupiah). (4) In the event that LKMs have met the provisions as referred to in Article 42 paragraph (1), paragraph (2), paragraph (4), and paragraph (7), the Financial Services Authority revokes the administrative sanctions. (5) In the event that violations of the provisions as referred to in paragraph (1) occur and the violations have been corrected, the Financial Services Authority provides administrative sanctions in the form of written warnings that end automatically. (6) In addition to administrative sanctions as referred to in paragraph (1), the Financial Services Authority has the authority to:
a. lower the health level assessment results; b. conduct a re-evaluation of the main parties that caused the LKM to violate the provisions as referred to in paragraph (1); and/or
c. record the track record of the parties that caused the LKM to violate the provisions as referred to in paragraph (1) in the Financial Services Authority's electronic system.

CHAPTER X
INSTITUTIONAL CHANGES
First Section
Changes in Shareholders, Board of Directors, Board of Commissioners, Sharia Supervisory Board, and Capital

Article 44
(1) LKMs in the form of limited liability companies are required to ensure the Board of Directors reports changes in:
a. shareholders; b. Board of Directors;
c. Board of Commissioners;
d. DPS; and/or e. paid-up capital, to the Financial Services Authority no later than 20 (twenty) working days after the date of approval, recording, or receipt of the notification letter from the competent authority. (2) LKMs in the form of cooperatives are required to ensure the Board of Directors reports changes in:
a. Board of Directors; b. Board of Commissioners; and/or
c. DPS,
to the Financial Services Authority no later than 20 (twenty) working days after the date of the changes are made as recorded in the minutes of the general meeting of members. (3) Reporting changes in shareholders as referred to in paragraph (1) letter a is submitted by attaching the reporting requirement documents for changes in shareholders contained in Appendix I in Table 12 which is an integral part of this Financial Services Authority Regulation. (4) Reporting changes in the Board of Directors as referred to in paragraph (1) letter b or paragraph (2) letter a is submitted by attaching the reporting requirement documents for changes in the Board of Directors contained in Appendix I in Table 13 which is an integral part of this Financial Services Authority Regulation. (5) Reporting changes in the Board of Commissioners as referred to in paragraph (1) letter c or paragraph (2) letter b is submitted by attaching the reporting requirement documents for changes in the Board of Commissioners contained in Appendix I in Table 14 which is an integral part of this Financial Services Authority Regulation. (6) Reporting changes in DPS as referred to in paragraph (1) letter d or paragraph (2) letter c is submitted by attaching the reporting requirement documents for changes in DPS contained in Appendix I in Table 15 which is an integral part of this Financial Services Authority Regulation. (7) Reporting changes in paid-up capital as referred to in paragraph (1) letter e is submitted by attaching the reporting requirement documents for changes in paid-up capital contained in Appendix I in Table 16 which is an integral part of this Financial Services Authority Regulation. (8) In following up on reports of changes in the Board of Directors, Board of Commissioners, and DPS as referred to in paragraph (1) or paragraph (2), the Financial Services Authority may conduct verification and interviews or assessments of competence and propriety.

Second Section
Name Changes

Article 45
(1) LKMs are required to ensure the Board of Directors reports changes in the LKM name to the Financial Services Authority no later than 20 (twenty) working days after obtaining the name change approval letter from the competent authority or proof of name change reporting to the competent authority. (2) The report as referred to in paragraph (1) is submitted by attaching the reporting requirement documents for LKM name changes contained in Appendix I in Table 17 which is an integral part of this Financial Services Authority Regulation.

Third Section
Office Address Relocation

Article 46
(1) Plans to relocate office addresses must be announced to the public through a notice board at the LKM office, in a place easily accessible to the public, no later than 20 (twenty) working days before the office address relocation. (2) LKMs are required to ensure the Board of Directors reports the office address relocation to the Financial Services Authority no later than 20 (twenty) working days after the date of the change implementation. (3) The report as referred to in paragraph (2) is submitted by attaching the reporting requirement documents for address relocation as contained in Appendix I in Table 18 which is an integral part of this Financial Services Authority Regulation. (4) LKMs are prohibited from relocating office addresses as referred to in paragraph (2) outside the business area scope.

Fourth Section
Administrative Sanctions

Article 47
(1) LKMs that violate the provisions as referred to in Article 44 paragraph (1) and paragraph (2), Article 45 paragraph (1), and/or Article 46 paragraph (2) and paragraph (4) are subject to administrative sanctions in the form of:
a. written warning; b. dismissal and/or replacement of the LKM Board of Directors;
c. suspension of business activities for part or all of the business activities; and/or
d. administrative fines.
(2) Administrative sanctions as referred to in paragraph (1) letters b through d may be imposed with or without prior imposition of administrative sanctions in the form of written warnings as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of administrative fines as referred to in paragraph (1) letter d are imposed at most Rp10,000,000.00 (ten million rupiah). (4) In the event that LKMs have met the provisions as referred to in Article 44 paragraph (1) and paragraph (2), Article 45 paragraph (1), and/or Article 46 paragraph (2) and paragraph (4), the Financial Services Authority revokes the administrative sanctions. (5) In the event that violations of the provisions as referred to in paragraph (1) occur and the violations have been corrected, the Financial Services Authority provides administrative sanctions in the form of written warnings that end automatically. (6) In addition to administrative sanctions as referred to in paragraph (1), the Financial Services Authority has the authority to:
a. lower the health level assessment results; b. conduct a re-evaluation of the main parties that caused the LKM to violate the provisions as referred to in paragraph (1); and/or
c. record the track record of the parties that caused the LKM to violate the provisions as referred to in paragraph (1) in the Financial Services Authority's electronic system.

CHAPTER XI
MERGER AND CONSOLIDATION

Article 48
(1) LKMs may conduct mergers with 1 (one) or more LKMs by maintaining the existence of one LKM and dissolving the other LKM(s) without prior liquidation.
(2) LKMs may conduct consolidations with 1 (one) or more LKMs by establishing a new LKM and dissolving the LKM(s) that conducted the consolidation.
(3) Mergers or consolidations are conducted by LKMs of the same legal entity form and having the same business management principles.
(4) In addition to mergers as referred to in paragraph (3), mergers may be conducted between LKMs and rural economic banks or Sharia rural economic banks. (5) LKMs are prohibited from conducting mergers or consolidations with other LKMs located in different district/city areas. (6) Mergers or consolidations must consider capital provisions as referred to in Article 7. (7) The merger or consolidation process of LKMs must obtain prior approval from the Financial Services Authority. (8) The procedures for conducting mergers between LKMs and rural economic banks or Sharia rural economic banks are carried out in accordance with Financial Services Authority regulations regarding rural economic banks or Sharia rural economic banks.

Article 49
(1) To obtain approval for merger or consolidation as referred to in Article 48 paragraph (7), the Board of Directors of the LKM that will receive the merger or the Board of Directors of one of the LKMs that will conduct the consolidation must submit an application to the Financial Services Authority by attaching the merger or consolidation requirement documents as contained in Appendix I in Table 19 which is an integral part of this Financial Services Authority Regulation. (2) The Financial Services Authority provides approval or rejection of the application as referred to in paragraph (1) within a period of no later than 20 (twenty) working days from the date the application is received in complete form. (3) To provide approval for the application as referred to in paragraph (1), the Financial Services Authority conducts:
a. examination of document completeness; and b. analysis of compliance with regulations in the field of LKMs.
(4) Rights and obligations arising after conducting merger or consolidation become the responsibility of the LKM that will receive the merger or the result of the consolidation.

Article 50
(1) LKMs that receive mergers are required to report the results of the merger implementation to the Financial Services Authority by attaching the reporting requirement documents for merger results as contained in Appendix I in Table 20 which is an integral part of this Financial Services Authority Regulation. (2) LKMs resulting from consolidations are required to report the results of the consolidation implementation to the Financial Services Authority by attaching the reporting requirement documents for consolidation results as contained in Appendix I in Table 21 which is an integral part of this Financial Services Authority Regulation. (3) Reports as referred to in paragraph (1) and paragraph (2) must be submitted no later than 20 (twenty) working days after the date of receiving the ratification, approval, or notification of articles of association changes from the competent authority. (4) Based on the report as referred to in paragraph (1), the Financial Services Authority revokes the business license of the LKM that merged. (5) Based on the report as referred to in paragraph (2), the Financial Services Authority revokes the business license of the LKM that conducted the consolidation and issues the business license of the LKM resulting from the consolidation.

Article 51
The headquarters and/or branch offices of LKMs that merge may be used as branch offices of the LKM resulting from the merger.

Article 52
(1) One of the headquarters of LKMs that consolidate may be used as the headquarters of the LKM resulting from the consolidation.
(2) The headquarters and/or branch offices of LKMs that consolidate may be used as branch offices of the LKM resulting from the consolidation.

Article 53
The procedures for LKM mergers and consolidations are carried out in accordance with applicable legislation.

Article 54
(1) LKMs that violate the provisions as referred to in Article 48 paragraph (5) and paragraph (7), and/or Article 50 paragraph (1), paragraph (2), and paragraph (3) are subject to administrative sanctions in the form of:
a. written warning; b. dismissal and/or replacement of the LKM Board of Directors;
c. suspension of business activities for part or all of the business activities; and/or
d. administrative fines.
(2) Administrative sanctions as referred to in paragraph (1) letters b through d may be imposed with or without prior imposition of administrative sanctions in the form of written warnings as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of administrative fines as referred to in paragraph (1) letter d are imposed at most Rp10,000,000.00 (ten million rupiah). (4) In the event that LKMs have met the provisions as referred to in Article 48 paragraph (5) and paragraph (7), and/or Article 50 paragraph (1), paragraph (2), and paragraph (3), the Financial Services Authority revokes the administrative sanctions. (5) In the event that violations of the provisions as referred to in paragraph (1) occur and the violations have been corrected, the Financial Services Authority provides administrative sanctions in the form of written warnings that end automatically. (6) In addition to administrative sanctions as referred to in paragraph (1), the Financial Services Authority has the authority to:
a. lower the health level assessment results; b. conduct a re-evaluation of the main parties that caused the LKM to violate the provisions as referred to in paragraph (1); and/or
c. record the track record of the parties that caused the LKM to violate the provisions as referred to in paragraph (1) in the Financial Services Authority's electronic system.

CHAPTER XII
ASSOCIATION

Article 55
(1) LKMs are required to be registered as members of the Association.
(2) LKMs are required to meet the provisions as referred to in paragraph (1) no later than 6 (six) months from the date of business license establishment.

Article 56
(1) The Association as referred to in Article 55 paragraph (1) must obtain written approval from the Financial Services Authority.
(2) To obtain approval from the Financial Services Authority, the Association submits an application by attaching documents in the form of:
a. photocopy of the articles of association or house rules; and b. organizational structure.

Article 57
(1) The Financial Services Authority provides approval or rejection of the Association approval application as referred to in Article 56 paragraph (1) within

the longest period is 20 (twenty) working days from the date the complete application is received.
(2) To grant approval or rejection as referred to in paragraph (1), the Financial Services Authority conducts analysis and research on the completeness of documents as referred to in Article 56 paragraph (2). (3) The Financial Services Authority may conduct an inspection at the Association's office to ensure the operational readiness of the Association. (4) In the event of missing documents, the Financial Services Authority submits a request for document completeness to the Association. (5) The Association submits missing documents no later than 20 (twenty) working days from the date of the letter requesting document completeness submitted by the Financial Services Authority. (6) If within the time limit as referred to in paragraph (5) the Financial Services Authority has not received the complete documents, the Association is deemed to have cancelled the approval application. (7) In the event that the Association's approval application is approved, the Financial Services Authority issues a letter of approval for the Association. (8) In the event that the Association's approval application is rejected, the rejection is done in writing and accompanied by the reasons for rejection.

Article 58
The Association as referred to in Article 56 paragraph (1) has the duties:
a. coordinating input from the industry in the formulation of policies and development of LFMs; b. assisting in socialization and strengthening of the Financial Services Authority for consumer protection; and
c. other duties as assigned by the Financial Services Authority.

Article 59
(1) LFMs that violate regulations as referred to in Article 55 are subject to administrative sanctions consisting of:
a. written warning; b. dismissal and/or replacement of the Board of Directors of the LFM;
c. suspension of business activities for part or all of the business activities; and/or
d. administrative fine.
(2) Administrative sanctions as referred to in paragraph (1) letters b through d may be imposed with or without prior imposition of administrative sanction in the form of a written warning as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of administrative fines as referred to in paragraph (1) letter d are imposed at most IDR 10,000,000.00 (ten million rupiah). https://jdih.ojk.go.id/

(4) In the event that the LFM has fulfilled the regulations as referred to in Article 55, the Financial Services Authority revokes the administrative sanction. (5) In the event of violation of regulations as referred to in paragraph (1) and the violation has been corrected, the Financial Services Authority imposes an administrative sanction in the form of a written warning that ends automatically. (6) In addition to administrative sanctions as referred to in paragraph (1), the Financial Services Authority is authorized to:
a. downgrade the health assessment results; b. re-evaluate the main parties causing the LFM to violate regulations as referred to in paragraph (1); and/or
c. record the track record of the party causing the LFM to violate regulations as referred to in paragraph (1) in the Financial Services Authority's electronic system.

CHAPTER XIII
REVOCATION OF BUSINESS LICENSE AND DISSOLUTION OF LFMs First Section Revocation of Business License

Article 60
(1) Revocation of the LFM business license is carried out by the Financial Services Authority.
(2) Revocation of the business license as referred to in paragraph (1) is conducted on LFMs that:
a. are subject to sanctions in the form of revocation of business license; b. dissolve as a result of carrying out merger or consolidation as referred to in Articles 48 through 53;
c. have not carried out business activities during the period determined by the Financial Services Authority since the date the business license was established; or
d. submit a request for revocation of business license based on a decision of the General Meeting of Shareholders or Members' Meeting.
(3) LFMs whose business license is revoked as referred to in paragraph (2) letters a, c, and d are required to carry out Liquidation or settlement in accordance with applicable legislation.

Article 61
(1) LFMs intending to submit a request for revocation of business license as referred to in Article 60 paragraph (2) letter d are required to submit an application for approval of revocation of business license to the Financial Services Authority. (2) LFMs as referred to in paragraph (1) must meet the requirements:
a. are not currently subject to partial or full suspension of business activities; https://jdih.ojk.go.id/

b. are not currently undergoing rehabilitation; and
c. the LFM has completed settlement of obligations.
(3) The application for revocation of business license as referred to in paragraph (1) is submitted by the Board of Directors to the Financial Services Authority by attaching the document requirements for revocation of business license as contained in Appendix I in Table 22 which is an integral part of this Financial Services Authority Regulation. (4) The Financial Services Authority may clarify with members of the Board of Directors, members of the Board of Commissioners, and/or other parties related to the LFM to ensure revocation of business license based on self-request and settlement of its obligations. (5) The Financial Services Authority is authorized to order the LFM to appoint a registered public accountant with the Financial Services Authority to prepare the final financial position report including conducting verification to ensure the settlement of all LFM obligations. (6) The Financial Services Authority grants approval or rejection of the application for revocation of business license as referred to in paragraph (3) no later than 20 (twenty) working days from the date the application is received completely. (7) The Financial Services Authority conducts research on the documents submitted in the application for revocation of business license as referred to in paragraph (3). (8) In the event of missing documents as referred to in paragraph (3), the Financial Services Authority submits a request for document completeness to the LFM. (9) The LFM must submit complete documents no later than 20 (twenty) working days from the date of the letter requesting document completeness from the Financial Services Authority. (10) If within 20 (twenty) working days from the date of the letter requesting document completeness as referred to in paragraph (9), the Financial Services Authority has not received the complete documents, the LFM is deemed to have cancelled the application. (11) In the event that the application for revocation of business license is approved, the Financial Services Authority establishes the revocation of the LFM business license. (12) In the event that the application for revocation of business license is rejected, the Financial Services Authority sends a written notification accompanied by the reasons for rejection.

Second Section
Bankruptcy

Article 62
(1) The Financial Services Authority is the only party authorized to submit a petition for declaration of bankruptcy and/or petition for suspension of debt payment obligations against debtors that are LFMs. (2) Regulations regarding the mechanism of bankruptcy and suspension of debt payment obligations follow the provisions of applicable legislation regarding bankruptcy and suspension of debt payment obligations. (3) In the event that the settlement of assets of the bankrupt LFM has been carried out and the bankruptcy of the LFM ends, the Financial Services Authority revokes the LFM business license.

Third Section
Obligations and Prohibitions for LFMs Post-Revocation of Business License

Article 63
(1) LFMs must cease business activities since the revocation of the LFM business license.
(2) Shareholders/members, Board of Directors, Board of Commissioners, and/or employees of the LFM are prohibited from transferring, pledging, mortgaging, using assets, and/or taking other actions that can reduce assets or decrease the value of LFM assets since the revocation of the LFM business license.

Article 64
(1) The Board of Directors is required to prepare and submit a closing balance sheet to the Financial Services Authority no later than 15 (fifteen) working days from the date of revocation of the LFM business license. (2) If within the time limit as referred to in paragraph (1) the closing balance sheet is not submitted to the Financial Services Authority, the Financial Services Authority appoints a public accountant to prepare the closing balance sheet within a certain time limit. (3) The certain time limit as referred to in paragraph (2) is no later than 50 (fifty) working days from the date of appointment of the public accountant. (4) In the event that the closing balance sheet is prepared by a public accountant as referred to in paragraph (2), responsibility for the closing balance sheet remains with the Board of Directors. (5) The cost of preparing the closing balance sheet by a public accountant as referred to in paragraph (2) becomes the burden of the LFM. (6) The Financial Services Authority submits the closing balance sheet to the Liquidation Team after receiving the closing balance sheet prepared and submitted by:
a. the Board of Directors as referred to in paragraph (1); or b. the public accountant as referred to in paragraph (2) and paragraph (3).
(7) The LFM is required to appoint a person in charge and employees tasked as a task force and service center to serve customer and public interests until the Liquidation Team is formed. https://jdih.ojk.go.id/

(8) The appointment of the person in charge and employees tasked as a task force and service center as referred to in paragraph (7) must be reported to the Financial Services Authority no later than 5 (five) working days from the notification of revocation of business license from the Financial Services Authority.

Fourth Section
Dissolution and Liquidation
Paragraph 1
Dissolution

Article 65
(1) LFMs whose business license is revoked are required to hold a General Meeting of Shareholders or Members' Meeting to decide on dissolution and form a Liquidation Team no later than 30 (thirty) working days from the date the business license is revoked. (2) Members of the Liquidation Team as referred to in paragraph (1) must first obtain approval from the Financial Services Authority. (3) To obtain approval from the Financial Services Authority as referred to in paragraph (2), the Board of Directors must submit an application for approval of Liquidation Team members to the Financial Services Authority by attaching the document requirements for revocation of business license as contained in Appendix I in Table 23 which is an integral part of this Financial Services Authority Regulation. (4) Documents as referred to in paragraph (3) must be submitted to the Financial Services Authority no later than 20 (twenty) working days before the date of the implementation of the Members' Meeting or General Meeting of Shareholders. (5) The Financial Services Authority grants approval or rejection of the proposal for candidate members of the Liquidation Team as referred to in paragraph (3) no later than 20 (twenty) working days after receipt of complete documents. (6) In the event of missing documents as referred to in paragraph (3), the Financial Services Authority submits a request for document completeness to the LFM. (7) The LFM must submit complete documents no later than 20 (twenty) working days from the date of the letter requesting document completeness from the Financial Services Authority. (8) If within 20 (twenty) working days from the date of the letter requesting document completeness as referred to in paragraph (3), the Financial Services Authority has not received the complete documents, the LFM is deemed to have cancelled the application. (9) In the event that the Financial Services Authority approves the proposal for candidate members of the Liquidation Team, the Financial Services Authority issues a letter of approval for the proposal for candidate members of the Liquidation Team. (10) In the event that the Financial Services Authority rejects the proposal for candidate members of the Liquidation Team, the Board of Directors must submit a new proposal for candidate members of the Liquidation Team and submit documents as referred to in paragraph (3) no later than 20 (twenty) working days after receipt of notification from the Financial Services Authority.

Article 66
(1) In dissolution, the Liquidation Team formed by the Members' Meeting or General Meeting of Shareholders as referred to in Article 65 paragraph (1) is required to register and notify the dissolution to the competent authority, and announce it in the State News Bulletin of the Republic of Indonesia. (2) Registration, notification, and announcement actions as referred to in paragraph (1) are carried out by the Liquidation Team no later than 30 (thirty) working days from the date of the dissolution decision by the Members' Meeting or General Meeting of Shareholders. (3) Notification and announcement as referred to in paragraph (1) contain:
a. dissolution and its legal basis; b. name and address of the Liquidation Team;
c. procedure for submitting claims; and
d. time limit for submitting claims.
(4) The time limit for submitting claims as referred to in paragraph (3) letter d is no later than 60 (sixty) working days calculated from the date of announcement as referred to in paragraph (1).

Article 67
(1) If within the time limit as referred to in Article 65 paragraph (1) the Members' Meeting or General Meeting of Shareholders cannot be held or can be held but fails to decide on dissolution and/or fails to form a Liquidation Team, the Financial Services Authority:
a. decides on dissolution and forms a Liquidation Team; b. orders the Liquidation Team to register and notify the dissolution to the competent authority, and announce it in the State News Bulletin of the Republic of Indonesia;
c. orders the Liquidation Team to carry out Liquidation in accordance with applicable legislation; and
d. orders the Liquidation Team to report the results of Liquidation implementation to the Financial Services Authority.
(2) Actions as referred to in paragraph (1) letter b are carried out no later than 20 (twenty) working days https://jdih.ojk.go.id/

from the date of the dissolution decision by the Financial Services Authority as referred to in paragraph (1) letter a.
(3) Notification and announcement as referred to in paragraph (1) letter b contain:
a. dissolution and its legal basis; b. name and address of the Liquidation Team;
c. procedure for submitting claims; and
d. time limit for submitting claims.
(4) The time limit for submitting claims as referred to in paragraph (3) letter d is no later than 60 (sixty) working days calculated from the date of announcement as referred to in paragraph (1). (5) All costs arising as referred to in paragraph (1) become the burden of LFM assets in Liquidation and are paid out first from every realization result.

Article 68
LFM is called an LFM in Liquidation and is required to append the word "in liquidation" abbreviated as "(DL)" behind the name of the LFM since the decision of the Members' Meeting or General Meeting of Shareholders as referred to in Article 65 paragraph (1) or the decision of the Financial Services Authority as referred to in Article 67 paragraph (1) letter a.

Paragraph 2
Liquidation

Article 69
(1) Since the formation of the Liquidation Team as referred to in Article 65 and Article 67:
a. responsibility and management of the LFM in Liquidation is carried out by the Liquidation Team; b. Board of Directors, Board of Commissioners, and DPS:

1. no longer have authority as Board of Directors, Board of Commissioners, and DPS and become inactive;
2. are not permitted to resign before Liquidation is completed, except with approval from the Financial Services Authority; and
3. are not entitled to receive salaries and other income as Board of Directors, Board of Commissioners, and DPS of the LFM in Liquidation.
   (2) Shareholders or those equivalent to shareholders in legal entities in the form of cooperatives, Board of Directors, Board of Commissioners, DPS, and employees of the LFM in Liquidation are required to provide data, information, and documents needed by the Liquidation Team. (3) Shareholders or those equivalent to shareholders in legal entities in the form of cooperatives, Board of Directors, Board of Commissioners, DPS, and employees of the LFM in Liquidation are prohibited from hindering the Liquidation process.

Article 70
The Liquidation Team has the duties:
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a. settling matters related to dissolution; b. settling matters related to LFM employees;
c. carrying out asset and obligation settlement of the LFM;
d. submitting periodic reports and incidental reports if necessary to the Financial Services Authority; e. providing accountability for Liquidation implementation to:

1. the Members' Meeting or General Meeting of Shareholders, for Liquidation Teams formed by the Members' Meeting or General Meeting of Shareholders; or
2. the Financial Services Authority, for Liquidation Teams formed by the Financial Services Authority; and
   f. carrying out other tasks considered necessary to carry out the Liquidation process.

Article 71
In carrying out duties as referred to in Article 70, the Liquidation Team is authorized to:
a. represent the LFM in Liquidation related to the settlement of rights and obligations of the LFM both inside and outside the court; b. conduct negotiations and other actions in the sale of assets and collection of receivables from debtors;
c. make summonses, negotiations, and payment of obligations to creditors;
d. employ supporting personnel for the Liquidation Team, both from within and outside the LFM in Liquidation; e. appoint other parties to assist in Liquidation implementation; f. request cancellation from the court regarding all legal acts of the LFM that are suspected to harm the LFM and were done in bad faith; and g. take other actions necessary in Liquidation implementation.

Article 72
(1) Liquidation implementation by the Liquidation Team must be completed within a maximum period of 2 (two) years calculated from the date of formation of the Liquidation Team. (2) In the event that Liquidation implementation cannot be completed within the time limit as referred to in paragraph (1) then:
a. the Members' Meeting or General Meeting of Shareholders; or b. the Financial Services Authority, is authorized to extend the Liquidation implementation period at most 2 (two) times each for a maximum of 1 (one) year. (3) Extension of the Liquidation time limit as referred to in paragraph (2) is carried out by the Liquidation Team https://jdih.ojk.go.id/

to obtain approval from the Financial Services Authority.
(4) To obtain approval for extension of the Liquidation implementation time limit as referred to in paragraph (3), the Liquidation Team must submit an application for approval to the Financial Services Authority by attaching the document requirements for approval of extension of Liquidation implementation time limit as contained in Appendix I in Table 24 which is an integral part of this Financial Services Authority Regulation. (5) The application for extension of Liquidation implementation time limit as referred to in paragraph (4) is submitted at most 4 (four) months before the expiration of the Liquidation implementation time limit as referred to in paragraph (1) or the expiration of the first extension time limit. (6) The Financial Services Authority grants approval or rejection of the application for extension of Liquidation implementation time limit as referred to in paragraph (5) no later than 20 (twenty) working days from the date the business license application is received completely. (7) In the event of missing documents as referred to in paragraph (4), the Financial Services Authority submits a request for document completeness to the LFM. (8) The LFM must submit complete documents no later than 20 (twenty) working days from the date of the letter requesting document completeness from the Financial Services Authority. (9) If within 20 (twenty) working days from the date of the letter requesting document completeness as referred to in paragraph (7), the Financial Services Authority has not received the complete documents, the LFM is deemed to have cancelled the application. (10) If the application for extension of Liquidation implementation time limit is approved, the Financial Services Authority issues a letter of approval to the respective LFM. (11) If the application for extension of Liquidation implementation time limit is rejected, the Financial Services Authority sends a written notification accompanied by the reasons for rejection. (12) If Liquidation implementation cannot be completed within the time limit as referred to in paragraph (2), the Financial Services Authority may:
a. wait until there is a final court decision, in the event that the completion of Liquidation implementation until the time limit as referred to in paragraph (2) is caused by lawsuits or disputes on problematic assets of the LFM in Liquidation; or b. establish other settlement steps in accordance with applicable legislation and the authority of the Financial Services Authority in Liquidation settlement. https://jdih.ojk.go.id/

Article 73
(1) Members of the Liquidation Team for each LFM in Liquidation are at least 2 (two) persons and at most 5 (five) persons.
(2) One of the members of the Liquidation Team is designated as the Chairman of the Liquidation Team.
(3) The determination of the number of Liquidation Team members is done by considering the effectiveness and efficiency of Liquidation implementation.
(4) If necessary, one of the shareholder members or those equivalent to shareholders in legal entities in the form of cooperatives, Board of Directors, or Board of Commissioners can be appointed as a member of the Liquidation Team by considering understanding of the problems occurring in the LFM, being cooperative, and having no conflict of interest that can harm the LFM.

Article 74
(1) Appointment of the Liquidation Team is done by considering the integrity, competence, and financial reputation of candidate members of the Liquidation Team. (2) Membership of the Liquidation Team consists of at least:
a. 1 (one) person who has knowledge and experience of at least 5 (five) years in the field of LFMs; and b. 1 (one) person who has knowledge and experience of at least 5 (five) years in the field of law, audit, finance, and/or accounting. (3) Members of the Liquidation Team, supporting personnel of the Liquidation Team, and other parties appointed must not have marriage relations, in-law family relations, or blood family relations upwards, downwards, and sideways up to the first degree with members of the Liquidation Team.

Article 75
(1) In the event that the Liquidation Team is formed by the Members' Meeting or General Meeting of Shareholders, the Financial Services Authority may order the Members' Meeting or General Meeting of Shareholders to dismiss and/or appoint replacements for Liquidation Team members who leave before the end of the Liquidation Team assignment period with consideration if the Liquidation Team member:
a. does not perform duties well; b. violates applicable legislation;
c. resigns;
d. is permanently unable; or e. dies.
(2) In the event that the Financial Services Authority orders the Members' Meeting or General Meeting of Shareholders as referred to in paragraph (1) and the Members' Meeting or General Meeting of Shareholders does not dismiss and/or appoint replacements https://jdih.ojk.go.id/

members of the Liquidation Team, the Financial Services Authority may dismiss and/or appoint a replacement for a Liquidation Team member who has resigned. (3) In the event that a Liquidation Team member is formed by the Financial Services Authority, the Financial Services Authority may dismiss a Liquidation Team member before the Liquidation Team's assignment period ends based on the considerations referred to in paragraph (1). (4) The Financial Services Authority may appoint a replacement for a Liquidation Team member dismissed as referred to in paragraphs (2) and (3) for the remainder of their term.

Article 76
(1) Members of the Liquidation Team are given remuneration determined by:
a. the members' meeting or the general meeting of shareholders for a Liquidation Team formed by the members' meeting or the general meeting of shareholders; or b. the Financial Services Authority for a Liquidation Team formed by the Financial Services Authority. (2) Remuneration as referred to in paragraph (1) consists of:
a. honorarium; and b. other income/facilities.
(3) The amount of remuneration for the Liquidation Team as referred to in paragraph (1) is determined by considering the factors:
a. the amount of assets and liabilities; b. the condition and level of difficulty in liquidating assets and/or collecting receivables and settling the MFI's liabilities;
c. the MFI's office network in Liquidation; and/or
d. the qualifications of the Liquidation Team members.
(4) Other income/facilities as referred to in paragraph (2) letter b include holiday allowances, reasonable incentives, and participation in national social insurance programs in accordance with applicable laws and regulations. (5) Liquidation Team remuneration is a component of Liquidation costs that becomes the burden of the MFI in Liquidation. (6) Regulations regarding the provision of reasonable incentives as referred to in paragraph (4) are determined by the Financial Services Authority.

Article 77
(1) The Liquidation Team prepares and submits a work plan and budget for the implementation of Liquidation referring to the work plan and budget guidelines to obtain approval from the Financial Services Authority. (2) The Liquidation Team prepares a work plan and budget for the implementation of Liquidation which must contain at least:
a. the types of activities to be carried out; b. the schedule for completing each activity; https://jdih.ojk.go.id/

c. plans and methods for liquidating assets;
d. plans and methods for collecting receivables; e. plans and methods for paying liabilities to creditors; f. the number of supporting staff for the Liquidation Team required; and g. Liquidation costs. (3) The work plan and budget as referred to in paragraph (1) is prepared for the period of the Liquidation Team's assignment term, detailed monthly. (4) In the event of improvements to the current year's work plan and budget, the Liquidation Team must submit the improvements to the current year's work plan and budget to the Financial Services Authority to obtain approval. (5) Improvements to the work plan and budget as referred to in paragraph (4) are approved by the Financial Services Authority no later than 20 (twenty) working days after the Financial Services Authority receives the said work plan and budget improvements. (6) In the event that the Financial Services Authority has not or does not grant approval for the improvements to the work plan and budget as referred to in paragraph (4), the Liquidation Team continues to use the last work plan and budget approved by the Financial Services Authority. (7) In the event that the Financial Services Authority extends the implementation period of Liquidation and/or the term of the Liquidation Team, the Liquidation Team submits a work plan and budget for the extension period to the Financial Services Authority. (8) Further regulations regarding the work plan and budget guidelines as referred to in paragraph (1) are determined by the Financial Services Authority.

Article 78
(1) The work plan and budget as referred to in Article 77 is submitted to the Financial Services Authority no later than 30 (thirty) working days from the formation of the Liquidation Team or from the start of the Liquidation Team's extension period. (2) The Financial Services Authority may request improvements to the work plan and budget no later than 10 (ten) working days since the receipt of the work plan and budget. (3) In the event that the Financial Services Authority requests improvements to the work plan and budget, the Liquidation Team submits improvements to the work plan and budget according to the Financial Services Authority's request no later than 10 (ten) working days since the receipt of the improvement request letter from the Financial Services Authority. (4) The Financial Services Authority grants approval for the work plan and budget no later than 20 (twenty) working days after the Financial Services Authority receives the work plan and budget as referred to in paragraph (1) or improvements to the work plan and budget as referred to in paragraph (3).

Article 79
(1) In carrying out tasks to resolve matters related to MFI employees as referred to in Article 70 letter b, the Liquidation Team calculates the owed salary and severance pay for employees that are the MFI's obligations to employees who have had their employment terminated. (2) Payment of owed salary as referred to in paragraph (1) is carried out by considering the employee's obligations that have become due. (3) Payment of severance pay as referred to in paragraph (1) is carried out by considering all employee obligations. (4) The Liquidation Team may postpone the payment of severance pay to Board of Directors members and MFI employees indicated to have committed criminal acts in the field of MFIs and/or other criminal acts that can harm the MFI. (5) The Liquidation Team is obligated to terminate employee employment no later than 3 (three) months since the formation of the Liquidation Team. (6) The Liquidation Team is obligated to calculate other employee rights arising as a result of employment termination as regulated in applicable labor laws and regulations to be recorded as MFI liabilities in Liquidation in the group of liabilities to other creditors. (7) In the event that the Liquidation Team has not yet been formed and employee salary payments have become due, with the approval of the Financial Services Authority, the Board of Directors may make such salary payments to the extent that funds for such salary payments are available.

Article 80
In settling MFI assets and liabilities as referred to in Article 70 letter c, the Liquidation Team implements actions:
a. appointing a public accountant registered with the Financial Services Authority to audit the closing balance sheet; b. conducting an inventory of assets and liabilities;
c. preparing the Liquidation interim balance sheet;
d. implementing asset liquidation; e. implementing receivables collection; f. implementing liability payments to creditors; and g. depositing portions not yet claimed by creditors with the court. https://jdih.ojk.go.id/

Article 81
(1) After receiving the closing balance sheet from the Financial Services Authority, the Liquidation Team appoints a public accountant registered with the Financial Services Authority to audit the closing balance sheet. (2) The implementation of the closing balance sheet audit as referred to in paragraph (1) is carried out referring to the terms of reference prepared by the Liquidation Team. (3) The terms of reference as referred to in paragraph (2) must contain at least the audit objectives and scope. (4) The appointment of the public accountant as referred to in paragraph (1) is no later than 30 (thirty) working days since the Liquidation Team receives the closing balance sheet. (5) The Liquidation Team submits the closing balance sheet audited by the public accountant as referred to in paragraph (1) to the Financial Services Authority no later than 90 (ninety) working days since the date of appointment of the public accountant.

Article 82
(1) The Liquidation Team conducts an inventory of assets and liabilities as of the date of the revocation of the MFI's business license.
(2) Assets are grouped into non-performing assets and performing assets.
(3) Assets are designated as performing if they have legal obstacles to liquidation caused by at least:
a. incomplete documents; b. complete documents but the physical existence of the asset is unknown;
c. incomplete encumbrance;
d. assets and/or collateral are not marketable; and/or e. becoming the object of disputes outside or inside the court.
(4) The results of the asset and liability inventory as referred to in paragraph (1) are used as the basis for preparation and are an appendix to the Liquidation interim balance sheet.

Article 83
(1) The Liquidation Team prepares the Liquidation interim balance sheet referring to the guidelines for preparing the Liquidation interim balance sheet.
(2) The Liquidation Team submits the Liquidation interim balance sheet to the Financial Services Authority no later than 60 (sixty) working days after the Liquidation Team receives the audited closing balance sheet. (3) The Financial Services Authority may approve or request improvements to the Liquidation interim balance sheet if prepared not in accordance with the guidelines as referred to in paragraph (1) no later than 20 (twenty) working days since the Liquidation interim balance sheet is received by the Financial Services Authority. https://jdih.ojk.go.id/

(4) The Liquidation Team must fulfill the Financial Services Authority's request as referred to in paragraph (3) no later than 20 (twenty) working days since the date of the request for improvements to the Liquidation interim balance sheet by the Financial Services Authority. (5) The Liquidation Team is obligated to announce the Liquidation interim balance sheet approved by the Financial Services Authority in 2 (two) newspapers no later than 7 (seven) working days since the said Liquidation interim balance sheet is approved by the Financial Services Authority. (6) Further regulations regarding the guidelines for preparing the Liquidation interim balance sheet as referred to in paragraph (1) are determined by the Financial Services Authority.

Article 84
(1) The liquidation of non-performing assets as referred to in Article 82 paragraph (2) is carried out after the Liquidation interim balance sheet is approved by the Financial Services Authority. (2) In the event that the Liquidation interim balance sheet has not been approved by the Financial Services Authority, the liquidation of non-performing assets as referred to in paragraph (1) may be carried out after obtaining approval from the Financial Services Authority. (3) The liquidation of non-performing assets as referred to in paragraphs (1) and (2) must use fair market value. (4) The liquidation of assets and/or collection of receivables is carried out by the Liquidation Team according to the plans and methods contained in the work plan and budget as referred to in Article 77 paragraph (2) letter c.

Article 85
All costs of implementing Liquidation contained in the Liquidation cost list become the burden of the MFI's assets in Liquidation and are paid out first from every liquidation result.

Article 86
(1) The Financial Services Authority conducts supervision over the implementation of Liquidation.
(2) Supervision of Liquidation implementation as referred to in paragraph (1) is carried out indirectly by analyzing reports submitted by the Liquidation Team to the Financial Services Authority. (3) In the event necessary, the Financial Services Authority may conduct direct supervision on the MFI in Liquidation. (4) The Financial Services Authority may appoint a public accountant registered with the Financial Services Authority or other parties on behalf of and in the name of the Financial Services Authority to conduct direct supervision as referred to in paragraph (3). https://jdih.ojk.go.id/

Article 87
(1) The Liquidation Team is obligated to submit reports on the realization of the work plan and budget to the Financial Services Authority every month no later than the 10th (ten) of the following month. (2) If the deadline for submitting the report on the realization of the work plan and budget as referred to in paragraph (1) falls on a holiday, the submission deadline is the next working day. (3) The report on the realization of the work plan and budget as referred to in paragraph (1) must contain at least:
a. the development of Liquidation activities; b. obstacles to the failure to achieve targets;
c. cash flow reports;
d. the position of assets that have been liquidated and liabilities that have been settled; e. details of budget realization; and f. obstacles faced and follow-up plans.

Article 88
The implementation of Liquidation is completed in the event:
a. all liabilities of the MFI in Liquidation have been paid; b. there are no more assets that can be used to pay liabilities before the end of the implementation period of Liquidation; or
c. the end of the implementation period of Liquidation as referred to in Article 72.

Article 89
(1) In the event that the implementation period of Liquidation as referred to in Article 72 paragraph (1) and paragraph (2) is about to end, no later than 3 (three) months before the estimated end of Liquidation implementation, the Liquidation Team is obligated to announce:
a. the date of the final payment to creditors; and b. follow-up actions if creditors do not claim their rights within the period up to the final payment date. (2) The final payment date as referred to in paragraph (1) letter a is no later than 30 (thirty) working days since the announcement date. (3) The announcement as referred to in paragraph (1) is carried out through the electronic system/media used by the MFI. (4) In the event that creditors have not claimed their rights up to the time limit as referred to in paragraph (2), the funds belonging to such creditors are deposited with the court or estate office in accordance with applicable laws and regulations. (5) The application for deposit of funds as referred to in paragraph (4) is carried out no later than 30 (thirty) working days since the payment period as referred to in paragraph (2). (6) The Liquidation Team is deemed to have fulfilled the payment of liabilities to the relevant creditors after the deposit of funds belonging to unclaimed creditors as referred to in paragraph (4). (7) If within 30 (thirty) years, the funds belonging to creditors as referred to in paragraph (4) are not claimed by the relevant creditors, such funds are handed over to the state treasury.

Article 90
(1) In the event that the Liquidation Team is formed by the members' meeting or the general meeting of shareholders as referred to in Article 65 paragraph (1), the Liquidation Team is obligated to submit the Liquidation final balance sheet to the Financial Services Authority and the Liquidation Team's task accountability report to the members' meeting or the general meeting of shareholders no later than 20 (twenty) working days after the implementation of Liquidation is completed. (2) In the event that the Liquidation Team is formed by the Financial Services Authority as referred to in Article 67 paragraph (1), the Liquidation Team is obligated to submit the Liquidation final balance sheet and the Liquidation Team's task accountability report to the Financial Services Authority with a copy to the shareholders or equivalent to shareholders in legal entities in the form of cooperatives no later than 20 (twenty) working days after the implementation of Liquidation is completed. (3) The accountability report as referred to in paragraphs (1) and (2) must contain at least:
a. Liquidation results receipts; b. Liquidation costs;
c. payments of liabilities to creditors;
d. remaining cash or cash equivalent assets; and e. remaining performing assets; and f. remaining unpaid liabilities.
(4) The Financial Services Authority appoints a public accountant on behalf of and in the name of the Financial Services Authority to audit the Liquidation final balance sheet as referred to in paragraphs (1) and (2).

Article 91
In the event that the Liquidation Team formed by the members' meeting or the general meeting of shareholders as referred to in Article 65 paragraph (1) has submitted the Liquidation final balance sheet and it has been approved by the Financial Services Authority and the accountability report has been received by the members' meeting or the general meeting of shareholders, the members' meeting or the general meeting of shareholders:
a. requests the Liquidation Team to:

1. announce the end of Liquidation by placing it in the State Gazette of the Republic of Indonesia and in 2 (two) newspapers;
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2. notify the competent agency regarding the loss of the MFI's legal entity status; and

3. notify the competent agency to have the MFI's name removed from the company list; and
   b. disbands the Liquidation Team.

Article 92
(1) In the event that the Liquidation Team formed by the Financial Services Authority as referred to in Article 67 paragraph (1) has submitted the Liquidation final balance sheet and accountability report to the Financial Services Authority, the Financial Services Authority decides to accept or not accept the Liquidation Team's accountability no later than 20 (twenty) working days since the Financial Services Authority receives the audit result report as referred to in Article 90 paragraph (4). (2) In the event that the Liquidation Team's accountability report has been received by the Financial Services Authority, the Financial Services Authority:
a. requests the Liquidation Team to:

1. announce the end of Liquidation by placing it in the State Gazette of the Republic of Indonesia and in 2 (two) newspapers;
2. notify the competent agency regarding the loss of the MFI's legal entity status;
3. notify the competent agency to have the MFI's name removed from the company list; and
4. hand over all documents of the MFI in Liquidation to the Financial Services Authority;
   b. disbands the Liquidation Team; and
   c. dismisses the Board of Directors, Board of Commissioners, and non-active DPS.
   (3) Actions as referred to in paragraph (2) letter a are carried out by the Liquidation Team no later than 30 (thirty) working days since the accountability is received by the Financial Services Authority. (4) In the event that the Financial Services Authority decides not to accept the Liquidation Team's accountability, the Financial Services Authority may:
   a. report the Liquidation Team to the authorities if the Liquidation Team is indicated to have committed:
5. fraud in the Liquidation process; or
6. criminal acts; or
   b. take other steps in accordance with applicable laws and regulations.

Article 93
The legal entity status of the liquidated MFI ends since the date of the announcement of the end of Liquidation in the State Gazette of the Republic of Indonesia as referred to in Article 91 letter a number 1 and Article 92 paragraph (2) letter a number 1.

Article 94
The Financial Services Authority is authorized to determine mechanisms and requirements for Liquidation different from this Financial Services Authority Regulation due to the revocation of the business license because:
a. submitting the cessation of business activities at the request of the MFI; or b. not carrying out business activities for a period as referred to in Article 16 paragraph (1).

Fifth Part
Administrative Sanctions

Article 95
(1) MFIs that violate regulations as referred to in Article 60 paragraph (3), Article 61 paragraph (1), Article 63 paragraph (2), Article 64 paragraph (1) and paragraph (7), Article 65 paragraph (1), and/or Article 68 are subject to administrative sanctions in the form of administrative fines. (2) Administrative sanctions in the form of administrative fines as referred to in paragraph (1) are imposed at most IDR 10,000,000.00 (ten million rupiah). (3) In addition to administrative sanctions as referred to in paragraph (1), the Financial Services Authority is authorized to:
a. re-evaluate the main parties; b. record the track record of parties related to the MFI in the Financial Services Authority's electronic system;
c. issue written instructions and/or written orders to related parties to form a Liquidation Team (at least one person); and/or
d. other actions, including in consumer and general public protection.

Article 96
(1) Parties that violate regulations as referred to in Article 66 paragraph (1), Article 69 paragraph (2) and paragraph (3), Article 72 paragraph (1), Article 79 paragraph (5) and paragraph (6), Article 83 paragraph (4) and paragraph (5), Article 87 paragraph (1), Article 89 paragraph (1), and/or Article 90 paragraph (1) and paragraph (2) are subject to administrative sanctions in the form of written warnings. (2) In addition to administrative sanctions as referred to in paragraph (1), violating parties may be subject to administrative sanctions in the form of bans on becoming shareholders or equivalent to shareholders in legal entities in the form of cooperatives, Board of Directors, Board of Commissioners, or DPS in MFIs. (3) In the event that the violating party has fulfilled the regulations as referred to in Article 66 paragraph (1), Article 69 paragraph (2) and paragraph (3), Article 72 paragraph (1), Article 79 paragraph (5) and paragraph (6), Article 83 paragraph (4) and paragraph (5), Article 87 paragraph (1), Article 89 paragraph (1), and/or Article 90 paragraph (1) and paragraph (2), the Financial Services Authority revokes the administrative sanction in the form of a written warning. (4) In the event that violations of regulations as referred to in paragraph (1) occur but the violations have been corrected, the Financial Services Authority imposes administrative sanctions in the form of written warnings that end automatically.

CHAPTER XIV
BUSINESS ACTIVITIES
First Part
General

Article 97
(1) MFI business activities include:
a. business development and community empowerment services, through:

1. Loans or Financing in micro-scale businesses to members and the community;
2. Savings management; or
3. Providing business development consulting services; and
   b. other business activities determined by the Financial Services Authority.
   (2) Other business activities determined by the Financial Services Authority as referred to in paragraph (1) letter b include:
   a. fee-based activities as long as they do not conflict with applicable laws and regulations in the financial services sector; and/or b. other business activities with the approval of the Financial Services Authority. (3) In the event that MFI business activities are carried out based on Sharia Principles, the implementation of such business activities must fulfill the principles of justice ('adl), balance (tawazun), benefit (maslahah), and universalism (alamiyah) and must not contain gharar, maysir, riba, zhulm, risywah, and haram objects. (4) Further regulations regarding MFI business activities as referred to in paragraph (1) are determined by the Financial Services Authority.

Article 98
(1) MFIs that will conduct fee-based activities as referred to in Article 97 paragraph (2) letter a must report to the Financial Services Authority by attaching at least:
a. descriptions of fee-based product activities to be marketed; b. descriptions of marketing mechanisms;
c. descriptions of the rights and obligations of the parties;
d. draft cooperation agreements; and https://jdih.ojk.go.id/

e. a copy of the license from the competent authority, (if any).
(2) In the event that the Financial Services Authority has received the report as referred to in paragraph (1) in its entirety, the Financial Services Authority issues a letter recording fee-based activities to the Microfinance Institution (LKM) within a maximum of 20 (twenty) working days from the date the report is received. (3) If the Financial Services Authority does not issue the recording letter within the time frame as referred to in paragraph (2), the LKM may carry out fee-based activities as referred to in paragraph (1).

Article 99
(1) LKM that will conduct other business activities as referred to in Article 97 paragraph (2) letter b must meet the following requirements:
a. have a health level with a minimum composite rating of 2; b. have adequate human resources to conduct other business activities;
c. have adequate infrastructure to conduct other business activities;
d. have standard operating procedures for other business activities; and e. are not currently subject to sanctions of suspension of part or all of business activities. (2) LKM that will conduct other business activities as referred to in paragraph (1) must submit an application to the Financial Services Authority by attaching the requirement documents as listed in Appendix I in table 25, which is an integral part of this Financial Services Authority Regulation. (3) The Financial Services Authority grants approval or rejection of the application as referred to in paragraph (2) within a maximum of 20 (twenty) working days after the application is received. (4) In granting approval or rejection as referred to in paragraph (3), the Financial Services Authority conducts:
a. analysis of the completeness of documents as referred to in paragraph (2); b. analysis of compliance with the provisions of this Financial Services Authority Regulation; and
c. analysis of the feasibility of the proposed other business activities.
(5) In the event that the application to conduct other business activities has incomplete documents, the Financial Services Authority issues a request for document completeness to the LKM. (6) The Board of Directors must submit the completeness of documents as referred to in paragraph (2) no later than 20 (twenty) working days from the date of the request for document completeness letter from the Financial Services Authority. (7) If within 20 (twenty) working days from the date of the request for document completeness letter as referred to in paragraph (5), the Financial Services Authority has not received a response to the request for document completeness, the Board of Directors is deemed to have cancelled the application for approval to conduct other business activities. (8) In the event that the application for approval to conduct other business activities as referred to in paragraph (3) is approved, the Financial Services Authority grants approval to conduct other business activities to the LKM. (9) In the event that the Financial Services Authority rejects the application for approval to conduct other business activities as referred to in paragraph (3), the rejection must be done in writing and accompanied by the reasons for rejection.

Article 100
(1) After the determination of the business scale as referred to in Article 10 paragraph (10), LKM are classified based on business scale with assets as follows:
a. Small-scale LKM is an LKM with a business coverage area of villages/sub-districts and has assets of less than IDR 1,000,000,000.00 (one billion rupiah); b. Medium-scale LKM is an LKM with a business coverage area of districts and has assets starting from IDR 1,000,000,000.00 (one billion rupiah) to less than IDR 10,000,000,000.00 (ten billion rupiah); and
c. Large-scale LKM is an LKM with a business coverage area of regencies/cities and has assets starting from IDR 10,000,000,000.00 (ten billion rupiah).
(2) The Financial Services Authority determines the business scale of LKM based on LKM assets calculated based on financial reports for the December period. (3) The Financial Services Authority determines the business scale of LKM no later than February 28 of the following year. (4) Determination of changes in LKM business scale can be conducted if LKM assets meet the provisions as referred to in paragraph (1) based on periodic financial reports for the December period of the previous year. (5) For LKM that have different business licenses between business coverage area and business scale, adjustments regarding business coverage area or business scale must be made no later than 5 (five) years from the determination of LKM business scale. (6) LKM that meet the criteria as referred to in paragraph (5) are exempt from the determination of business scale and business coverage area as referred to in paragraph (3) and paragraph (4) until the criteria for business coverage and business scale are met. (7) LKM determined as medium-scale LKM and large-scale LKM cannot have their business scale downgraded to small-scale LKM. (8) The provisions as referred to in paragraph (2), paragraph (3), and paragraph (4) do not apply to LKM that have obtained business licenses for less than 3 (three) years. (9) Provisions regarding the procedures for evaluation and consideration of changes in LKM business scale grouping are determined by the Financial Services Authority.

Second Section
Loan or Financing Disbursement

Article 101
(1) In carrying out loan or financing disbursement business activities as referred to in Article 97 paragraph (1) letter a number 1, LKM must conduct an analysis of the feasibility of loan or financing disbursement. (2) Loan or financing disbursement as referred to in paragraph (1) is conducted for business development and community empowerment. (3) All agreements between LKM and customers must be stipulated in written agreements. (4) Agreements as referred to in paragraph (3) must meet the provisions for drafting agreements in accordance with legislation regarding consumer and community protection. (5) In managing risks regarding loan or financing disbursement, LKM may transfer loan or financing risks through credit guarantee or credit insurance mechanisms. (6) In the event that LKM conducts risk management as referred to in paragraph (5), LKM must use guarantee companies or insurance companies that market credit guarantee or credit insurance products that meet the following provisions:
a. have obtained business licenses from the Financial Services Authority; and b. are not subject to sanctions of suspension of business activities or business closure from the Financial Services Authority.

Article 102
(1) In carrying out loan or financing disbursement activities to members or the community, LKM sets the maximum interest rate for Loans or maximum yield for Financing. (2) Small-scale LKM must report the maximum interest rate for Loans or maximum yield for Financing as referred to in paragraph (1) to the Regional Government of Regencies/Cities with a copy to the Financial Services Authority every 3 (three) months for periods ending on March 31, June 30, September 30, and December 31. (3) The report as referred to in paragraph (2) is part of the quarterly periodic financial reports. (4) Medium-scale LKM and large-scale LKM must report the maximum interest rate for Loans or maximum yield for Financing as referred to in paragraph (1) to the Financial Services Authority every month. (5) The report as referred to in paragraph (4) is part of the monthly periodic financial reports. (6) The reports as referred to in paragraph (2) and paragraph (4) must be submitted no later than the 10th of the following month. (7) In the event that LKM will increase the maximum interest rate for Loans or maximum yield for Financing before the reporting period as referred to in paragraph (2) and paragraph (4) ends, then:
a. Small-scale LKM must first report to the Regional Government of Regencies/Cities with a copy to the Financial Services Authority; or b. Medium-scale and large-scale LKM must first report to the Financial Services Authority, as listed in Appendix II, which is an integral part of this Financial Services Authority Regulation. (8) LKM are prohibited from applying loan interest rates or financing yields exceeding the maximum interest rate for Loans or maximum yield for Financing that has been reported as referred to in paragraph (2), paragraph (4), and paragraph (7).

Article 103
LKM must announce the maximum interest rate for Loans or maximum yield for Financing as referred to in Article 102 through announcement boards at the LKM office in places easily accessible to the public.

Article 104
(1) LKM are prohibited from disbursing Loans or Financing exceeding the maximum limit for loan or financing disbursement at the time of disbursement.
(2) The maximum limit for loan or financing disbursement 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:
a. periodic financial reports for the last 3 (three) months before the date of loan or financing disbursement for small-scale LKM; or b. periodic financial reports for the last 1 (one) month before the date of loan or financing disbursement for medium-scale LKM and large-scale LKM. (4) If LKM has obtained business licenses for less than 3 (three) months, Equity is calculated based on the financial reports submitted at the time of the business license application.

Article 105
(1) The maximum limit for loan or financing disbursement as referred to in Article 104 paragraph (1) is set at a maximum of 20% (twenty percent) of Equity for 1 (one) customer meeting the following minimum provisions:
a. the customer has a good track record with the respective LKM; and b. loan or financing disbursement is accompanied by collateral or credit guarantee/credit insurance. (2) The calculation of Equity as referred to in paragraph (1) refers to the provisions as referred to in Article 104 paragraph (3) and paragraph (4). (3) Collateral as referred to in paragraph (1) letter b includes:
a. savings and/or blocked deposits at the respective LKM accompanied by a withdrawal authorization letter; b. land and/or buildings with certificates encumbered by a mortgage right;
c. land and/or buildings with certificates not encumbered by a mortgage right;
d. land and/or buildings with proof of ownership in the form of customary land acknowledgment letters accompanied by a tax notification letter for the outstanding tax for 1 (one) year or a letter stating the value of the taxable object; and/or e. motor vehicles, ships, and/or motorized boats, accompanied by proof of ownership and have been bound in accordance with legislation provisions. (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 guarantee or credit insurance as referred to in paragraph (1) letter b must meet the provisions as referred to in Article 101 paragraph (6) and:
a. the value of credit guarantee is at least 80% (eighty percent) of the value of the Loan or Financing; or b. the value of credit insurance is at least 75% (seventy-five percent) of the value of the credit balance.

Article 106
(1) LKM must conduct quality assessments of disbursed Loans or Financing.
(2) Quality assessments of Loans or Financing as referred to in paragraph (1) are established into 5 (five) groups:
a. performing; b. special attention;
c. substandard;
d. doubtful; and e. non-performing.
(3) Quality assessments of Loans or Financing as referred to in paragraph (2) are established based on the accuracy of principal and/or interest/yield payments. (4) Quality assessment parameters for Loans or Financing used as referred to in paragraph (3) are listed in Appendix III, which is an integral part of this Financial Services Authority Regulation.

Article 107
(1) LKM must form loan or financing write-off reserves.
(2) Loan or financing write-off reserves as referred to in paragraph (1) are at least:
a. 0% (zero percent) of the remaining principal of Loans or Financing with performing quality; b. 5% (five percent) of the remaining principal of Loans or Financing with special attention quality;
c. 15% (fifteen percent) of the remaining principal of Loans or Financing with substandard quality;
d. 50% (fifty percent) of the remaining principal of Loans or Financing with doubtful quality; and e. 100% (one hundred percent) of the remaining principal of Loans or Financing with non-performing quality.

Article 108
(1) In the event that LKM requires credit guarantee/credit insurance or collateral in loan or financing disbursement, loan or financing write-off reserves as referred to in Article 107 paragraph (1) are at least:
a. 0% (zero percent) of the remaining principal of Loans or Financing with performing quality; b. 5% (five percent) of the remaining principal of Loans or Financing with special attention quality after being reduced by the value of credit guarantee or collateral;
c. 15% (fifteen percent) of the remaining principal of Loans or Financing with substandard quality after being reduced by the value of credit guarantee or collateral;
d. 50% (fifty percent) of the remaining principal of Loans or Financing with doubtful quality after being reduced by the value of credit guarantee or collateral; and e. 100% (one hundred percent) of the remaining principal of Loans or Financing with non-performing quality after being reduced by the value of credit guarantee or collateral. (2) The value of credit guarantee/credit insurance or collateral calculated as a reduction for loan or financing write-off reserves as referred to in paragraph (1) is at most:
a. 100% (one hundred percent) of liquid collateral in the form of savings and/or blocked deposits at the respective LKM accompanied by a withdrawal authorization letter; b. 80% (eighty percent) of the value of mortgage rights for collateral in the form of land and/or buildings with certificates encumbered by a mortgage right;
c. 80% (eighty percent) for the portion of funds guaranteed by guarantee companies/insurance companies offering credit insurance products owned by the Government or regional governments;
d. 60% (sixty percent) of the Value of the Taxable Object or values based on assessments by independent appraisers for collateral in the form of land and/or buildings with certificates not encumbered by a mortgage right; e. 50% (fifty percent) of the Value of the Taxable Object for collateral in the form of land and/or buildings with proof of ownership in the form of customary land acknowledgment letters accompanied by Tax Notification Letters for 1 (one) year or letters stating the Value of the Taxable Object; and f. 50% (fifty percent) of the market value for collateral in the form of motor vehicles, ships, and/or motorized boats, accompanied by proof of ownership and have been bound in accordance with legislation provisions.

Article 109
(1) LKM must:
a. conduct assessments of collateral to know its economic value; and b. have collateral storage places that meet minimum security and safety standards.
(2) Collateral that can be calculated in the maximum limit for loan or financing disbursement as referred to in Article 105 paragraph (3) or as a reduction for loan or financing write-off reserves as referred to in Article 108 paragraph (2) if:
a. assessments have been conducted by LKM as referred to in paragraph (1); b. its existence can be known; and
c. it can be executed.
(3) The Financial Services Authority has the authority to recalculate or not recognize the value of collateral that has been calculated in the maximum limit for loan or financing disbursement as referred to in Article 105 paragraph (1) or as a reduction for loan or financing write-off reserves as referred to in Article 108 paragraph (2), if LKM does not meet the provisions as referred to in paragraph (1) and paragraph (2).

Third Section
Loan or Financing Restructuring

Article 110
(1) LKM may conduct restructuring of Loan or Financing agreements.
(2) The application of restructuring policies for Loan or Financing agreements as referred to in paragraph (1) is implemented while still paying attention to the application of prudential principles, risk management, and good corporate governance. (3) Restructuring of Loan or Financing agreements can be conducted if it meets the following criteria:
a. Customers still have income; and/or b. Customers' business activities still have prospects.
(4) The quality of loan or financing receivables that undergo changes as referred to in paragraph (1) is established:
a. at most equal to the quality of loan or financing receivables before restructuring, if customers have not fulfilled principal and/or interest installment obligations consecutively for 3 (three) periods according to the agreed time; b. may increase at most 1 (one) level from the quality of loan or financing receivables before restructuring, after customers have fulfilled principal and/or interest installment obligations consecutively for 3 (three) periods as referred to in letter a; and
c. based on assessment factors as referred to in Article 106:

1. after the establishment of loan or financing receivables quality as referred to in letter b; or
2. in the event that customers do not meet the requirements and/or payment obligations in restructuring agreements, both during and after 3 (three) periods of payment obligations according to the agreed time.
   (5) The Financial Services Authority may establish the quality of loan or financing receivables that are restructured based on assessment factors as referred to in Article 106, in the event that restructuring of loan or financing receivables conducted by LKM is not supported by the application of adequate restructuring policies as referred to in paragraph (3). (6) Additional quality of loan or financing receivables as part of a restructuring package is established equal to the quality of loan or financing receivables that are restructured. (7) Quality assessments of loan or financing receivables in restructuring as referred to in paragraph (4) must be accompanied and completed with supporting documents for quality assessments of loan or financing receivables.

Fourth Section
Savings Management

Article 111
LKM that conduct savings management business activities as referred to in Article 97 paragraph (1) letter a number 2 must:
a. administer Customer Savings; and b. provide proof of Savings.

Fifth Section
Administrative Sanctions

Article 112
(1) LKM that violate the provisions as referred to in Article 97 paragraph (3), Article 98 paragraph (1), Article 99 paragraph (2), Article 100 paragraph (5), Article 101 paragraph (1), paragraph (3), paragraph (4) and paragraph (6), Article 102 paragraph (2), paragraph (4), paragraph (6), paragraph (7), and paragraph (8), Article 103, Article 104 paragraph (1), Article 106 paragraph (1), Article 107 paragraph (1), Article 109 paragraph (1), and/or Article 111 are subject to administrative sanctions in the form of:
a. written warnings; b. dismissal and/or replacement of LKM Board of Directors;
c. suspension of business activities for part or all of business activities; and/or
d. administrative fines.
(2) Administrative sanctions as referred to in paragraph (1) letters b to d can be imposed with or without being preceded by the imposition of administrative sanctions in the form of written warnings as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of administrative fines as referred to in paragraph (1) letter d are imposed at most IDR 10,000,000.00 (ten million rupiah). (4) In the event that LKM has fulfilled the provisions as referred to in Article 97 paragraph (3), Article 98 paragraph (1), Article 99 paragraph (2), Article 100 paragraph (5), Article 101 paragraph (1), paragraph (3), paragraph (4) and paragraph (6), Article 102 paragraph (2), paragraph (4), paragraph (6), paragraph (7), and paragraph (8), Article 103, Article 104 paragraph (1), Article 106 paragraph (1), Article 107 paragraph (1), Article 109 paragraph (1), and/or Article 111, the Financial Services Authority revokes administrative sanctions. (5) In the event that violations of the provisions as referred to in paragraph (1) occur and the violations have been corrected, the Financial Services Authority imposes administrative sanctions in the form of written warnings that end automatically. (6) In addition to administrative sanctions as referred to in paragraph (1), the Financial Services Authority has the authority to:
a. downgrade the health assessment results; b. conduct re-assessments of main parties that caused LKM to violate the provisions as referred to in paragraph (1); and/or
c. record track records of parties that caused LKM to violate the provisions as referred to in paragraph (1) in the Financial Services Authority's electronic system.

CHAPTER XV
PROHIBITIONS

Article 113
In conducting business activities, LKM are prohibited from:
a. accepting Savings in the form of giro and participating in payment transactions; b. conducting business activities in foreign currency;
c. conducting insurance business as insurers;
d. acting as guarantors; e. giving Loans or Financing to other LKM, except to overcome liquidity difficulties for other LKM within the same regency/city area; f. conducting loan or financing disbursements outside the business coverage area; and/or g. conducting businesses outside business activities as referred to in Article 97.

Article 114
(1) LKM that violate the provisions as referred to in Article 113 are subject to administrative sanctions in the form of:
a. written warnings; b. dismissal and/or replacement of LKM Board of Directors;
c. suspension of business activities for part or all of business activities; and/or
d. administrative fines.
(2) Administrative sanctions as referred to in paragraph (1) letters b to d can be imposed

with or without prior imposition of administrative sanctions in the form of a written warning as referred to in paragraph (1) letter a.
(3) Administrative sanctions in the form of administrative fines as referred to in paragraph (1) letter d are imposed at most Rp10,000,000.00 (ten million rupiah). (4) In the event that the MFI has fulfilled the provisions as referred to in Article 113, the Financial Services Authority revokes the administrative sanction. (5) In the event of a violation of the provisions as referred to in paragraph (1) and the violation has been rectified, the Financial Services Authority imposes an administrative sanction in the form of a written warning that ends automatically. (6) In addition to administrative sanctions as referred to in paragraph (1), the Financial Services Authority is authorized to:
a. lower the health level assessment results; b. re-evaluate the main party that caused the MFI to violate the provisions as referred to in paragraph (1); and/or
c. record the track record of the party that caused the MFI to violate the provisions as referred to in paragraph (1) in the Financial Services Authority's electronic system.

CHAPTER XVI
FUNDING SOURCES

Article 115
(1) MFI funding sources originate from:
a. Equity; b. Deposits;
c. Loans;
d. Grants; and/or e. Waqf.
(2) MFIs are prohibited from receiving Loans as referred to in paragraph (1) letter c except from:
a. Indonesian citizens; b. business entities established and operating within the territory of the Republic of Indonesia based on loan agreements; and/or
c. international institutions with the approval of the Financial Services Authority.

Article 116
(1) MFIs that violate the provisions as referred to in Article 115 paragraph (2) are subject to administrative sanctions in the form of:
a. written warnings; b. dismissal and/or replacement of the MFI Board of Directors;
c. suspension of business activities for part or all of the business activities; and/or
d. administrative fines. https://jdih.ojk.go.id/

(2) Administrative sanctions as referred to in paragraph (1) letters b through d may be imposed with or without prior imposition of administrative sanctions in the form of written warnings as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of administrative fines as referred to in paragraph (1) letter d are imposed at most Rp10,000,000.00 (ten million rupiah). (4) In the event that the MFI has fulfilled the provisions as referred to in Article 115 paragraph (2), the Financial Services Authority revokes the administrative sanction. (5) In the event of a violation of the provisions as referred to in paragraph (1) and the violation has been rectified, the Financial Services Authority imposes an administrative sanction in the form of a written warning that ends automatically. (6) In addition to administrative sanctions as referred to in paragraph (1), the Financial Services Authority is authorized to:
a. lower the health level assessment results; b. re-evaluate the main party that caused the MFI to violate the provisions as referred to in paragraph (1); and/or
c. record the track record of the party that caused the MFI to violate the provisions as referred to in paragraph (1) in the Financial Services Authority's electronic system.

CHAPTER XVII
CONTRACTS USED IN BUSINESS ACTIVITIES AND FUNDING SOURCES BASED ON SHARIA PRINCIPLES

Article 117
(1) MFIs conducting business activities based on Sharia Principles are required to use contracts that are in accordance with Sharia Principles.
(2) Contracts in accordance with Sharia Principles as referred to in paragraph (1) include:
a. deposit collection business activities are conducted using:

1. wadi'ah contract;

2. mudharabah contract; or

3. 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:

4. mudharabah contract;

5. musyarakah contract;

6. murabahah contract;

7. ijarah contract;

8. salam contract;

9. istishna contract;

10. ijarah muntahiah bit tamlik contract;

11. qardh contract;
    https://jdih.ojk.go.id/

12. ijarah multijasa contract; or

13. other contracts that do not conflict with Sharia Principles and are approved by the Financial Services Authority;
    c. consulting and business development service activities are conducted using:

14. ijarah contract;

15. ju'alah contract; or

16. 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:

17. qardh contract;

18. mudharabah contract;

19. musyarakah contract; or

20. other contracts that do not conflict with Sharia Principles and are approved by the Financial Services Authority.
    (3) To obtain other contracts with approval for business activities as referred to in paragraph (2) letter a number 3, paragraph (2) letter b number 10, paragraph (2) letter c number 3, and paragraph (2) letter d number 4, MFIs submit applications to the Financial Services Authority. (4) Applications as referred to in paragraph (3) are accompanied by a Sharia opinion from the Sharia Supervisory Board (DPS) based on fatwas from institutions having authority in setting fatwas in the field of Sharia. (5) Financing disbursement may be conducted using:
    a. single contracts; and/or b. combined contracts from contracts as referred to in paragraph (2) letter b in accordance with Sharia opinions from the DPS based on fatwas from institutions having authority in setting fatwas in the field of Sharia. (6) 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 social and charitable fund management in the form of zakat, infak, sedekah, and waqf in accordance with applicable legislation. (7) Bookkeeping for the management of social and charitable funds as referred to in paragraph (6) is conducted separately.

Article 118
Further provisions regarding contracts used in business activities and funding sources based on Sharia Principles as referred to in Article 117 are determined by the Financial Services Authority. https://jdih.ojk.go.id/

Article 119
(1) MFIs that violate the provisions as referred to in Article 117 paragraph (1) are subject to administrative sanctions in the form of:
a. written warnings; b. dismissal and/or replacement of the MFI Board of Directors;
c. suspension of business activities for part or all of the business activities; and/or
d. administrative fines.
(2) Administrative sanctions as referred to in paragraph (1) letters b through d may be imposed with or without prior imposition of administrative sanctions in the form of written warnings as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of administrative fines as referred to in paragraph (1) letter d are imposed at most Rp10,000,000.00 (ten million rupiah). (4) In the event that the MFI has fulfilled the provisions as referred to in Article 117 paragraph (1), the Financial Services Authority revokes the administrative sanction. (5) In the event of a violation of the provisions as referred to in paragraph (1) and the violation has been rectified, the Financial Services Authority imposes an administrative sanction in the form of a written warning that ends automatically. (6) In addition to administrative sanctions as referred to in paragraph (1), the Financial Services Authority is authorized to:
a. lower the health level assessment results; b. re-evaluate the main party that caused the MFI to violate the provisions as referred to in paragraph (1); and/or
c. record the track record of the party that caused the MFI to violate the provisions as referred to in paragraph (1) in the Financial Services Authority's electronic system.

CHAPTER XVIII
MFI HEALTH LEVELS
First Section
General

Article 120
(1) MFIs are required to maintain and/or improve their health level with a composite rating of at least composite rating 3.
(2) Measurement of the health level as referred to in paragraph (1) includes aspects:
a. capital and solvency; b. asset quality;
c. profitability;
d. liquidity; and e. management. https://jdih.ojk.go.id/

(3) Further provisions regarding MFI health levels are determined by the Financial Services Authority.

Second Section
Capital and Solvency

Article 121
(1) Assessment of the capital and solvency factors as referred to in Article 120 paragraph (2) letter a includes assessment of capital adequacy, projections, and the ability to anticipate risks and long-term obligations. (2) MFIs are required to 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. the sum of basic deposits, mandatory deposits, and grants for MFIs in the form of cooperative legal entities. (3) MFIs are required to maintain a solvency ratio of at least 110% (one hundred ten percent). (4) The solvency ratio as referred to in paragraph (3) is calculated by comparing total assets with total liabilities. (5) For MFIs conducting business activities based on Sharia Principles, the solvency ratio as referred to in paragraph (3) is calculated by comparing total assets with total liabilities and temporary partnership funds.

Third Section
Asset Quality

Article 122
(1) Assessment of the asset quality factor as referred to in Article 120 paragraph (2) letter a includes assessment of components:
a. productive asset quality and risk exposure concentration; and b. adequacy of policies and procedures, documentation systems, and performance in handling problematic productive assets. (2) MFIs are required to maintain a net Non-Performing Loans or Non-Performing Financing ratio of at most 5% (five percent). (3) The net Non-Performing Loans or Non-Performing Financing ratio as referred to in paragraph (2) is calculated by comparing Loans or Financing that have poor, doubtful, and loss quality as referred to in Article 106 paragraph (2) letters c, d, and e, after deducting loan loss provisions or financing provisions formed and collateral (if any), with total Loans or Financing provided to the community. https://jdih.ojk.go.id/

Fourth Section
Profitability

Article 123
Assessment of the profitability factor as referred to in Article 120 paragraph (2) letter c includes assessment of components:
a. the ability of productive assets to generate profit; and b. the level of operational efficiency.

Fifth Section
Liquidity

Article 124
(1) Assessment of the liquidity factor as referred to in Article 120 paragraph (2) letter d includes assessment of components:
a. the ability to meet short-term obligations, and the potential for mismatch between short-term and long-term obligations (maturity mismatch); and b. the adequacy of liquidity management policies. (2) MFIs are required to maintain a liquidity ratio of at least 4% (four percent). (3) The liquidity ratio as referred to in paragraph (2) is calculated by comparing cash and cash equivalents owned with current liabilities. (4) For MFIs conducting business activities based on Sharia Principles, the liquidity ratio as referred to in paragraph (2) is calculated by comparing cash and cash equivalents owned with current liabilities and temporary partnership funds less than 1 (one) year.

Sixth Section
Management

Article 125
Assessment of the management factor as referred to in Article 120 paragraph (2) letter e includes assessment of components:
a. general management quality, including implementation of commitments to the Financial Services Authority or other parties; b. risk management application, especially management's understanding of MFI risks; and
c. MFI compliance with Sharia principles and implementation of social functions, for MFIs conducting business activities based on Sharia Principles.
https://jdih.ojk.go.id/

Seventh Section
Composite Rating Calculation

Article 126
(1) Each health level assessment factor as referred to in Article 120 paragraph (2) is assigned a rating based on comprehensive and structured analysis.
(2) The rating of each factor as referred to in paragraph (1) is categorized:
a. rating 1; b. rating 2;
c. rating 3;
d. rating 4; and e. rating 5.

Article 127
(1) Composite ratings are determined based on comprehensive and structured analysis of the rating of each factor as referred to in Article 126 paragraph (2), considering the materiality and significance of each factor. (2) Composite ratings as referred to in paragraph (1) are categorized:
a. composite rating 1; b. composite rating 2;
c. composite rating 3;
d. composite rating 4; and e. composite rating 5.
(3) Composite rating 1 as referred to in paragraph (2) letter a reflects an MFI condition that is generally very healthy, thus assessed as very capable of facing significant negative influences from changes in business conditions and other external factors. (4) Composite rating 2 as referred to in paragraph (2) letter b reflects an MFI condition that is generally healthy, thus assessed as capable of facing significant negative influences from changes in business conditions and other external factors. (5) Composite rating 3 as referred to in paragraph (2) letter c reflects an MFI condition that is generally fairly healthy, thus assessed as fairly capable of facing significant negative influences from changes in business conditions and other external factors. (6) Composite rating 4 as referred to in paragraph (2) letter d reflects an MFI condition that is generally less healthy, thus assessed as less capable of facing significant negative influences from changes in business conditions and other external factors. (7) Composite rating 5 as referred to in paragraph (2) letter e reflects an MFI condition that is generally unhealthy, thus assessed as unable to face significant negative influences from changes in business conditions and other external factors. https://jdih.ojk.go.id/

(8) Further provisions regarding composite health level ratings are determined by the Financial Services Authority.

Eighth Section
Administrative Sanctions

Article 128
(1) MFIs that violate the provisions as referred to in Article 120 paragraph (1), Article 121 paragraph (2) and (3), Article 122 paragraph (2), and/or Article 124 paragraph (2) are subject to administrative sanctions in the form of:
a. written warnings; b. dismissal and/or replacement of the MFI Board of Directors;
c. suspension of business activities for part or all of the business activities; and/or
d. administrative fines.
(2) Administrative sanctions as referred to in paragraph (1) letters b through d may be imposed with or without prior imposition of administrative sanctions in the form of written warnings as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of administrative fines as referred to in paragraph (1) letter d are imposed at most Rp10,000,000.00 (ten million rupiah). (4) In the event that the MFI has fulfilled the provisions as referred to in Article 120 paragraph (1), Article 121 paragraph (2) and (3), Article 122 paragraph (2), and/or Article 124 paragraph (2), the Financial Services Authority revokes the administrative sanction. (5) In the event of a violation of the provisions as referred to in paragraph (1) and the violation has been rectified, the Financial Services Authority imposes an administrative sanction in the form of a written warning that ends automatically. (6) In addition to administrative sanctions as referred to in paragraph (1), the Financial Services Authority is authorized to:
a. lower the health level assessment results; b. re-evaluate the main party that caused the MFI to violate the provisions as referred to in paragraph (1); and/or
c. record the track record of the party that caused the MFI to violate the provisions as referred to in paragraph (1) in the Financial Services Authority's electronic system.

CHAPTER XIX
PLACEMENT OF EXCESS FUNDS

Article 129
(1) MFIs are prohibited from placing excess funds they possess other than in:
a. savings at banks; b. checking accounts at banks;
c. time deposits at banks;
d. bank certificates of deposit; e. securities issued by the Republic of Indonesia and Bank Indonesia; and/or f. deposits at secondary cooperatives.
(2) Types of excess fund placement as referred to in paragraph (1) also include types of excess fund placement using Sharia Principles.
(3) MFIs conducting business activities based on Sharia Principles are prohibited from placing excess funds they possess other than in:
a. savings at Sharia commercial banks, Sharia business units of commercial banks, and/or Sharia rural banks; b. checking accounts at Sharia commercial banks, Sharia business units of commercial banks, and/or Sharia rural banks;
c. time deposits at Sharia commercial banks, Sharia business units of commercial banks, and/or Sharia rural banks;
d. certificates of deposit at Sharia commercial banks, Sharia business units of commercial banks, and/or Sharia rural banks; e. Sharia securities issued by the Republic of Indonesia and Bank Indonesia; and/or f. deposits at Sharia secondary cooperatives. (4) In the event that Sharia commercial banks, Sharia business units, and/or Sharia rural banks are not available in the MFI's business area, MFIs conducting business activities based on Sharia Principles may place excess funds they possess in conventional banks until Sharia commercial banks, Sharia business units, and/or Sharia rural banks become available. (5) Placement of excess funds in the form of deposits at secondary cooperatives as referred to in paragraph (1) letter f and paragraph (3) letter f is prohibited for MFIs with cooperative legal entities except at secondary cooperatives having the highest health level based on applicable legislation regarding cooperative health assessment. (6) The value of fund placement in the form of deposits at secondary cooperatives as referred to in paragraph (5) is prohibited from exceeding 10% (ten percent) of basic deposits, mandatory deposits, and grants.

Article 130
(1) MFIs that violate the provisions as referred to in Article 129 paragraph (1), (3), (5), and (6) are subject to administrative sanctions in the form of:
a. written warnings; b. dismissal and/or replacement of the MFI Board of Directors; https://jdih.ojk.go.id/

c. suspension of business activities for part or all of the business activities; and/or
d. administrative fines.
(2) Administrative sanctions as referred to in paragraph (1) letters b through d may be imposed with or without prior imposition of administrative sanctions in the form of written warnings as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of administrative fines as referred to in paragraph (1) letter d are imposed at most Rp10,000,000.00 (ten million rupiah). (4) In the event that the MFI has fulfilled the provisions as referred to in Article 129 paragraph (1), (3), (5), and (6), the Financial Services Authority revokes the administrative sanction. (5) In the event of a violation of the provisions as referred to in paragraph (1) and the violation has been rectified, the Financial Services Authority imposes an administrative sanction in the form of a written warning that ends automatically. (6) In addition to administrative sanctions as referred to in paragraph (1), the Financial Services Authority is authorized to:
a. lower the health level assessment results; b. re-evaluate the main party that caused the MFI to violate the provisions as referred to in paragraph (1); and/or
c. record the track record of the party that caused the MFI to violate the provisions as referred to in paragraph (1) in the Financial Services Authority's electronic system.

CHAPTER XX
PROCEDURES FOR OBTAINING INFORMATION ABOUT DEPOSITORS AND DEPOSITS AT MFIs

Article 131
(1) Members of the Board of Commissioners, Board of Directors, employees, and affiliated parties of MFIs 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 Depositor and Deposit information is for:
a. tax interests; b. judicial interests in criminal cases;
c. judicial interests in civil cases; or
d. information requests from legitimate heirs if the Depositor has passed away.

Article 132
Provisions regarding the disclosure of Depositor and Deposit information for tax interests as referred to in Article 131 paragraph (2) letter a are implemented in accordance with applicable legislation regarding financial information access for tax interests, without requiring approval from the Financial Services Authority.

Article 133
(1) Disclosure of Depositor and Deposit information for judicial interests in criminal cases as referred to in Article 131 paragraph (2) letter b must obtain approval from the Financial Services Authority. (2) Applications for disclosure of Depositor and Deposit information for judicial interests in criminal cases as referred to in paragraph (1) are submitted based on written requests from the head of the prosecutor's office, head of the police, court chairman, or head of an institution authorized to conduct investigations based on law to the Financial Services Authority, stating:
a. name and position of the prosecutor, police officer, judge, or other investigator; b. name of the Depositor as the suspect, defendant, or convict;
c. name of the MFI where the Depositor holds Deposits;
d. information requested; e. relationship between the criminal case concerned and the information needed; and f. reasons for the need for information.
(3) Approval or rejection of applications as referred to in paragraph (2) 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 information disclosure is given by the Financial Services Authority within a maximum period of 10 (ten) working days after the request letter is received completely.

Article 134
Disclosure of Depositor and Deposit information for judicial interests in civil cases as referred to in Article 131 paragraph (2) letter c does not require approval from the Financial Services Authority for MFIs.

Article 135
Disclosure of Depositor and Deposit information for information requests from legitimate heirs if the Depositor has passed away as referred to in Article 131 paragraph (2) letter d does not require approval from the Financial Services Authority for MFIs.

Article 136
MFIs are prohibited from providing Depositor and Deposit information without approval from the Financial Services Authority, except in the case of information requests as referred to in https://jdih.ojk.go.id/

as referred to in Article 132, Article 134 and Article 135 of this Financial Services Authority Regulation.

Article 137
(1) MFIs that violate provisions as referred to in Article 136 are subject to administrative sanctions in the form of:
a. written warning; b. dismissal and/or replacement of the Board of Directors of the MFI;
c. suspension of business activities for part or
all of the business activities; and/or d. administrative fine.
(2) Administrative sanctions as referred to in paragraph (1) letters b to d may be imposed with or without preceded by imposition of administrative sanctions in the form of a written warning as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of administrative fines as referred to in paragraph (1) letter d are imposed at most Rp10,000,000.00 (ten million rupiah). (4) In the event that the MFI has fulfilled the provisions as referred to in Article 136, the Financial Services Authority revokes the administrative sanction. (5) In the event of a violation of the provisions as referred to in paragraph (1) and the violation has been rectified, the Financial Services Authority imposes an administrative sanction in the form of a written warning that expires automatically. (6) In addition to administrative sanctions as referred to in paragraph (1), the Financial Services Authority is authorized to:
a. downgrade the health level assessment results; b. conduct a re-evaluation of the main party causing the MFI to violate the provisions as referred to in paragraph (1); and/or
c. record a track record against the party
causing the MFI to violate the provisions as referred to in paragraph (1) in the electronic system of the Financial Services Authority.

CHAPTER XXI
FINANCIAL REPORTS

Article 138
MFIs are required to prepare financial statements in accordance with accounting standards.

Article 139
(1) Small-scale MFIs are required to submit periodic financial reports every 3 (three) months for periods ending on March 31, June 30, September 30, and December 31 to the district/city regional government with a copy to the Financial Services Authority. (2) Medium-scale MFIs and large-scale MFIs are required to submit periodic financial reports monthly to the Financial Services Authority. (3) Submission of financial reports as referred to in paragraph (1) and paragraph (2) is done no later than the 10th (ten) day of the following month. (4) The obligation to submit reports as referred to in paragraph (3) takes effect for the next reporting period, if:
a. Small-scale MFIs obtain a business license less than 3 (three) months before the reporting obligation as referred to in paragraph (1); or b. Medium-scale MFIs and large-scale MFIs obtain a business license less than 1 (one) month before the reporting obligation as referred to in paragraph (2). (5) If the deadline for submission of financial reports as referred to in paragraph (3) falls on a holiday, the submission deadline is on the next working day. (6) If the deadline for submission of financial reports as referred to in paragraph (3) or paragraph (5) falls on a national holiday or joint holiday, the Financial Services Authority is authorized to set the submission due date.

Article 140
(1) Large-scale MFIs and medium-scale MFIs that have total assets above Rp7,500,000,000.00 (seven billion five hundred million rupiah) and engage in public fund gathering in the form of Deposits 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 MFI require:
a. Small-scale MFIs; and/or b. Medium-scale MFIs that do not meet the criteria as referred to in paragraph (1), to be audited by a public accountant, the annual financial report 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 submission of annual financial reports as referred to in paragraph (1) falls on a holiday, the submission deadline is on the next working day. (5) If the deadline for submission of annual financial reports as referred to in paragraph (4) falls on a national holiday or joint holiday, the Financial Services Authority is authorized to set the submission due date. (6) MFIs are required to ensure that the public accountant as referred to in paragraph (1) and paragraph (2) is registered with the Financial Services Authority. (7) If the MFI 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) takes effect in the next calendar year. (8) MFIs are required to include the annual financial report that has been audited by a public accountant as referred to in paragraph (1) on the MFI website, no later than May 31 of the following year.

Article 141
(1) In implementing the principle of openness, MFIs are required to announce the balance sheet and income statement for each fiscal year period on the announcement board at the respective MFI office in a place easily accessible to the public 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) In the event that the MFI obtains a business license less than 6 (six) months until the end of the calendar year, the obligation to announce as referred to in paragraph (1) takes effect in the next calendar year. (4) Proof of announcement of the balance sheet and income statement as referred to in paragraph (1) must be reported to the Financial Services Authority no later than 20 (twenty) working days after the date of announcement.

Article 142
Further provisions regarding the format, structure, and method of submission of financial reports as referred to in Article 139 are determined by the Financial Services Authority.

Article 143
(1) In supporting the implementation of business activities and electronic reporting, MFIs are required to have information systems and information technology. (2) Information systems and information technology as referred to in paragraph (1) are adjusted to business complexity and MFI size. (3) MFIs may delegate the execution, evaluation, and maintenance of information systems and information technology to third-party information technology service providers in the form of legal entities while still being implemented in accordance with Financial Services Authority Regulations regarding the application of risk management in the use of information technology by non-bank financial service institutions.

Article 144
(1) MFIs that violate provisions as referred to in Article 138, Article 139 paragraphs (1) and (2), Article 140 paragraphs (1), (6), and (8), Article 141 paragraphs (1) and (4), and/or Article 143 paragraph (1) are subject to administrative sanctions in the form of:
a. written warning; b. dismissal and/or replacement of the Board of Directors of the MFI;
c. suspension of business activities for part or
all of the business activities; and/or d. administrative fine.
(2) Administrative sanctions as referred to in paragraph (1) letters b to d may be imposed with or without preceded by imposition of administrative sanctions in the form of a written warning as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of administrative fines as referred to in paragraph (1) letter d are imposed at most Rp10,000,000.00 (ten million rupiah). (4) In the event that the MFI has fulfilled the provisions as referred to in Article 138, Article 139 paragraphs (1) and (2), Article 140 paragraphs (1), (6), and (8), Article 141 paragraphs (1) and (4), and/or Article 143 paragraph (1), the Financial Services Authority revokes the administrative sanction. (5) In the event of a violation of the provisions as referred to in paragraph (1) and the violation has been rectified, the Financial Services Authority imposes an administrative sanction in the form of a written warning that expires automatically. (6) In addition to administrative sanctions as referred to in paragraph (1), the Financial Services Authority is authorized to:
a. downgrade the health level assessment results; b. conduct a re-evaluation of the main party causing the MFI to violate the provisions as referred to in paragraph (1); and/or
c. record a track record against the party
causing the MFI to violate the provisions as referred to in paragraph (1) in the electronic system of the Financial Services Authority.
(7) MFIs that are late in submitting reports so as not to fulfill the provisions as referred to in Article 139 paragraphs (1) and (2) and/or Article 140 paragraph (1) are subject to administrative sanctions in the form of fines with the following provisions:
a. for small-scale MFIs with business coverage in villages/sub-districts, a monetary fine of Rp5,000.00 (five thousand rupiah) is imposed for each day of delay and at most Rp200,000.00 (two hundred thousand rupiah); b. for medium-scale MFIs with business coverage in districts, a monetary fine of Rp10,000.00 (ten thousand rupiah) is imposed for each day of delay and at most Rp400,000.00 (four hundred thousand rupiah); or
c. for large-scale MFIs with business coverage in districts/cities, a monetary fine
of Rp50,000.00 (fifty thousand rupiah) is imposed for each day of delay and at most Rp2,500,000.00 (two million five hundred thousand rupiah).

CHAPTER XXII
BUSINESS PLAN

Article 145
(1) Medium-scale MFIs and large-scale MFIs are required to prepare and submit a business plan annually.
(2) The business plan must be prepared by the Board of Directors and approved by the Board of Commissioners.
(3) The scope of the business plan must at least contain:
a. executive summary; b. evaluation of the implementation of the previous business plan period;
c. vision, mission, and business strategy;
d. policies and management plans; and e. other information.
(4) Submission of the business plan is made no later than November 30 before the start of the business plan year.
(5) Further provisions regarding the business plan are determined by the Financial Services Authority.

Article 146
(1) MFIs that violate provisions as referred to in Article 145 paragraphs (1) and (2) are subject to administrative sanctions in the form of:
a. written warning; b. dismissal and/or replacement of the Board of Directors of the MFI;
c. suspension of business activities for part or
all of the business activities; and/or d. administrative fine.
(2) Administrative sanctions as referred to in paragraph (1) letters b to d may be imposed with or without preceded by imposition of administrative sanctions in the form of a written warning as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of administrative fines as referred to in paragraph (1) letter d are imposed at most Rp10,000,000.00 (ten million rupiah). (4) In the event that the MFI has fulfilled the provisions as referred to in Article 145 paragraphs (1) and (2), the Financial Services Authority revokes the administrative sanction. (5) In the event of a violation of the provisions as referred to in paragraph (1) and the violation has been rectified, the Financial Services Authority imposes an administrative sanction in the form of a written warning that expires automatically. (6) In addition to administrative sanctions as referred to in paragraph (1), the Financial Services Authority is authorized to:
a. downgrade the health level assessment results; b. conduct a re-evaluation of the main party causing the MFI to violate the provisions as referred to in paragraph (1); and/or
c. record a track record against the party
causing the MFI to violate the provisions as referred to in paragraph (1) in the electronic system of the Financial Services Authority.

CHAPTER XXIII
CONSUMER AND COMMUNITY PROTECTION

Article 147
(1) MFIs apply the principle of consumer and community protection in business operations in accordance with regulations concerning consumer and community protection in the financial services sector. (2) The mechanism and procedure for applying the principle of consumer and community protection as referred to in paragraph (1) are implemented in accordance with regulations concerning consumer and community protection in the financial services sector.

CHAPTER XXIV
ANTI-FRAUD STRATEGY

Article 148
(1) MFIs formulate and implement an effective anti-fraud strategy.
(2) Formulation and implementation of the anti-fraud strategy as referred to in paragraph (1) are implemented in accordance with Financial Services Authority Regulations regarding the application of anti-fraud strategies for financial service institutions.

CHAPTER XXV
ANTI-MONEY LAUNDERING, PREVENTION OF TERRORISM FINANCING, AND PREVENTION OF WEAPONS OF MASS DESTRUCTION PROLIFERATION FINANCING

Article 149
(1) MFIs effectively implement anti-money laundering, terrorism financing prevention, and weapons of mass destruction proliferation financing prevention programs. (2) Implementation of anti-money laundering, terrorism financing prevention, and weapons of mass destruction proliferation financing prevention programs as referred to in paragraph (1) are implemented in accordance with Financial Services Authority Regulations regarding the implementation of anti-money laundering, terrorism financing prevention, and weapons of mass destruction proliferation financing prevention programs in the financial services sector.

CHAPTER XXVI
GUIDANCE AND SUPERVISION

Article 150
(1) Regulation of MFIs is conducted by the Financial Services Authority.
(2) Guidance and supervision of small-scale MFIs are conducted by the District/City Regional Government, referring to provisions determined by the Financial Services Authority. (3) Guidance and supervision of medium-scale and large-scale MFIs are conducted by the Financial Services Authority. (4) In carrying out guidance and supervision, as referred to in paragraph (2), the district/city regional government and the Financial Services Authority may coordinate with the ministry responsible for cooperative affairs and the ministry responsible for domestic affairs.

Article 151
(1) To carry out guidance and supervision of small-scale MFIs, the district/city regional government prepares human resources and infrastructure.
(2) Preparation of human resources and infrastructure as referred to in paragraph (1) must at least:
a. appoint district/city regional government employees to carry out guidance and supervision of small-scale MFIs; b. assign appointed employees as referred to in letter a to attend training organized by the Financial Services Authority; and
c. prepare operational support facilities for supervision.

Article 152
Guidance and supervision of small-scale MFIs by the district/city regional government must at least include:
a. receipt of financial reports and data input into the application system; b. implementation of analysis of MFI financial reports;
c. receipt and analysis of other reports;
d. implementation of follow-up on other reports; e. preparation of examination work plans, implementation of examinations, and follow-up on examination results of MFIs; f. imposition of administrative sanctions on MFIs other than revocation of business licenses and fines; and g. implementation of rehabilitation steps for MFIs that do not meet health levels.

Article 153
The Financial Services Authority may establish technical guidelines for guidance and supervision of small-scale MFIs.

CHAPTER XXVII
EXAMINATION

Article 154
(1) In carrying out the functions of guidance and supervision, Examination is conducted by:
a. the Financial Services Authority for medium-scale and large-scale MFIs; or b. the district/city regional government for small-scale MFIs.
(2) The Financial Services Authority may conduct Examinations of small-scale MFIs by considering the authority held by the district/city regional government as referred to in paragraph (1) letter b. (3) Examination aims to:
a. obtain assurance regarding the actual condition of the MFI; b. examine the conformity of the MFI's condition with legislation and sound MFI business practices; and
c. ensure that the MFI has taken efforts to fulfill obligations to customers.
(4) Implementation of Examination of MFIs is conducted based on:
a. analysis results of periodic MFI reports, where there is suspicion that the implementation of the MFI's business activities deviates from legislation in the field of MFIs that can pose risks endangering the sustainability of the MFI's business and/or customer interests; or b. complaints or reports submitted by the public, where there is suspicion that the implementation of the MFI's business activities deviates from applicable legislation regarding MFIs that can cause losses to the public. (5) Examination as referred to in paragraph (1) includes Examination of the substance of periodic reports and compliance with legislation in the field of MFIs.

Article 155
Examination of small-scale MFIs is conducted by the Financial Services Authority together with the district/city regional government as referred to in Article 154 paragraph (2) in the event of suspicion of conditions:
a. misuse of MFI funds by the Board of Directors, Commissioners, or MFI employees; b. liquidity and solvency difficulties leading to conditions endangering the sustainability of the MFI's business;
c. deviations from Sharia Principles for MFIs conducting business based on Sharia Principles;
d. significant arrears in Loan or Financing repayments that can affect the financial condition of the MFI; e. deviations in the form of fictitious Loans or Financings; f. errors in recording and/or accounting calculations resulting in financial losses for the MFI; and/or g. conditions outside the provisions as referred to in letters a to f, which based on consideration from the Financial Services Authority require direct Examination by the Financial Services Authority of the MFI.

Article 156
Implementation of Examination of MFIs is conducted:
a. periodically according to the Examination plan; or b. ad hoc.

Article 157
(1) Examination as referred to in Article 154 is carried out by Examiners based on a task order or Examination Order Letter and Examination Notification Letter. (2) Before conducting Examination as referred to in paragraph (1), an Examination Notification Letter is first sent to the MFI. (3) The Examination Notification Letter as referred to in paragraph (2) is sent no later than 3 (three) working days before the date of implementation of the Examination activity. (4) Prior submission of the Examination Notification Letter does not apply if sending such notification letter could cause obscuring of the actual situation or hiding of data, information, or reports needed for the implementation of the Examination.

Article 158
(1) Examination as referred to in Article 154 is conducted through the following stages:
a. Examination preparation; b. Examination implementation; and
c. Reporting of Examination results.
(2) Examination preparation as referred to in paragraph (1) letter a is made based on analysis results of periodic reports and other supporting data.
(3) Examination implementation as referred to in paragraph (1) letter b can be conducted at the MFI office or elsewhere as needed.
(4) To support the implementation of Examination as referred to in paragraph (1) letter b, confirmation with third parties related to the respective MFI may be conducted. (5) Reporting of Examination results as referred to in paragraph (1) letter c must be prepared based on data or information obtained during the examination process documented in Examination working papers.

Article 159
(1) At the time Examination is about to begin, the Examiner shows the task order or Examination Order Letter.
(2) In the event that the Examiner cannot fulfill the provisions in paragraph (1), the MFI to be examined may refuse the Examination.

Article 160
(1) In the implementation of Examination, the examined MFI is required to:
a. accept the Examination conducted by the Examiner; b. fulfill the Examiner's request to provide or lend books, notes, and documents necessary for the smooth running of the Examination.
c. provide necessary information in writing and/or orally; and
d. grant access to the Examiner to enter places or rooms related to the Examination.
(2) The MFI is considered to hinder the smooth process of Examination if it does not fulfill obligations as referred to in paragraph (1).
(3) The Examiner keeps confidential data and/or information obtained during the Examination from unauthorized parties.

Article 161
(1) The Examiner discusses the results of the Examination with the MFI before the Examination ends.
(2) The discussion results as referred to in paragraph (1) are signed by the Examiner and the MFI as the basis for preparing the Examination results report. (3) The Examination results report as referred to in paragraph (2) is submitted to the MFI no later than 20 (twenty) working days after the Examination results report is finalized.

Article 162
(1) MFIs that violate provisions as referred to in Article 160 paragraph (1) are subject to administrative sanctions in the form of:
a. written warning; b. dismissal and/or replacement of the Board of Directors of the MFI;
c. suspension of business activities for part or
all of the business activities; and/or d. administrative fine.
(2) Administrative sanctions as referred to in paragraph (1) letters b to d may be imposed with or without preceded by imposition of administrative sanctions in the form of a written warning as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of administrative fines as referred to in paragraph (1) letter d are imposed at most Rp10,000,000.00 (ten million rupiah). (4) In the event that the MFI has fulfilled the provisions as referred to in Article 160 paragraph (1), the Financial Services Authority revokes the administrative sanction. (5) In the event of a violation of the provisions as referred to in paragraph (1) and the violation has been rectified, the Financial Services Authority imposes an administrative sanction in the form of a written warning that expires automatically. (6) In addition to administrative sanctions as referred to in paragraph (1), the Financial Services Authority is authorized to:
a. downgrade the health level assessment results; b. conduct a re-evaluation of the main party causing the MFI to violate the provisions as referred to in paragraph (1); and/or
c. record a track record against the party
causing the MFI to violate the provisions as referred to in paragraph (1) in the electronic system of the Financial Services Authority.

CHAPTER XXVIII
DETERMINATION OF SUPERVISION STATUS

First Section
General

Article 163
(1) Supervision status of medium-scale MFIs and large-scale MFIs is determined by the Financial Services Authority.
(2) Supervision status of small-scale MFIs is determined by the district/city regional government.
(3) Supervision status of MFIs as referred to in paragraph (1) consists of:

a. normal supervision; b. intensive supervision; or
c. special supervision.
(4) The determination of the supervision status as referred to in paragraph (2) is based on factors:
a. composite rating; and/or b. quantitative parameters.
(5) The determination of the supervision status as referred to in paragraph (1) is carried out at any time according to the assessment of the Financial Services Authority, taking into account the condition of the MFI based on the factors as referred to in paragraph (4). (6) The determination of the supervision status as referred to in paragraph (2) is carried out at any time according to the assessment of the district/city government, taking into account the condition of the MFI based on the factors as referred to in paragraph (4).

Second Section
Supervision Status Criteria

Article 164
The determination of an MFI in intensive supervision status as referred to in Article 163 paragraph (3) letter b, if:
a. the health level of the MFI is set at composite rating 4 (four); and/or b. meets quantitative parameters consisting of:

1. the ratio of equity to paid-up capital is greater than or equal to 50% (fifty percent) and less than 75% (seventy-five percent); and/or
2. the ratio of the quality of net Non-Performing Loans is greater than 5% (five percent) and less than 25% (twenty-five percent).

Article 165
(1) An MFI with intensive supervision status as referred to in Article 163 paragraph (3) letter b is determined by the Financial Services Authority for a maximum period of 1 (one) year from the date of the Financial Services Authority's notification letter. (2) If the time limit for intensive supervision status as referred to in paragraph (1) expires and the MFI still meets the criteria as referred to in Article 164, the Financial Services Authority may determine an extension of the MFI supervision status time limit for a maximum of 1 (one) time with a maximum time limit of 1 (one) year. (3) The determination of the extension of the intensive supervision status time limit as referred to in paragraph (2) is accompanied by an increase in supervision actions. (4) The determination of the extension of the time limit as referred to in paragraph (3) is based on the assessment of the Financial Services Authority by considering the resolution of the approved action plan. (5) An MFI that meets the criteria as referred to in Article 164 may not be determined in intensive supervision status by the Financial Services Authority if:
a. the MFI is in the process of merger, consolidation, or takeover; and/or b. the MFI is in the process of adding capital contributions which have at least been recorded in the capital contribution fund criteria.

Article 166
The determination of an MFI in special supervision status as referred to in Article 163 paragraph (3) letter c, if:
a. the time limit as referred to in Article 165 paragraph (1) or paragraph (2) expires and the MFI still meets the criteria as referred to in Article 163; b. the health level of the MFI is set at composite rating 5 (five);
c. meets quantitative parameters consisting of:

1. the ratio of equity to paid-up capital is less than 50% (fifty percent); and/or
2. the ratio of the quality of net Non-Performing Loans is greater than or equal to 25% (twenty-five percent); and/or
   d. meets criteria other than the criteria as referred to in letters a, b, and c that impact the continuity of the MFI's business and/or significantly harm the interests of customers/society.

Article 167
(1) An MFI with special supervision status as referred to in Article 163 paragraph (3) letter c is determined by the Financial Services Authority for a maximum of 6 (six) months from the date of the Financial Services Authority's notification letter. (2) If the time limit for an MFI with special supervision status as referred to in paragraph (1) expires, the Financial Services Authority may determine an extension of the MFI supervision status time limit for a maximum of 1 (one) time with a maximum time limit of 6 (six) months. (3) The determination of the extension of the special supervision status time limit as referred to in paragraph (2) is accompanied by an increase in supervision actions. (4) The determination of the extension of the time limit as referred to in paragraph (2) is based on the assessment of the Financial Services Authority by considering the resolution of the approved action plan. (5) An MFI that meets the criteria as referred to in Article 166 may not be determined in special supervision status by the Financial Services Authority if:
a. the MFI is in the process of merger, consolidation, or takeover; and/or b. the MFI is in the process of adding capital contributions which have at least been recorded in the capital contribution fund criteria.

Article 168
(1) An MFI with special supervision status determined by the Financial Services Authority cannot be rehabilitated in the event:
a. the time limit for special supervision status expires; and b. the MFI still meets the criteria as referred to in Article 166.
(2) The district/city government sends a letter to the Financial Services Authority regarding small-scale business MFIs with special supervision status that cannot be rehabilitated as referred to in paragraph (1) to be carried out a license revocation process.

Article 169
(1) In the event the Financial Services Authority determines an MFI with special supervision status cannot be rehabilitated as referred to in Article 168 paragraph (1), the Financial Services Authority revokes the MFI's business license. (2) The revocation of the MFI's business license as referred to in paragraph (1) is communicated in writing to:
a. the Board of Directors; b. the Board of Commissioners; and
c. shareholders or members.
(3) The revocation of the MFI's business license as referred to in paragraph (1) is announced on the Financial Services Authority's website.

Third Section
Follow-up on Supervision Status and Procedures for Submission of Supervision Status Reports

Article 170
Follow-up on supervision status and procedures for submission of supervision status reports are carried out in accordance with the Financial Services Authority Regulation regarding the determination of status and follow-up on supervision of non-bank financial service institutions.

CHAPTER XXIX
REPORTS ON GUIDANCE AND SUPERVISION

Article 171
The district/city government that conducts guidance and supervision of small-scale business MFIs reports periodically the results of guidance and supervision of small-scale business MFIs to the Financial Services Authority for a 1 (one) calendar year period at the latest 2 (two) months calculated from the end of the calendar year.

CHAPTER XXX
OTHER PROVISIONS

Article 172
(1) The Financial Services Authority has the authority to request MFIs to submit a plan for fulfilling compliance with violations of this Financial Services Authority Regulation. (2) MFIs are required to submit the fulfillment plan at the latest 1 (one) month since the Financial Services Authority sets the date of the violation committed by the MFI. (3) The fulfillment plan as referred to in paragraph (1) must contain at least:
a. the plan to be carried out by the MFI; and b. the time required to implement the plan as referred to in letter a.
(4) The fulfillment plan as referred to in paragraph (1) must be signed by all members of the Board of Directors and the Board of Commissioners.

Article 173
(1) MFIs that violate the provisions as referred to in Article 172 paragraph (2) are subject to administrative sanctions consisting of:
a. written warning; b. dismissal and/or replacement of the MFI's Board of Directors;
c. suspension of business activities for part or all of the business activities; and/or
d. administrative fine.
(2) Administrative sanctions as referred to in paragraph (1) letters b to d may be imposed with or without being preceded by the imposition of an administrative sanction consisting of a written warning as referred to in paragraph (1) letter a. (3) Administrative sanctions consisting of administrative fines as referred to in paragraph (1) letter d are imposed for a maximum of IDR 10,000,000.00 (ten million rupiah). (4) In the event the MFI has fulfilled the provisions as referred to in Article 172 paragraph (2), the Financial Services Authority revokes the administrative sanction. (5) In the event a violation of the provisions as referred to in paragraph (1) occurs and the violation has been corrected, the Financial Services Authority provides an administrative sanction consisting of a written warning that ends automatically. (6) In addition to the administrative sanctions as referred to in paragraph (1), the Financial Services Authority has the authority to:
a. downgrade the health assessment results; b. conduct a re-assessment of the main parties that caused the MFI to violate the provisions as referred to in paragraph (1); and/or
c. record the track record of the parties that caused the MFI to violate the provisions as referred to in paragraph (1) in the Financial Services Authority's electronic system.

Article 174
The Financial Services Authority may, based on certain considerations, grant approval or policies that differ from this Financial Services Authority Regulation.

CHAPTER XXXI
TRANSITIONAL PROVISIONS

Article 175
(1) Business licenses for MFIs issued before this Financial Services Authority Regulation is determined are declared to remain valid.
(2) Licensing and approval applications that have been received by the Financial Services Authority and have not obtained approval or rejection at the time this Financial Services Authority Regulation comes into force, are processed in accordance with Financial Services Authority Regulation Number 10/POJK.05/2021 concerning Business Licensing and Institutional Aspects of Microfinance Institutions. (3) Business license applications with non-cash capital contributions as referred to in Article 11 paragraph (1) apply at the latest 3 (three) years calculated from the date of January 12, 2023.

Article 176
For MFIs that have obtained business licenses before this Financial Services Authority Regulation comes into force, the Financial Services Authority determines the MFI business scale for the first time at the latest on February 28, 2025, based on MFI assets calculated based on financial reports for the December 2024 period.

Article 177
(1) Agreements regarding the granting of Loans that have been signed before this Financial Services Authority Regulation is promulgated are declared to remain valid until the agreement expires. (2) In the event the agreement as referred to in paragraph (1) requires changes after the promulgation of this Financial Services Authority Regulation, changes to the agreement must meet the provisions in this Financial Services Authority Regulation.

Article 178
For MFIs that have obtained business licenses at the time this Financial Services Authority Regulation is promulgated, the obligation to meet the provisions:
a. inclusion of the name on the office building as referred to in Article 6; b. registered as members of the Association as referred to in Article 55 paragraph (1) for medium-scale business MFIs;
c. reporting of maximum interest rates as referred to in Article 102 paragraph (2) and paragraph (4), at the latest 1 (one) year since this Financial Services Authority Regulation is promulgated.

Article 179
For large-scale business MFIs that have obtained business licenses at the time this Financial Services Authority Regulation is promulgated, the obligation to be registered as members of the association as referred to in Article 55 paragraph (1) is at the latest 6 (six) months since this Financial Services Authority Regulation is promulgated.

Article 180
For Associations that have existed before this Financial Services Authority Regulation is promulgated, the Association must obtain written approval from the Financial Services Authority at the latest 1 (one) year since this Financial Services Authority Regulation is promulgated.

Article 181
(1) For MFIs that have obtained business licenses at the time this Financial Services Authority Regulation is promulgated, the obligation to meet the provisions regarding:
a. prohibition of concurrent positions on the Board of Directors as referred to in Article 28 paragraph (1); b. number of Board of Directors and Board of Commissioners as referred to in Article 29;
c. interviews for medium-scale business MFIs as referred to in Article 33 paragraph (1);
d. registered as members of the Association for small-scale business MFIs as referred to in Article 55 paragraph (1); e. assessment of Loan or Financing quality as referred to in Article 106 paragraph (1); f. formation of Loan or Financing write-off provisions as referred to in Article 107 paragraph (1); g. ratio of net Non-Performing Loans or Financing as referred to in Article 122 paragraph (2); h. submission of audited financial reports for medium-scale business MFIs having total assets above IDR 7,500,000,000.00 (seven billion five hundred million rupiah) and conducting public fund gathering in the form of Deposits as referred to in Article 140 paragraph (1);
i. ownership of information systems as referred to in Article 143 paragraph (1);
j. posting of annual financial reports audited by public accountants on the website as referred to in Article 140 paragraph (8); and k. preparation and reporting of business plans as referred to in Article 145 paragraph (1), at the latest 3 (three) years since this Financial Services Authority Regulation is promulgated. (2) At the time of the promulgation of this Financial Services Authority Regulation until the end of the transition period as referred to in paragraph (1), MFIs that have obtained business licenses at the time this Financial Services Authority Regulation is promulgated are required to meet the provisions regarding:
a. assessment of Loan or Financing quality; b. formation of Loan or Financing write-off provisions; and/or
c. ratio of Non-Performing Loans or Financing,
in accordance with Financial Services Authority Regulation Number 19/POJK.05/2021 concerning the Conduct of Microfinance Institution Business.
(3) In the event the obligations as referred to in paragraph (2) are not fulfilled, sanctions are imposed in accordance with this Financial Services Authority Regulation.

Article 182
(1) The obligation to submit periodic financial reports for small-scale business MFIs that have obtained business licenses before this Financial Services Authority Regulation is promulgated as referred to in Article 139 paragraph (1) applies for the first time for the period ending March 31, 2025. (2) The obligation to submit periodic financial reports for medium-scale business MFIs that have obtained business licenses before this Financial Services Authority Regulation is determined as referred to in Article 139 paragraph (2) is carried out in stages:
a. submission of periodic financial reports is carried out every 3 (three) months for periods ending on March 31, June 30, September 30, and December 31, starting from the period ending March 31, 2025 until the period ending December 31, 2027; and b. submission of periodic reports every month for the first time applies for the period ending January 31, 2028. (3) The obligation to submit periodic financial reports for large-scale business MFIs that have obtained business licenses before this Financial Services Authority Regulation is determined as referred to in Article 139 paragraph (2) is carried out in stages:
a. submission of periodic financial reports is carried out every 3 (three) months for periods ending on March 31, June 30, September 30, and December 31, starting from the period ending March 31, 2025 until the period ending December 31, 2025; and b. submission of periodic reports every month for the first time applies for the period ending January 31, 2026.

Article 183
Members of the Board of Directors, managers, members of the Board of Commissioners, and/or members of the DPS of large-scale business MFIs who have held office at the time this Financial Services Authority Regulation is promulgated and have not undergone the suitability and competence assessment as referred to in Article 32 paragraph (1) and paragraph (2), members of the Board of Directors, managers, members of the Board of Commissioners, and/or members of the DPS may hold office and carry out their duties and functions until the end of their term of office.

Article 184
Provisions regarding dissolution and Liquidation as referred to in Article 65 to Article 96 apply to MFIs whose business licenses are revoked since this Financial Services Authority Regulation is promulgated.

Article 185
(1) Provisions regarding health levels as referred to in Article 120 paragraph (1) begin to apply 3 (three) years since this Financial Services Authority Regulation is promulgated. (2) Health level criteria in the determination of supervision status as referred to in Article 164 letter a and Article 166 letter b begin to apply 3 (three) years since this Financial Services Authority Regulation is promulgated. (3) The ratio of net Non-Performing Loans or Financing criteria in the determination of supervision status as referred to in Article 164 letter b number 2 and Article 166 letter c number 2 are declared to begin to apply 3 (three) years since this Financial Services Authority Regulation is promulgated. (4) Fulfillment of health level requirements in applications for approval of other business activities as referred to in Article 99 paragraph (1) letter a begin to apply 3 (three) years since this Financial Services Authority Regulation is promulgated.

Article 186
(1) For large-scale business MFIs, provisions regarding the obligation to post annual financial reports audited by public accountants on the website as referred to in Article 140 paragraph (8) apply for the first time for the period ending December 31, 2026. (2) For medium-scale business MFIs having total assets above IDR 7,500,000,000.00 (seven billion five hundred million rupiah) and conducting public fund gathering in the form of Deposits, provisions regarding the obligation to post annual financial reports audited by public accountants on the website as referred to in Article 140 paragraph (8) apply for the first time for the period ending December 31, 2027.

Article 187
(1) Every notification letter that has been given to MFIs based on:
a. Financial Services Authority Regulation Number 10/POJK.05/2021 concerning Business Licensing and Institutional Aspects of Microfinance Institutions; or b. Financial Services Authority Regulation Number 19/POJK.05/2021 concerning the Conduct of Microfinance Institution Business, is declared to remain valid insofar as it does not conflict with this Financial Services Authority Regulation. (2) MFIs that have not been able to overcome the causes of the issuance of notification letters as referred to in paragraph (1) are subject to administrative sanctions in accordance with the procedures for imposing sanctions as regulated in this Financial Services Authority Regulation.

Article 188
(1) Every administrative sanction that has been imposed on MFIs based on:
a. Financial Services Authority Regulation Number 14/POJK.05/2014 concerning Guidance and Supervision of Microfinance Institutions; b. Financial Services Authority Regulation Number 10/POJK.05/2021 concerning Business Licensing and Institutional Aspects of Microfinance Institutions; or
c. Financial Services Authority Regulation Number 19/POJK.05/2021 concerning the Conduct of Microfinance Institution Business,
is declared to remain valid insofar as it does not conflict with this Financial Services Authority Regulation.
(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 follow-up administrative sanctions in accordance with the procedures for imposing administrative sanctions as regulated in this Financial Services Authority Regulation.

CHAPTER XXXII
CLOSING PROVISIONS

Article 189
At the time this Financial Services Authority Regulation comes into force, the implementation provisions of Financial Services Authority Regulation Number 19/POJK.05/2021 concerning the Conduct of Microfinance Institution Business (State Gazette of the Republic of Indonesia Year 2021 Number 217, Supplement to the State Gazette of the Republic of Indonesia Number 6742) are declared to remain valid insofar as they do not conflict with this Financial Services Authority Regulation.

Article 190
At the time this Financial Services Authority Regulation comes into force:

1. Financial Services Authority Regulation Number 14/POJK.05/2014 concerning Guidance and Supervision of Microfinance Institutions (State Gazette of the Republic of Indonesia Year 2014 Number 344, Supplement to the State Gazette of the Republic of Indonesia Number 5623);
2. Financial Services Authority Regulation Number 10/POJK.05/2021 concerning Business Licensing and Institutional Aspects of Microfinance Institutions (State Gazette of the Republic of Indonesia Year 2021 Number 145, Supplement to the State Gazette of the Republic of Indonesia Number 6691); and
3. Financial Services Authority Regulation Number 19/POJK.05/2021 concerning the Conduct of Microfinance Institution Business (State Gazette of the Republic of Indonesia Year 2021 Number 217, Supplement to the State Gazette of the Republic of Indonesia Number 6742),
   are revoked and declared invalid.

Article 191
At the time this Financial Services Authority Regulation comes into force, provisions regarding Loan interest rates and Financing yields are subject to this Financial Services Authority Regulation.

Article 192
This Financial Services Authority Regulation comes into force on the date of its promulgation.

This copy is in accordance with the original
Director of Legal Development
Legal Department signed
Aat Windradi

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

Determined in Jakarta on December 24, 2024
DEPUTY CHAIRMAN OF THE COMMISSIONERS BOARD
FINANCIAL SERVICES AUTHORITY OF THE REPUBLIC OF INDONESIA AS A MEMBER OF THE COMMISSIONERS BOARD REPLACING THE CHAIRMAN OF THE COMMISSIONERS BOARD OF THE FINANCIAL SERVICES AUTHORITY OF THE REPUBLIC OF INDONESIA, signed MIRZA ADITYASWARA

Promulgated in Jakarta on December 27, 2024
MINISTER OF LAW OF THE REPUBLIC OF INDONESIA, signed SUPRATMAN ANDI AGTAS

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2024 NUMBER 54/OJK

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 41 OF 2024
CONCERNING
MICROFINANCE INSTITUTIONS

BY THE GRACE OF GOD THE ALMIGHTY,
THE COMMISSIONERS BOARD OF THE FINANCIAL SERVICES AUTHORITY,

I. GENERAL
In order to create a reform of the Indonesian financial sector which is a main prerequisite for building a dynamic, solid, independent, sustainable, and just Indonesian economy, the Government has established Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector. Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector is drafted to increase collaboration by presenting interconnectivity both among financial sector institutions and with all financial service industry sectors. In line with these goals and in order to follow up on the mandate of Article 7 paragraph (2), Article 9 paragraph (3), Article 10, Article 11 paragraph (2), Article 15, Article 16 paragraph (2), Article 22 paragraph (2), Article 23 paragraph (4), Article 27, Article 28 paragraph (2), Article 30 paragraph (2), Article 32, Article 33 paragraph (3) of Law Number 1 of 2013 concerning Microfinance Institutions as amended by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector and Article 252 paragraph (4), Article 269, and Article 270 paragraph (3) of Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector, regulations concerning the development and strengthening of microfinance institutions are needed. These regulations also apply to Microfinance Institutions including parties that do not gather third-party funds as required in their articles of association.

II. ARTICLE BY ARTICLE
Article 1
Quite clear.

Article 2
Paragraph (1)
Letter a
The term "cooperative" refers to a service cooperative.
Letter b
This is sufficiently clear.
Paragraph (2)
This is sufficiently clear.
Paragraph (3)
This is sufficiently clear.
Paragraph (4)
This is sufficiently clear.
Paragraph (5)
Example:
LKM A is owned by the Central Java Regional Government by 60% (sixty percent) and is owned by Indonesian Citizen (WNI) named Wahyu by 20% (twenty percent) and by Indonesian Citizen (WNI) named Fajar by 20% (twenty percent).

Article 3
Ownership of LKM by insiders under this regulation is carried out while still observing the provisions as referred to in Article 2.

Article 4
This is sufficiently clear.

Article 5
Paragraph (1)
This is sufficiently clear.
Paragraph (2)
Example: PT Lembaga Keuangan Mikro Bakti Makmur, Cooperative Microfinance Institution Syariah Sugih Waras.
LKM may also include the name of the original institution of the LKM, for example: Usaha Ekonomi Desa Simpan Pinjam becomes PT Lembaga Keuangan Mikro Usaha Ekonomi Desa Simpan Pinjam Sentosa, Cooperative Microfinance Institution Syariah Usaha Ekonomi Desa Simpan Pinjam Sentosa. Paragraph (3) This is sufficiently clear.

Article 6
This is sufficiently clear.

Article 7
This is sufficiently clear.

Article 8
Paragraph (1)
The imposition of administrative sanctions takes into account among others:
a. the impact of the regulation violation on consumer losses, the condition of the LKM, and the financial services sector; b. the complexity of the regulation violation;
c. the financial condition of the LKM; and/or
d. repeated regulation violations.

Paragraph (2)
This is sufficiently clear.
Paragraph (3)
This is sufficiently clear.
Paragraph (4)
This is sufficiently clear.
Paragraph (5)
This is sufficiently clear.
Paragraph (6)
The implementation of OJK's authority other than the imposition of administrative sanctions is given as part of supervisory actions by OJK which are given by taking into account among others:
a. repeated violations committed by the LKM; b. the failure of the LKM to take corrective actions for the violations committed; and/or
c. the impact of the violation on the health level condition of the LKM.

Article 9
This is sufficiently clear.

Article 10
Paragraph (1)
This is sufficiently clear.
Paragraph (2)
This is sufficiently clear.
Paragraph (3)
This is sufficiently clear.
Paragraph (4)
This is sufficiently clear.
Paragraph (5)
The term "verification and interview" refers to actions taken by the Financial Services Authority (Otoritas Jasa Keuangan) to ensure among others the suitability of LKM facilities and infrastructure as well as the capability of the LKM Board of Directors. The verification and interview process can be conducted through an inspection of the LKM office to ensure the operational readiness of the LKM. Paragraph (6) This is sufficiently clear. Paragraph (7) This is sufficiently clear. Paragraph (8) This is sufficiently clear. Paragraph (9) This is sufficiently clear. Paragraph (10) Letter a The term "village/sub-district business coverage" refers to an LKM that provides Loans or Financing to residents in 1 (one) village/sub-district. Letter b The term "sub-district business coverage" refers to an LKM that provides Loans or Financing to residents in 2 (two) villages/sub-districts or more within 1 (one) same sub-district area. Letter c The term "regency/city business coverage" refers to an LKM that provides Loans or Financing to residents in 2 (two) sub-districts or more within 1 (one) same regency/city area. Paragraph (11) The term "valid for 3 (three) years" means that no evaluation of LKM assets will be conducted for 3 (three) years after the LKM business license is issued. Paragraph (12) The term "displayed at the LKM office" means placed on the wall of the LKM office room that serves as the service area for customers. Paragraph (13) This is sufficiently clear. Paragraph (14) This is sufficiently clear.

Article 11
Paragraph (1)
The term "LKM applying for a license with non-cash capital deposits" refers to an LKM that has operated before the enactment of the Law regarding LKM.
Paragraph (2)
This is sufficiently clear.
Paragraph (3)
The ratio of Problematic Loans or commonly used Non Performing Loan (NPL) or the ratio of Problematic Financing or commonly used Non Performing Finance (NPF) is calculated by comparing Loans or Financing with doubtful and bad quality with the total Loans or Financing given to the public, as regulated in this Financial Services Authority Regulation. Paragraph (4) This is sufficiently clear. Paragraph (5) This is sufficiently clear. Paragraph (6) This is sufficiently clear. Paragraph (7) This is sufficiently clear. Paragraph (8) See the explanation of Article 10 paragraph (5). Paragraph (9) This is sufficiently clear. Paragraph (10) This is sufficiently clear. Paragraph (11) This is sufficiently clear. Paragraph (12) This is sufficiently clear. Paragraph (13) This is sufficiently clear. Paragraph (14) This is sufficiently clear. Paragraph (15) This is sufficiently clear. Paragraph (16) This is sufficiently clear. Paragraph (17) This is sufficiently clear.

Article 12
Paragraph (1)
The term "incubation LKM" refers to an LKM, whether established to implement a Government program or established by the community that does not collect funds and is not yet able to meet the provisions as referred to in the law regarding microfinance institutions. Paragraph (2) This is sufficiently clear. Paragraph (3) This is sufficiently clear. Paragraph (4) This is sufficiently clear.

Article 13
This is sufficiently clear.

Article 14
Paragraph (1)
This is sufficiently clear.
Paragraph (2)
See the explanation of Article 11 paragraph (3).
Paragraph (3)
This is sufficiently clear.
Paragraph (4)
This is sufficiently clear.

Article 15
This is sufficiently clear.

Article 16
This is sufficiently clear.

Article 17
Paragraph (1)
See the explanation of Article 8 paragraph (1).
Paragraph (2)
This is sufficiently clear.
Paragraph (3)
This is sufficiently clear.
Paragraph (4)
This is sufficiently clear.
Paragraph (5)
This is sufficiently clear.
Paragraph (6)
See the explanation of Article 8 paragraph (6).

Article 18
This is sufficiently clear.

Article 19
This is sufficiently clear.

Article 20
This is sufficiently clear.

Article 21
This is sufficiently clear.

Article 22
This is sufficiently clear.

Article 23
This is sufficiently clear.

Article 24
This is sufficiently clear.

Article 25
This is sufficiently clear.

Article 26
Paragraph (1)
See the explanation of Article 8 paragraph (1).
Paragraph (2)
This is sufficiently clear.
Paragraph (3)
This is sufficiently clear.
Paragraph (4)
This is sufficiently clear.
Paragraph (5)
This is sufficiently clear.
Paragraph (6)
See the explanation of Article 8 paragraph (6).

Article 27
Letter a
The term "principal executive party" refers to the principal party as referred to in the Financial Services Authority Regulation regarding the re-evaluation of principal parties of financial service institutions. Example:
Mr. A, based on the process conducted by the Financial Services Authority in accordance with the Financial Services Authority Regulation regarding the re-evaluation of principal parties of financial service institutions, is declared to be included in the list of parties prohibited from becoming principal executives at a Rural Bank. Letter b This is sufficiently clear. Letter c This is sufficiently clear. Letter d This is sufficiently clear. Letter e This is sufficiently clear. Letter f This is sufficiently clear. Letter g This is sufficiently clear.

Article 28
Paragraph (1)
Example:
If Mr. Adi becomes a Director at LKM ABS, then Mr. Adi cannot become a director at another company, whether an LKM or a company operating in the financial or non-financial sector. Paragraph (2) This is sufficiently clear. Paragraph (3) This is sufficiently clear.

Article 29
This is sufficiently clear.

Article 30
This is sufficiently clear.

Article 31
Paragraph (1)
See the explanation of Article 8 paragraph (1).
Paragraph (2)
This is sufficiently clear.
Paragraph (3)
This is sufficiently clear.
Paragraph (4)
This is sufficiently clear.
Paragraph (5)
This is sufficiently clear.
Paragraph (6)
See the explanation of Article 8 paragraph (6).

Article 32
Paragraph (1)
The term "manager" refers to a party appointed by the executive board and given authority and power to manage the LKM business of a legal entity cooperative. Paragraph (2) This is sufficiently clear. Paragraph (3) This is sufficiently clear.

Article 33
Paragraph (1)
This is sufficiently clear.
Paragraph (2)
Board of Directors members, Board of Commissioners members, and/or members of the Supervisory Board (DPS) of small-scale LKM undergo an interview process, among others, if:
a. they do not have experience in the LKM field; b. they have negative information; and/or
c. they have previously not received approval in the evaluation and suitability process as a principal party of a financial service institution.

Article 34
This is sufficiently clear.

Article 35
This is sufficiently clear.

Article 36
Paragraph (1)
See the explanation of Article 8 paragraph (1).
Paragraph (2)
This is sufficiently clear.
Paragraph (3)
This is sufficiently clear.
Paragraph (4)
This is sufficiently clear.
Paragraph (5)
This is sufficiently clear.
Paragraph (6)
See the explanation of Article 8 paragraph (6).

Article 37
This is sufficiently clear.

Article 38
This is sufficiently clear.

Article 39
Paragraph (1)
See the explanation of Article 8 paragraph (1).
Paragraph (2)
This is sufficiently clear.
Paragraph (3)
This is sufficiently clear.
Paragraph (4)
This is sufficiently clear.
Paragraph (5)
This is sufficiently clear.
Paragraph (6)
See the explanation of Article 8 paragraph (6).

Article 40
This is sufficiently clear.

Article 41
Paragraph (1)
See the explanation of Article 8 paragraph (1).
Paragraph (2)
This is sufficiently clear.
Paragraph (3)
This is sufficiently clear.
Paragraph (4)
This is sufficiently clear.
Paragraph (5)
This is sufficiently clear.
Paragraph (6)
See the explanation of Article 8 paragraph (6).

Article 42
This is sufficiently clear.

Article 43
Paragraph (1)
See the explanation of Article 8 paragraph (1).
Paragraph (2)
This is sufficiently clear.
Paragraph (3)
This is sufficiently clear.
Paragraph (4)
This is sufficiently clear.
Paragraph (5)
This is sufficiently clear.
Paragraph (6)
See the explanation of Article 8 paragraph (6).

Article 44
This is sufficiently clear.

Article 45
This is sufficiently clear.

Article 46
Paragraph (1)
The term "office" refers to the head office and branch offices.
Paragraph (2)
This is sufficiently clear.
Paragraph (3)
This is sufficiently clear.
Paragraph (4)
This is sufficiently clear.

Article 47
Paragraph (1)
See the explanation of Article 8 paragraph (1).
Paragraph (2)
This is sufficiently clear.
Paragraph (3)
This is sufficiently clear.
Paragraph (4)
This is sufficiently clear.
Paragraph (5)
This is sufficiently clear.
Paragraph (6)
See the explanation of Article 8 paragraph (6).

Article 48
This is sufficiently clear.

Article 49
This is sufficiently clear.

Article 50
This is sufficiently clear.

Article 51
This is sufficiently clear.

Article 52
This is sufficiently clear.

Article 53
This is sufficiently clear.

Article 54
Paragraph (1)
See the explanation of Article 8 paragraph (1).
Paragraph (2)
This is sufficiently clear.
Paragraph (3)
This is sufficiently clear.
Paragraph (4)
This is sufficiently clear.
Paragraph (5)
This is sufficiently clear.
Paragraph (6)
See the explanation of Article 8 paragraph (6).

Article 55
This is sufficiently clear.

Article 56
This is sufficiently clear.

Article 57
This is sufficiently clear.

Article 58
Letter a
This is sufficiently clear.
Letter b
This is sufficiently clear.
Letter c
Other duties include the Association participating in certain efforts to develop, strengthen, and rehabilitate the industry and assignments to disseminate information from the Financial Services Authority to all Association members.

Article 59
Paragraph (1)
See the explanation of Article 8 paragraph (1).
Paragraph (2)
This is sufficiently clear.
Paragraph (3)
This is sufficiently clear.
Paragraph (4)
This is sufficiently clear.
Paragraph (5)
This is sufficiently clear.
Paragraph (6)
See the explanation of Article 8 paragraph (6).

Article 60
This is sufficiently clear.

Article 61
Paragraph (1)
This is sufficiently clear.
Paragraph (2)
Letter a
This is sufficiently clear.
Letter b
This is sufficiently clear.
Letter c
The term "obligation settlement" among others can be in the form of an LKM commitment to settle part or all of its obligations.
Paragraph (3)
This is sufficiently clear.
Paragraph (4)
This is sufficiently clear.
Paragraph (5)
This is sufficiently clear.
Paragraph (6)
This is sufficiently clear.
Paragraph (7)
This is sufficiently clear.
Paragraph (8)
This is sufficiently clear.
Paragraph (9)
This is sufficiently clear.
Paragraph (10)
This is sufficiently clear.
Paragraph (11)
This is sufficiently clear.
Paragraph (12)
This is sufficiently clear.

Article 62
This is sufficiently clear.

Article 63
This is sufficiently clear.

Article 64
Paragraph (1)
The term "closing balance sheet" refers to the LKM balance sheet as of the date of the revocation of the LKM business license, prepared in accordance with applicable financial accounting standards. Paragraph (2) This is sufficiently clear. Paragraph (3) The determination of the deadline for submitting the closing balance sheet is carried out by taking into account among others the office location, asset conditions, and the complexity of the LKM's problems. Paragraph (4) This is sufficiently clear. Paragraph (5) This is sufficiently clear. Paragraph (6) This is sufficiently clear. Paragraph (7) This is sufficiently clear. Paragraph (8) This is sufficiently clear.

Article 65
This is sufficiently clear.

Article 66
This is sufficiently clear.

Article 67
This is sufficiently clear.

Article 68
Example: PT LKM ABC (DL).

Article 69
Paragraph (1)
Letter a
This is sufficiently clear.
Letter b
Number 1
This is sufficiently clear.
Number 2
Conditions that can be granted approval by the Financial Services Authority, among others, include the Supervisory Board (DPS) not having a role related to the revocation of the LKM business license. Paragraph (2) This is sufficiently clear. Paragraph (3) This is sufficiently clear.

Article 70
This is sufficiently clear.

Article 71
Letter a
This is sufficiently clear.
Letter b
This is sufficiently clear.
Letter c
This is sufficiently clear.
Letter d
This is sufficiently clear.
Letter e
Other parties include, among others, actuaries, appraisers, and advocates/lawyers/legal consultants.
Letter f
This is sufficiently clear.
Letter g
This is sufficiently clear.

Article 72
This is sufficiently clear.

Article 73
Paragraph (1)
This is sufficiently clear.
Paragraph (2)
This is sufficiently clear.
Paragraph (3)
Taking into account effectiveness and efficiency, among others, considering the number of creditors and the number of assets.
Paragraph (4)
This is sufficiently clear.

Article 74
This is sufficiently clear.

Article 75
This is sufficiently clear.

Article 76
This is sufficiently clear.

Article 77
This is sufficiently clear.

Article 78
This is sufficiently clear.

Article 79
This is sufficiently clear.

Article 80
Letter a
See the explanation of Article 63 paragraph (1).
Letter b
This is sufficiently clear.
Letter c
The term "Interim Liquidation Balance Sheet" refers to the LKM balance sheet as of the date of the revocation of the LKM business license, prepared by the Liquidation Team based on the audited closing balance sheet, taking into account:

1. asset positions based on estimated realizable values; and
2. liability positions after the expiration of the period for submitting claims or receivables by creditors.
   Letter d
   This is sufficiently clear.
   Letter e
   This is sufficiently clear.
   Letter f
   This is sufficiently clear.
   Letter g
   This is sufficiently clear.

Article 81
This is sufficiently clear.

Article 82
This is sufficiently clear.

Article 83
This is sufficiently clear.

Article 84
This is sufficiently clear.

Article 85
This is sufficiently clear.

Article 86
Paragraph (1)
This is sufficiently clear.
Paragraph (2)
This is sufficiently clear.
Paragraph (3)
This is sufficiently clear.
Paragraph (4)
Other parties include, among others, actuaries and appraisers registered with the Financial Services Authority.

Article 87
This is sufficiently clear.

Article 88
This is sufficiently clear.

Article 89
This is sufficiently clear.

Article 90
Paragraph (1)
The term "Final Liquidation Balance Sheet" refers to the balance sheet submitted by the Liquidation Team after the Liquidation process is completed or the implementation period of the Liquidation has ended. Paragraph (2) This is sufficiently clear. Paragraph (3) This is sufficiently clear. Paragraph (4) This is sufficiently clear.

Article 91
This is sufficiently clear.

Article 92
This is sufficiently clear.

Article 93
This is sufficiently clear.

Article 94
This is sufficiently clear.

Article 95
This is sufficiently clear.

Article 96
This is sufficiently clear.

Article 97
Paragraph (1)
Letter a
This is sufficiently clear.
Letter b
Other business activities established by the Financial Services Authority must be in accordance with the characteristics of the LKM as a financial institution with a mission of community development and empowerment and not solely for profit. Paragraph (2) Letter a The term "fee-based activities" refers to LKM business activities that receive income other than interest or profit-sharing income, among others:
a. marketing financial service products such as micro insurance; b. cooperating with financing companies through financing channeling; and
c. becoming agents of financial service institutions providing Officeless Financial Services in the context of Inclusive Finance (Laku Pandai).
Letter b
This is sufficiently clear.
Paragraph (3)
The term "adl" means placing something in its proper place, giving something only to those entitled, and treating something according to its position.
The term "tawazun" means including balance in material and spiritual aspects, private and public aspects, the financial sector and the real sector, business and social aspects, and balance in utilization and sustainability aspects. The term "maslahah" means all forms of goodness with worldly and hereafter dimensions, material and spiritual, individual and collective, and must meet 3 (three) elements namely Sharia compliance (halal), beneficial and bringing goodness (thoyib) in all aspects overall without causing harm. The term "alamiyah" means can be done by, with, and for all parties concerned (stakeholders) without distinguishing ethnicity, religion, race, and sect, in accordance with the spirit of universal mercy (rahmatan lil alamin). The term "gharar" refers to transactions where the object is unclear, not owned, its existence is unknown, or it cannot be delivered at the time of the transaction unless otherwise regulated in Sharia. The term "maysir" refers to transactions that are speculative and not directly related to the productivity of the real sector. The term "riba" refers to the assurance of income addition that is unlawful (bathil). Example: in the exchange of similar goods that are not equal in quality, quantity, and time of delivery (fadhl), or in loan transactions requiring the recipient of the facility to return funds received exceeding the principal loan due to the passage of time (nasi'ah). The term "zhulm" refers to transactions that cause injustice to other parties. The term "risywah" refers to bribery in the form of money, facilities, or other forms that violate the law as an effort to obtain facilities or ease in a transaction. The term "haram object" refers to transactions where the object is prohibited in Sharia. Paragraph (4) This is sufficiently clear.

Article 98
This is sufficiently clear.

Article 99
This is sufficiently clear.

Article 100
Paragraph (1)
Example 1:
PT LKM GHI applies for a business license after this Financial Services Authority Regulation comes into force with paid-up capital of Rp 2,500,000,000.00 (two billion five hundred million rupiah) which is designated as a large-scale LKM with regency/city business coverage. After a period of 3 (three) years from the date of the business license, LKM GHI will be designated as a large-scale LKM with regency/city business coverage if it has assets starting from Rp 10,000,000,000.00 (ten billion rupiah).

Example 2:
PT LKM ABC obtained a business license before this Financial Services Authority Regulation came into force with paid-up capital of Rp 300,000,000.00 (three hundred million rupiah) which was designated as an LKM with village/sub-district business coverage. Subsequently, based on the financial report as of December 2024, LKM ABC has assets of Rp 5,000,000,000.00 (five billion rupiah) so LKM ABC will be designated as a medium-scale LKM with sub-district business coverage. Paragraph (2) Example:
Based on the financial report for the December 2024 period, it is known that the assets are:

• LKM ABC at Rp 750,000,000.00 (seven hundred fifty million rupiah);
• LKM DEF at Rp 2,500,000,000.00 (two billion five hundred million rupiah);
• LKM GHI at Rp 12,500,000,000.00 (twelve billion five hundred million rupiah),
  then by February 28, 2025 at the latest, the Financial Services Authority will designate as follows:
• LKM ABC as a small-scale LKM with village/sub-district business coverage;
• LKM DEF as a medium-scale LKM with sub-district business coverage;
• LKM GHI as a large-scale LKM with regency/city business coverage.
  Paragraph (3)
  This is sufficiently clear.
  Paragraph (4)
  This is sufficiently clear.
  Paragraph (5)
  Example:
  At the time of licensing, LKM ABC was an LKM with regency/city business coverage. Subsequently, based on the financial report for the December 2024 period, it has assets of Rp 750,000,000.00 (seven hundred fifty million rupiah). Based on the designation by the Financial Services Authority on February 28, 2025, LKM ABC is a small-scale LKM with village/sub-district business coverage. LKM ABC must adjust regarding the business coverage to village/sub-district or increase assets to above Rp 10,000,000,000.00 (ten billion rupiah) to become a large-scale business at the latest by February 28, 2030. Paragraph (6) This is sufficiently clear. Paragraph (7) This is sufficiently clear. Paragraph (8) This is sufficiently clear. Paragraph (9) This is sufficiently clear.

Article 101
Paragraph (1)
Analysis of the suitability of Loan or Financing disbursement is among others conducted based on the assessment of:
a. The customer's ability to repay the Loan or Financing (capacity); and b. The customer's track record/character (character), which are part of the 5C principles namely character, capital, capacity, condition of economy, and collateral. Paragraph (2) This is sufficiently clear. Paragraph (3) This is sufficiently clear. Paragraph (4) This is sufficiently clear. Paragraph (5) The term "credit guarantee or credit insurance" refers to guarantees or insurance conducted conventionally or based on Sharia Principles. Paragraph (6) This is sufficiently clear.

Article 102
This is sufficiently clear.

Article 103
This is sufficiently clear.

Article 104
Paragraph (1)
This is sufficiently clear.
Paragraph (2)
Example:
On April 30, 2024, the LKM had Equity of Rp 200,000,000.00 (two hundred million rupiah) so the maximum limit for Loan or Financing disbursement is at most 10% (ten percent) or Rp 20,000,000.00 (twenty million rupiah) for 1 (one) customer. If on April 30, 2024, the LKM provides a Loan of Rp 25,000,000.00 (twenty-five million rupiah) to 1 (one) customer, the LKM violates the maximum limit provision for Loan or Financing disbursement. Paragraph (3) Letter a Example:
Loan or Financing disbursement conducted in June 2024 is calculated using the LKM's Equity based on the financial report for the period ending on April 30, 2024. On June 15, 2024, the LKM had Equity of Rp 200,000,000.00 (two hundred million rupiah). Based on the financial report, the LKM's Equity on April 30, 2024 was Rp 100,000,000.00 (one hundred million rupiah). Based on this information, the maximum limit for Loan or Financing disbursement is Rp 10,000,000.00 (ten million rupiah) for 1 (one) customer. If on June 15, 2024, the LKM provides a Loan of Rp 20,000,000.00 (twenty million rupiah) to 1 (one) customer, the LKM violates the maximum limit provision for Loan or Financing disbursement. Letter b Example:
Loan or Financing disbursement conducted in June 2024 is calculated using the LKM's Equity based on the financial report for the period ending on May 31, 2024. On June 15, 2024, the LKM had Equity of Rp 200,000,000.00 (two hundred million rupiah). Based on the financial report, the LKM's Equity on May 31, 2024 was Rp 100,000,000.00 (one hundred million rupiah). Based on this information, the maximum limit for Loan or Financing disbursement is Rp 10,000,000.00 (ten million rupiah) for 1 (one) customer. If on June 15, 2024, the LKM provides a Loan of Rp 20,000,000.00 (twenty million rupiah) to 1 (one) customer, the LKM violates the maximum limit provision for Loan or Financing disbursement. Paragraph (4) This is sufficiently clear.

Article 105
Paragraph (1)
This is sufficiently clear.
Paragraph (2)
This is sufficiently clear.
Paragraph (3)
This is sufficiently clear.
Paragraph (4)
For a loan value of Rp 100,000,000.00 (one hundred million rupiah), the collateral must have an economic value of at least 120% (one hundred twenty percent) x Rp 100,000,000.00 (one hundred million rupiah) = Rp 120,000,000.00 (one hundred twenty million rupiah). "Economic value" used for:
a. collateral in the form of savings and/or deposits uses the nominal value; b. collateral in the form of land and/or buildings among others uses the value from the results of an independent appraiser or the tax object sale value;
c. collateral in the form of motor vehicles, ships, and/or motorized boats, uses the market value which is the money estimated to be obtained from a buy-sell transaction or the result of exchanging an asset on the valuation date after deducting transaction costs. Market value information can be obtained from print media or electronic media.
Paragraph (5)
This is sufficiently clear.

Article 106
This is sufficiently clear.

Article 107
Quite clear.

Article 108
Paragraph (1)
Example of Borrower A:

• Loan or Financing Amount: Rp10,000,000.00
  (ten million rupiah).
• Loan or Financing Quality: Doubtful.
• Provision Percentage: 50% (fifty percent).
• Collateral Type: None.
• Provision Value after deducting collateral: 50% x (Rp10,000,000.00 – Rp0.00) = Rp5,000,000.00 (five million rupiah).

Example of Borrower B:

• Loan or Financing Amount: Rp10,000,000.00
  (ten million rupiah).
• Loan or Financing Quality: Performing.
• Provision Percentage: 0% (zero percent).
• Since the provision percentage is 0% (zero percent), the provision value is Rp0.00 (zero rupiah), whether with or without collateral.

Example of Borrower C:

• Loan or Financing Amount: Rp10,000,000.00
  (ten million rupiah).
• Loan or Financing Quality: Doubtful.
• Provision Percentage: 50% (fifty percent).
• Collateral Type: Savings.
• Percentage referred to in Article 102 paragraph (2): 100%
  (one hundred percent).
• Collateral Value: Rp 15,000,000.00 (fifteen million rupiah).
• Collateral Value calculated as a reduction of 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 of provision is greater than the provision value so the provision calculation becomes Rp0.00 (zero rupiah).

Example of Borrower D:

• Loan or Financing Amount: Rp10,000,000.00
  (ten million rupiah).
• Loan or Financing Quality: Non-performing (Macet).
• Provision Percentage: 100% (one hundred percent).
• Collateral Type: Motorcycle accompanied by BPKB (Vehicle Registration Certificate) and has been subject to fidusia encumbrance.
• Percentage referred to in Article 102 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 of 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
Quite clear.

Letter b
What is meant by “land and/or buildings with certificates” is land and/or buildings that are 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, among others, residential houses, apartments, shops, and office buildings.

Letter c
Quite clear.

Letter d
Quite clear.

Letter e
“Customary land acknowledgment letters”, among others, girik letters, petok d, letter c, rincik, and ketitir.

Letter f
Quite clear.

Article 109
Paragraph (1)
Letter a
What is meant by “assessment of collateral” is the appraisal and opinion by the internal appraiser of the LKM or an independent appraiser regarding the economic value of the collateral based on an 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 collateral from weather hazards, theft risks, and fire.

Paragraph (2)
Letter a
Quite clear.

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

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)
Quite clear.

Article 110
Paragraph (1)
Quite clear.

Paragraph (2)
Quite clear.

Paragraph (3)
Quite clear.

Paragraph (4)
Letter a
Example:
Initial Condition:
Customer A has a loan at LKM XYZ with monthly payments detailed as follows:

• Total initial loan: Rp100,000,000.
• Monthly installment: Rp10,000,000 (including principal and interest).
• Remaining tenure: 12 months.
• Loan quality status before restructuring:
  Non-performing (Macet).

Restructuring Scheme:
In September 2024, LKM XYZ and Customer A agreed to restructure the loan by reducing monthly installments and extending the tenure:

• New monthly installment: Rp5,000,000 (including
  principal and interest).
• Tenure extension: 24 months.

In development, after such restructuring, Customer A was only able to pay according to the restructuring agreement for October and November 2024, while in December 2024, Customer A failed to make payment. Thus, the loan quality status of Customer A in the periodic financial reports for the period ending on December 31, 2024 remains Non-performing (Macet).

Letter b
Example:
Initial Condition:
Customer A has a loan at LKM XYZ with monthly payments detailed as follows:

• Total initial loan: Rp100,000,000.
• Monthly installment: Rp10,000,000 (including principal
  and interest).
• Remaining tenure: 12 months.
• Loan quality status before restructuring:
  Non-performing (Macet).

Restructuring Scheme:
In September 2024, LKM XYZ and Customer A agreed to restructure the loan by reducing monthly installments and extending the tenure:

• New monthly installment: Rp5,000,000.
• Tenure extension: 24 months.

In development, after such restructuring, Customer A was able to pay according to the restructuring agreement for October, November, and December 2024. Thus, the loan quality status of Customer A in the periodic financial reports for the period ending on December 31 2024 can increase at most 1 (one) level from the loan quality status before restructuring to Doubtful.

Letter c
Quite clear.

Paragraph (5)
Quite clear.

Paragraph (6)
Quite clear.

Paragraph (7)
Quite clear.

Article 111
Quite clear.

Article 112
Paragraph (1)
See explanation of Article 8 paragraph (1).

Paragraph (2)
Quite clear.

Paragraph (3)
Quite clear.

Paragraph (4)
Quite clear.

Paragraph (5)
Quite clear.

Paragraph (6)
See explanation of Article 8 paragraph (6).

Article 113
Quite clear.

Article 114
Paragraph (1)
See explanation of Article 8 paragraph (1).

Paragraph (2)
Quite clear.

Paragraph (3)
Quite clear.

Paragraph (4)
Quite clear.

Paragraph (5)
Quite clear.

Paragraph (6)
See explanation of Article 8 paragraph (6).

Article 115
Paragraph (1)
Quite clear.

Paragraph (2)
Letter a
Quite clear.

Letter b
Quite clear.

Letter c
What is meant by “international institution” is an international institution focused on community development.

Article 116
Paragraph (1)
See explanation of Article 8 paragraph (1).

Paragraph (2)
Quite clear.

Paragraph (3)
Quite clear.

Paragraph (4)
Quite clear.

Paragraph (5)
Quite clear.

Paragraph (6)
See explanation of Article 8 paragraph (6).

Article 117
Paragraph (1)
Quite clear.

Paragraph (2)
Quite clear.

Paragraph (3)
Quite clear.

Paragraph (4)
Quite clear.

Paragraph (5)
Management of social and charitable funds in the form of zakat, infak, sedekah, and wakaf carried out by LKMs that conduct business activities based on Sharia Principles must be carried out separately from the activities of collecting Savings and distributing Financing, which are the main activities of the respective LKM.

Paragraph (6)
Quite clear.

Article 118
Quite clear.

Article 119
Paragraph (1)
See explanation of Article 8 paragraph (1).

Paragraph (2)
Quite clear.

Paragraph (3)
Quite clear.

Paragraph (4)
Quite clear.

Paragraph (5)
Quite clear.

Paragraph (6)
See explanation of Article 8 paragraph (6).

Article 120
Paragraph (1)
What is meant by “composite rating” is the final rating of the health level assessment results.

Paragraph (2)
Quite clear.

Paragraph (3)
Quite clear.

Article 121
Quite clear.

Article 122
Quite clear.

Article 123
Quite clear.

Article 124
Quite clear.

Article 125
Quite clear.

Article 126
Quite clear.

Article 127
Quite clear.

Article 128
Paragraph (1)
See explanation of Article 8 paragraph (1).

Paragraph (2)
Quite clear.

Paragraph (3)
Quite clear.

Paragraph (4)
Quite clear.

Paragraph (5)
Quite clear.

Paragraph (6)
See explanation of Article 8 paragraph (6).

Article 129
Quite clear.

Article 130
Paragraph (1)
See explanation of Article 8 paragraph (1).

Paragraph (2)
Quite clear.

Paragraph (3)
Quite clear.

Paragraph (4)
Quite clear.

Paragraph (5)
Quite clear.

Paragraph (6)
See explanation of Article 8 paragraph (6).

Article 131
Quite clear.

Article 132
Quite clear.

Article 133
Paragraph (1)
What is meant by:

• “prosecution leadership” includes the Head of District Prosecution, Head of Regional Prosecution, and Attorney General;
• “police leadership” includes the Head of District/City Police, Head of Regional Police, and Head of the Republic of Indonesia Police; or
• “court chairman” includes the Chairman of District Court, Chairman of High Court, and Chairman of the Supreme Court.

Paragraph (2)
Quite clear.

Paragraph (3)
Quite clear.

Article 134
Quite clear.

Article 135
Quite clear.

Article 136
Quite clear.

Article 137
Paragraph (1)
See explanation of Article 8 paragraph (1).

Paragraph (2)
Quite clear.

Paragraph (3)
Quite clear.

Paragraph (4)
Quite clear.

Paragraph (5)
Quite clear.

Paragraph (6)
See explanation of Article 8 paragraph (6).

Article 138
Quite clear.

Article 139
Quite clear.

Article 140
Paragraph (1)
Quite clear.

Paragraph (2)
Quite clear.

Paragraph (3)
Quite clear.

Paragraph (4)
Quite clear.

Paragraph (5)
Quite clear.

Paragraph (6)
Quite clear

Paragraph (7)
Example:
PT LKM ABC has a business license as a large-scale LKM issued by the Financial Services Authority on October 1, 2024. In relation to this, the first obligation regarding the submission of annual financial reports audited by a public accountant applies to financial reports for the fiscal year ending on December 31, 2025, which must subsequently be submitted to the Financial Services Authority no later than May 31, 2026.

Paragraph (8)
Quite clear.

Article 141
Paragraph (1)
Financial position reports are part of an entity's financial statements generated in a certain accounting period showing the entity's financial position at the end of the period. Profit and loss reports are part of an entity's financial statements generated in a certain accounting period showing the revenue and expense elements of the LKM.

Paragraph (2)
Quite clear.

Paragraph (3)
Quite clear.

Paragraph (4)
Quite clear.

Article 142
Quite clear.

Article 143
Paragraph (1)
Quite clear.

Paragraph (2)
Business complexity includes diversity in types of transactions, products or services, and business networks.

Paragraph (3)
Quite clear.

Article 144
Paragraph (1)
See explanation of Article 8 paragraph (1).

Paragraph (2)
Quite clear.

Paragraph (3)
Quite clear.

Paragraph (4)
Quite clear.

Paragraph (5)
Quite clear.

Paragraph (6)
See explanation of Article 8 paragraph (6).

Paragraph (7)
Quite clear.

Article 145
Quite clear.

Article 146
Paragraph (1)
See explanation of Article 8 paragraph (1).

Paragraph (2)
Quite clear.

Paragraph (3)
Quite clear.

Paragraph (4)
Quite clear.

Paragraph (5)
Quite clear.

Paragraph (6)
See explanation of Article 8 paragraph (6).

Article 147
Quite clear.

Article 148
Quite clear.

Article 149
Quite clear.

Article 150
Quite clear.

Article 151
Quite clear.

Article 152
Quite clear.

Article 153
Quite clear.

Article 154
Paragraph (1)
Quite clear.

Paragraph (2)
Inspections of small-scale LKMs may be conducted by the Financial Services Authority, for example, in cases involving indications of suspected criminal acts in the LKM sector and/or complexity of issues occurring at the LKM. Therefore, assistance from the Financial Services Authority in the form of joint inspections, offsite inspection recommendations, or other actions is required.

Paragraph (3)
Quite clear.

Paragraph (4)
Quite clear.

Paragraph (5)
Quite clear.

Article 155
Quite clear.

Article 156
Quite clear.

Article 157
Quite clear.

Article 158
Paragraph (1)
Quite clear.

Paragraph (2)
Quite clear.

Paragraph (3)
Example:
Inspections at other locations as needed are conducted at village offices, sub-district offices, or local Financial Services Authority offices.

Paragraph (4)
Example:
Confirmations to third parties related to the LKM include confirmations to depositors.

Paragraph (5)
Quite clear.

Article 159
Quite clear.

Article 160
Quite clear.

Article 161
Quite clear.

Article 162
Paragraph (1)
See explanation of Article 8 paragraph (1).

Paragraph (2)
Quite clear.

Paragraph (3)
Quite clear.

Paragraph (4)
Quite clear.

Paragraph (5)
Quite clear.

Paragraph (6)
See explanation of Article 8 paragraph (6).

Article 163
Quite clear.

Article 164
Letter a
Quite clear.

Letter b
Number (1)
Example 1:
LKM ABC has an equity ratio to paid-up capital of 55% (fifty-five percent). Based on this information, LKM ABC meets the quantitative parameters for intensive supervision status.

Example 2:
LKM DEF has an equity ratio to paid-up capital of 75% (seventy-five percent). Based on this information, LKM DEF does not meet the quantitative parameters for intensive supervision status.

Number (2)
Example 1:
LKM ABC has a net problem loan quality ratio of 15% (fifteen percent).
Based on this information, LKM ABC meets the quantitative parameters for intensive supervision status.

Example 2:
LKM DEF has a net problem loan quality ratio of 25% (twenty-five percent).
Based on this information, LKM DEF does not meet the quantitative parameters for intensive supervision status and enters special supervision status.

Article 165
Quite clear.

Article 166
Quite clear.

Article 167
Quite clear.

Article 168
Quite clear.

Article 169
Quite clear.

Article 170
Quite clear.

Article 171
Quite clear.

Article 172
The Financial Services Authority has the authority to request LKMs to submit compliance plans, among others, if:
a. the violation has a significant impact on the financial condition of the LKM; and/or b. compliance with the violation requires a certain period of time.

Article 173
Paragraph (1)
See explanation of Article 8 paragraph (1).

Paragraph (2)
Quite clear.

Paragraph (3)
Quite clear.

Paragraph (4)
Quite clear.

Paragraph (5)
Quite clear.

Paragraph (6)
See explanation of Article 8 paragraph (6).

Article 174
The granting of different approvals or policies is intended, among others, to:
a. support national policy; b. maintain public interest;
c. maintain industry growth; and/or
d. maintain healthy business competition.
Conditions requiring particular consideration, among others, are caused by extraordinary events that can result in large increases in morbidity and mortality and also impact the economy and society, thus requiring attention and handling by all relevant parties and regulated in other provisions regarding consideration in facing possible extraordinary events.

Article 175
Quite clear.

Article 176
Quite clear.

Article 177
Paragraph (1)
Quite clear.

Paragraph (2)
Example, when there are changes to the collateralized object, such changes must meet the provisions in this Financial Services Authority Regulation.

Article 178
Quite clear.

Article 179
Quite clear.

Article 180
Quite clear.

Article 181
Paragraph (1)
Quite clear.

Paragraph (2)
Example:
For a period of 3 (three) years since this Financial Services Authority Regulation is enacted, LKM XYZ which has obtained a business license at the time this Financial Services Authority Regulation is enacted must comply with provisions regarding the ratio of problem loans or financing at most 30% as regulated in Article 9 paragraph (5) of Financial Services Authority Regulation Number 19/POJK.05/2021 concerning the Conduct of Business of Microfinance Institutions.

Paragraph (3)
Example:
In the event that LKM XYZ as referred to in the example in paragraph (2) violates provisions regarding the ratio of problem loans or financing at most 30% as regulated in Article 9 paragraph (5) of Financial Services Authority Regulation Number 19/POJK.05/2021 concerning the Conduct of Business of Microfinance Institutions. LKM XYZ is subject to administrative sanctions in accordance with Article 128 of this Financial Services Authority Regulation.

Article 182
Quite clear.

Article 183
Quite clear.

Article 184
Quite clear.

Article 185
Quite clear.

Article 186
Quite clear.

Article 187
Paragraph (1)
Example:
LKM XYZ is currently being issued a notice letter for violating the minimum number of Directors and Board of Commissioners provisions based on Financial Services Authority Regulation Number 10/POJK.05/2021 concerning Business Licensing and Institutional Structure of Microfinance Institutions. Considering that the provisions regarding the minimum number of Directors and Board of Commissioners are also regulated in this Financial Services Authority Regulation, the violation of the minimum number of Directors and Board of Commissioners provisions is declared valid and applicable.

Paragraph (2)
Example:
LKM XYZ is currently being issued a notice letter for violating the minimum number of Directors and Board of Commissioners provisions based on Financial Services Authority Regulation Number 10/POJK.05/2021 concerning Business Licensing and Institutional Structure of Microfinance Institutions. Based on this Financial Services Authority Regulation, the violation of the minimum number of Directors and Board of Commissioners provisions is subject to administrative sanctions as regulated in Article 29 of this Financial Services Authority Regulation.

Article 188
Paragraph (1)
Example 1:
LKM XYZ is currently subject to a third warning sanction for violating the maximum loan/financing disbursement limit provisions based on Financial Services Authority Regulation Number 19/POJK.05/2021 concerning the Conduct of Business of Microfinance Institutions. Considering that the provisions regarding the maximum loan/financing disbursement limit are also regulated in this Financial Services Authority Regulation, the violation of the maximum loan/financing disbursement limit provisions is declared valid and applicable.

Example 2:
LKM ABC is currently subject to a first warning sanction for violating the obligation to use at least 50% of paid-up capital for working capital provisions based on Financial Services Authority Regulation Number 19/POJK.05/2021 concerning the Conduct of Business of Microfinance Institutions. Considering that the provisions regarding the obligation to use at least 50% of paid-up capital for working capital are not regulated in this Financial Services Authority Regulation, the violation of the obligation to use at least 50% of paid-up capital for working capital provisions is declared revoked and not applicable based on this Financial Services Authority Regulation.

Paragraph (2)
Example:
LKM XYZ is currently subject to a third warning sanction for violating the maximum loan/financing disbursement limit provisions based on Financial Services Authority Regulation Number 19/POJK.05/2021 concerning the Conduct of Business of Microfinance Institutions. Based on this Financial Services Authority Regulation, the violation of the maximum loan/financing disbursement limit is subject to further sanctions based on administrative sanction provisions as regulated in Article 108 of this Financial Services Authority Regulation.

Article 188
Quite clear.

Article 189
Quite clear.

Article 190
Quite clear.

Article 191
Quite clear.

Article 192
Quite clear.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 122/OJK

APPENDIX I
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 41 OF 2024
CONCERNING
MICROFINANCE INSTITUTIONS

TABLE 1: LIST OF DOCUMENT REQUIREMENTS FOR BUSINESS LICENSE APPLICATION FOR MICROFINANCE INSTITUTIONS WITH CASH CAPITAL SUBSCRIPTION
NO. DOCUMENT LIST DESCRIPTION

1. Copy of the establishment deed of the legal entity accompanied by proof of approval from the competent authority.
2. Copy of the latest amended articles of association accompanied by proof of approval, proof of approval, and/or letter of acceptance of notification from the competent authority, if any.
3. Data of Directors, Board of Commissioners, and DPS, including:
   a. photocopy of identification in the form of Identity Card (KTP); b. curriculum vitae;
   c. stamped letter of statement from Directors, Board of Commissioners, and DPS stating:

1. not included in the list of parties prohibited from becoming main management parties;
   What is meant by
   “main management party” is the main management party as regulated in the Financial Services Authority Regulation regarding Reassessment of Main Parties of Financial Service Institutions.
2. not recorded in the list of non-performing loans in the financial services sector;
3. never sentenced for committing criminal acts in the financial services business sector based on a court decision that has permanent legal force within 20 (twenty) years;
4. never sentenced for committing criminal acts based on a court decision that has permanent legal force within 5 (five) years;
5. never declared bankrupt or causing a business entity to be declared bankrupt based on a court decision that has permanent legal force within 5 (five) years;
6. do not hold concurrent positions as Directors;
7. do not hold concurrent positions as Board of Commissioners of more than 2 (two) other LKMs for Directors; and
8. do not hold concurrent positions as Board of Commissioners of more than 3 (three) other LKMs for Board of Commissioners;
   d. letter of statement from Directors stating that they are willing to manage and administer the LKM responsibly and in accordance with applicable laws and regulations; e. letter of certificate or written proof of operational experience in microfinance institutions or other financial service institutions for at least 1 (one) year for one of the Directors; What is meant by “operational experience” is experience in financing, credit, marketing, collection, and/or accounting/bookkeeping. f. letter of certificate or written proof of operational experience in the field of microfinance institutions conducting business activities based on Sharia Principles or other Sharia financial service institutions for at least 1 (one) year for one of the Directors, for LKMs conducting business activities based on Sharia Principles;

4. Data of shareholders including details of share ownership/data of founding members*)
   a. in the event that shareholders or founding members are individuals, documents attached:

1. photocopy of identification in the form of Identity Card (KTP);
2. photocopy of tax notification letter (SPT) for the last 2 (two) years before capital injection;
3. stamped letter of statement stating that the capital injection:
   a) does not come from loans; and b) does not come from and for the purpose of money laundering, terrorism financing, proliferation financing of weapons of mass destruction, and other financial crimes, b. in the event that shareholders are village-owned enterprises and/or cooperatives, documents attached:
4. copy of the establishment deed of the legal entity accompanied by proof of approval from the competent authority including copy of the latest amended articles of association (if any) accompanied by proof of approval, proof of approval, and/or letter of acceptance of notification from the competent authority, or proof of establishment of village-owned enterprises;
5. financial reports audited by a public accountant or the latest financial reports or the latest financial bookkeeping;
   What is meant by
   “the latest financial reports or the latest financial bookkeeping” is the period of financial reports or financial bookkeeping no longer than 4 (four) months before the date of submission of the LKM business license application.
6. photocopy of identification in the form of Identity Card for directors or management of the

---

village-owned enterprises and/or cooperatives; and
4) a stamped declaration stating that the capital deposit:
a) does not originate from loans; and b) does not originate from and is not for the purpose of money laundering, terrorism financing, proliferation financing of weapons of mass destruction, and other financial crimes;
c. in the event that the shareholder is a district/city/provincial government, the attached documents consist of a copy of the district/city/provincial regional regulation regarding capital participation in the MFI.

5. A recommendation letter for the appointment of the Sharia Supervisory Board (DPS) and/or DPS training certificates from an institution having authority in determining fatwas in the Sharia field for MFIs conducting business activities based on Sharia Principles;
6. An organizational structure and management that has at least the functions of credit decision-making, collection, and administration.
7. The MFI's work systems and procedures, at least covering:
   The work systems and procedures can be supplemented with examples of forms used, such as savings opening forms and savings withdrawal forms. a. granting Loans or Financing; b. acceptance and closure of Savings for MFIs conducting business activities accepting Savings; The term "business activities" refers to the business activities as stated in the MFI's articles of association.
   c. collection from borrowers or parties receiving Financing; and
   d. settlement of bad debts;
8. A work plan for the first 2 (two) years that at least contains:
   a. targets for the disbursement of Loans or Financing; b. targets for Savings management for MFIs conducting business activities accepting Savings; and
   c. activity steps to be taken to achieve the aforementioned targets,
   for MFIs with a business coverage area of a district/city;
9. Proof of fulfillment of paid-in capital or principal savings, mandatory savings, and donations is conducted in cash in the form of a still-valid time deposit:
   a. in the name of the MFI; or b. in the name of one of the Directors, accompanied by a statement letter from the Board of Directors.
   The statement letter from the Directors among other things states that the still-valid time deposit in the name of one of the Directors is intended to meet the capital establishment requirements for the MFI in the context of the MFI business license application and its withdrawal is carried out after obtaining approval from the Board of Commissioners. with one of the banks in Indonesia or one of the Sharia banks or Sharia business units in Indonesia for MFIs conducting business activities based on Sharia Principles;
10. Proof of operational readiness, including:
    a. a list of fixed assets (if any) and inventory; b. proof of ownership or control of the office; and
    c. a list of branch offices and their addresses (if any).
11. Opening financial position report.
12. Documents of business products/services to be marketed.
    The documents referred to consist of loan agreements and savings receipts for savings products.

TABLE 2: LIST OF DOCUMENT REQUIREMENTS FOR BUSINESS LICENSE APPLICATION FOR MICROFINANCE INSTITUTIONS WITH NON-CASH CAPITAL DEPOSIT
NO. DOCUMENT LIST DESCRIPTION

1. Copy of the deed of establishment of the legal entity accompanied by proof of approval from the competent authority
2. Copy of the last amendment to the articles of association accompanied by proof of approval, proof of approval, and/or a letter of acceptance of notification from the competent authority, if any.
3. Closing financial position report and opening financial position report from the MFI.
   The financial position report is part of the financial statements of an MFI generated during an accounting period that shows the financial position of the MFI at the end of that period (formerly the balance sheet).
4. Annual financial statements audited by a public accounting firm registered with the Financial Services Authority for MFIs with assets of at least IDR 1,000,000,000.00 (one billion rupiah) for the last 1 (one) year, accompanied by the previous year's financial statements.
   The term "previous year's financial statements" can be non-audited annual financial statements.
5. Annual financial statements prepared or compiled by an Accounting Service Firm licensed by the competent authority for MFIs with assets below IDR 1,000,000,000.00 (one billion rupiah) for the last 1 (one) year, accompanied by the previous year's financial statements.
6. List of MFI loans/financing for the last 2 (two) years.
   The loan/financing list for conventional MFIs contains information regarding:
   a. borrower name filled with the borrower's name. b. installment type filled with the type of installment payment which can be distinguished into daily, weekly, ten-day (selapan), seasonal, and/or monthly.
   c. duration filled with the date, month, and year the loan started and the date, month, and year the loan ended as stated in the agreement or contract.
   d. interest rate/return rate/profit sharing filled with the loan interest rate charged by the MFI to the borrower, expressed in % and the period of application of the interest rate, e.g., per day, per week, per month, per ten-day, or per season. e. loan/receivable balance filled with the loan balance amount given by the MFI to each borrower on the report date. f. amount/duration of installment arrears filled with the number of days the installment arrears occurred. g. Collectibility filled according to the quality of loans/financing as regulated in this Financial Services Authority Regulation.
7. Data of the Board of Directors, Board of Commissioners, and Sharia Supervisory Board (DPS).
   a. photocopy of identification in the form of an Identity Card (KTP); b. curriculum vitae list;
   c. a stamped declaration letter from the Board of Directors, Board of Commissioners, and DPS stating:

1. not included in the list of parties prohibited from becoming main management parties;
   The term "main management party" refers to the main management party as regulated in the Financial Services Authority Regulation regarding Reassessment for Main Parties of Financial Service Institutions.
2. not recorded in the list of bad credits in the financial service sector;
3. never sentenced for committing criminal acts in the financial service business sector based on a court decision that has had permanent legal force;
4. never sentenced for committing criminal acts based on a court decision that has had permanent legal force in the last 5 (five) years;
5. never declared bankrupt or causing a business entity to be declared bankrupt based on a court decision that has had permanent legal force in the last 5 (five) years;
6. not holding concurrent positions as a director in other companies for Directors;
7. not holding concurrent positions as a Board of Commissioners in more than 2 (two) other MFIs/MFIs Sharia*) for Directors; and
8. not holding concurrent positions as a Board of Commissioners in more than 3 (three) other MFIs/MFIs Sharia*) for the Board of Commissioners;
   d. a statement letter from the Directors stating that the person concerned is willing to manage and operate the MFI responsibly and in accordance with applicable laws and regulations; e. a certificate/written proof regarding operational experience in microfinance institutions or other financial service institutions for at least 1 (one) year for one of the Directors; The term "operational experience" refers to experience in the fields of financing, lending, marketing, collection, and/or accounting/bookkeeping. f. a certificate or written proof of having operational experience in the field of microfinance institutions conducting business activities based on Sharia Principles or other Sharia financial service institutions for at least 1 (one) year for one of the Directors, for MFIs conducting business activities based on Sharia Principles;

8. Shareholder data including details of share ownership/founder member data*)
   a. in the event that the shareholder or founder member is an individual, the attached documents are:

1. photocopy of identification in the form of an Identity Card (KTP);
2. photocopy of tax notification letter (SPT) for the last 2 (two) years before the capital participation is made;
3. a stamped declaration letter stating that the capital deposit:
   a) does not originate from loans; and b) does not originate from and is not for the purpose of money laundering, terrorism financing, proliferation financing of weapons of mass destruction, and other financial crimes, b. in the event that the shareholder is a village-owned enterprise and/or cooperative, the attached documents consist of:
4. copy of the deed of establishment of the legal entity accompanied by proof of approval from the competent authority including a copy of the last amendment to the articles of association (if any) accompanied by proof of approval, proof of approval, and/or a letter of acceptance of notification from the competent authority, or proof of establishment of the village-owned enterprise;
5. financial statements that have been audited by a public accountant or the latest financial statements or latest financial bookkeeping;
   The term "latest financial statements or latest financial bookkeeping" refers to the financial statement or financial bookkeeping period of at most 4 (four) months before the date of the MFI business license application submission.
6. photocopy of identification in the form of an Identity Card for directors or management of the village-owned enterprise and/or cooperative; and
7. a stamped declaration letter stating that the capital deposit:
   a) does not originate from loans; and b) does not originate from and is not for the purpose of money laundering, terrorism financing, proliferation financing of weapons of mass destruction, and other financial crimes;
   c. in the event that the shareholder is a district/city/provincial government, the attached documents consist of a copy of the district/city/provincial regional regulation regarding capital participation in the MFI.

9. Organizational structure and management that has at least the functions of credit decision-making, collection, and administration.
10. MFI work systems and procedures, at least covering:
    The work systems and procedures can be supplemented with examples of forms used, such as savings opening forms and savings withdrawal forms. a. granting Loans or Financing; b. acceptance and closure of Savings for MFIs conducting business activities accepting Savings; The term "business activities" refers to the business activities as stated in the MFI's articles of association.
    c. collection from borrowers or parties receiving Financing; and
    d. settlement of bad debts;

TABLE 3: LIST OF DOCUMENT REQUIREMENTS FOR BUSINESS LICENSE APPLICATION FOR INCUBATOR MICROFINANCE INSTITUTIONS WITH CASH CAPITAL DEPOSIT
NO. DOCUMENT LIST DESCRIPTION

1. Copy of the deed of establishment of the legal entity accompanied by proof of approval from the competent authority
2. Copy of the last amendment to the articles of association accompanied by proof of approval, proof of approval, and/or a letter of acceptance of notification from the competent authority, if any.
3. Closing financial position report and opening financial position report from the incubator MFI.
   The financial position report is part of the financial statements of an MFI generated during an accounting period that shows the financial position of the MFI at the end of that period (formerly the balance sheet).
4. Annual financial statements audited by a public accounting firm for incubator MFIs with assets of at least IDR 1,000,000,000.00 (one billion rupiah) for the last 1 (one) year, accompanied by the previous year's financial statements.
   The term "previous year's financial statements" can be non-audited annual financial statements.
5. Annual financial statements prepared or compiled by an Accounting Service Firm licensed by the competent authority for incubator MFIs with assets below IDR 1,000,000,000.00 (one billion rupiah) for the last 1 (one) year, accompanied by the previous year's financial statements.
6. List of incubator MFI loans/financing for the last 2 (two) years.
7. Proof of fulfillment of paid-in capital or principal savings, mandatory savings, and donations is conducted in cash in the form of a photocopy of a still-valid time deposit.
   a. in the name of the MFI; or b. in the name of one of the Directors, accompanied by a statement letter from the Board of Directors.
   The statement letter from the Directors among other things states that the still-valid time deposit in the name of one of the Directors is intended to meet the capital establishment requirements for the MFI in the context of the MFI business license application and its withdrawal is carried out after obtaining approval from the Board of Commissioners. with one of the banks/Sharia banks or Sharia business units*) in Indonesia.
8. Data of the Board of Directors, Board of Commissioners, and Sharia Supervisory Board (DPS), including:
   a. photocopy of identification in the form of an Identity Card (KTP); b. curriculum vitae list;
   c. a stamped declaration letter from the Board of Directors, Board of Commissioners, and DPS stating:

1. not included in the list of parties prohibited from becoming main management parties;
   The term "main management party" refers to the main management party as regulated in the Financial Services Authority Regulation regarding Reassessment for Main Parties of Financial Service Institutions.
2. not recorded in the list of bad credits in the financial service sector;
3. never sentenced for committing criminal acts in the financial service business and/or economic sector based on a court decision that has had permanent legal force;
4. never sentenced for committing criminal acts based on a court decision that has had permanent legal force in the last 5 (five) years;
5. never declared bankrupt or causing a business entity to be declared bankrupt based on a court decision that has had permanent legal force in the last 5 (five) years;
6. not holding concurrent positions as a Director;
7. not holding concurrent positions as a Board of Commissioners in more than 2 (two) other MFIs for Directors; and
8. not holding concurrent positions as a Board of Commissioners in more than 3 (three) other MFIs for the Board of Commissioners;
   d. a statement letter from the Directors stating that the person concerned is willing to manage and operate the MFI responsibly and in accordance with applicable laws and regulations; e. a certificate/written proof regarding operational experience in microfinance institutions or other financial service institutions for at least 1 (one) year for one of the Directors; The term "operational experience" refers to experience in the fields of financing, lending, marketing, collection, and/or accounting/bookkeeping. f. a certificate or written proof of having operational experience in the field of microfinance institutions conducting business activities based on Sharia Principles or other Sharia financial service institutions for at least 1 (one) year for one of the Directors, for MFIs conducting business activities based on Sharia Principles;

9. Shareholder data including details of share ownership/founder member data*)
   a. in the event that the shareholder or founder member is an individual, the attached documents are:

1. photocopy of identification in the form of an Identity Card (KTP);
2. photocopy of tax notification letter (SPT) for the last 2 (two) years before the capital participation is made;
3. a stamped declaration letter stating that the capital deposit:
   a) does not originate from loans; and b) does not originate from and is not for the purpose of money laundering, terrorism financing, proliferation financing of weapons of mass destruction, and other financial crimes, b. in the event that the shareholder is a village-owned enterprise and/or cooperative, the attached documents consist of:
4. copy of the deed of establishment of the legal entity accompanied by proof of approval from the competent authority including a copy of the last amendment to the articles of association (if any) accompanied by proof of approval, proof of approval, and/or a letter of acceptance of notification from the competent authority, or proof of establishment of the village-owned enterprise;
5. financial statements that have been audited by a public accountant or the latest financial statements or latest financial bookkeeping;
   The term "latest financial statements or latest financial bookkeeping" refers to the financial statement or financial bookkeeping period of at most 4 (four) months before the date of the MFI business license application submission.
6. photocopy of identification in the form of an Identity Card for directors or management of the village-owned enterprise and/or cooperative; and
7. a stamped declaration letter stating that the capital deposit:
   a) does not originate from loans; and b) does not originate from and is not for the purpose of money laundering, terrorism financing, proliferation financing of weapons of mass destruction, and other financial crimes;
   c. in the event that the shareholder is a district/city/provincial government, the attached documents consist of a copy of the district/city/provincial regional regulation regarding capital participation in the MFI.

10. A recommendation letter for the appointment of the Sharia Supervisory Board (DPS) and/or DPS training certificates from an institution having authority in determining fatwas in the Sharia field for MFIs conducting business activities based on Sharia Principles.
11. Organizational structure and management that has at least the functions of credit decision-making, collection, and administration.
12. Incubator MFI work systems and procedures, at least covering:
    The work systems and procedures can be supplemented with examples of forms used, such as savings opening forms and savings withdrawal forms. a. granting Loans or Financing; b. acceptance and closure of Savings for MFIs conducting business activities accepting Savings; The term "business activities" refers to the business activities as stated in the MFI's articles of association.
    c. collection from borrowers or parties receiving Financing; and
    d. settlement of bad debts;

TABLE 4: LIST OF DOCUMENT REQUIREMENTS FOR BUSINESS LICENSE APPLICATION FOR INCUBATOR MICROFINANCE INSTITUTIONS WITH NON-CASH CAPITAL DEPOSIT
NO. DOCUMENT LIST DESCRIPTION

1. Copy of the deed of establishment of the legal entity accompanied by proof of approval from the competent authority
2. Copy of the last amendment to the articles of association accompanied by proof of approval, proof of approval, and/or a letter of acceptance of notification from the competent authority, if any.
3. Closing financial position report and opening financial position report from the incubator MFI.
   The financial position report is part of the financial statements of an MFI generated during an accounting period that shows the financial position of the MFI at the end of that period (formerly the balance sheet).
4. Annual financial statements audited by a public accounting firm for incubator MFIs with assets of at least IDR 1,000,000,000.00 (one billion rupiah) for the last 1 (one) year, accompanied by the previous year's financial statements.
   The term "previous year's financial statements" can be non-audited annual financial statements.
5. Annual financial statements prepared or compiled by an Accounting Service Firm licensed by the competent authority for incubator MFIs with assets below IDR 1,000,000,000.00 (one billion rupiah) for the last 1 (one) year, accompanied by the previous year's financial statements.
   The term "previous year's financial statements" can be non-audited annual financial statements.
6. List of MFI loans/financing for the last 2 (two) years.
7. Data of the Board of Directors, Board of Commissioners, and DPS, including:
   a. photocopy of identification in the form of an Identity Card (KTP); b. curriculum vitae list;
   c. a stamped declaration letter from the Board of Directors, Board of Commissioners, and DPS stating:

1. not included in the list of parties prohibited from becoming main management parties;
   The term "main management party" refers to the main management party as regulated in the Financial Services Authority Regulation regarding Reassessment for Main Parties of Financial Service Institutions.
2. not recorded in the list of bad credits in the financial service sector;
3. never sentenced for committing criminal acts in the financial service business and/or economic sector based on a court decision that has had permanent legal force;
4. never sentenced for committing criminal acts based on a court decision that has had permanent legal force in the last 5 (five) years;
5. never declared bankrupt or causing a business entity to be declared bankrupt based on a court decision that has had permanent legal force in the last 5 (five) years;
6. not holding concurrent positions as a Director;
7. not holding concurrent positions as a Board of Commissioners in more than 2 (two) other MFIs for Directors; and
8. not holding concurrent positions as a Board of Commissioners in more than 3 (three) other MFIs for the Board of Commissioners;
   d. a statement letter from the Directors stating that the person concerned is willing to manage and operate the MFI responsibly and in accordance with applicable laws and regulations; e. a certificate/written proof regarding operational experience in microfinance institutions or other financial service institutions for at least 1 (one) year for one of the Directors; The term "operational experience" refers to experience in the fields of financing, lending, marketing, collection, and/or accounting/bookkeeping. f. a certificate or written proof of having operational experience in the field of microfinance institutions conducting business activities based on Sharia Principles or other Sharia financial service institutions for at least 1 (one) year for one of the Directors, for MFIs conducting business activities based on Sharia Principles;

8. Shareholder data/founder member data including details of share ownership/founder member data*)
   a. in the event that the shareholder or founder member is an individual, the attached documents are:

1. photocopy of identification in the form of an Identity Card (KTP);
2. photocopy of tax notification letter (SPT) for the last 2 (two) years before the capital participation is made;
3. a stamped declaration letter stating that the capital deposit:
   a) does not originate from loans; and b) does not originate from and is not for the purpose of money laundering, terrorism financing, proliferation financing of weapons of mass destruction, and other financial crimes, b. in the event that the shareholder is a village-owned enterprise and/or cooperative, the attached documents consist of:
4. copy of the deed of establishment of the legal entity accompanied by proof of approval from the competent authority including a copy of the last amendment to the articles of association (if any) accompanied by proof of approval, proof of approval, and/or a letter of acceptance of notification from the competent authority, or proof of establishment of the village-owned enterprise;
5. financial statements that have been audited by a public accountant or the latest financial statements or latest financial bookkeeping;
   The term "latest financial statements or latest financial bookkeeping" refers to the financial statement or financial bookkeeping period of at most 4 (four) months before the date of the MFI business license application submission.

"last" refers to the financial report or financial accounting period no later than 4 (four) months before the date of submission of the business license application for the MFI.

3. photocopy of identification in the form of an Identity Card (KTP) for the Board of Directors or management of village-owned enterprises and/or cooperatives; and

4. a stamped statement letter stating that the capital deposit:
   a) does not originate from loans; and b) does not originate from and is not for the purpose of money laundering, terrorism financing, financing of proliferation of weapons of mass destruction, and other financial crimes;

c. in the event that the shareholder is a district/city/provincial local government, the attached documents consist of a copy of the relevant district/city/provincial regional regulation regarding capital participation in the MFI.

9. Organizational structure and management that has at least the functions of credit decision-making, collection, and administration.
   a. granting Loans or Financing; b. acceptance and closure of Deposits for MFIs conducting business activities for accepting Deposits;
   c. collection from borrowers or parties receiving Financing; and
   d. settlement of bad debts;

10. Work systems and procedures of the MFI/MFIS*). Work systems and procedures can be supplemented with examples of forms used, such as deposit opening forms and deposit withdrawal forms.
    a. granting Loans or Financing; b. acceptance and closure of Deposits for MFIs conducting business activities for accepting Deposits;

The term "business activities" refers to business activities as stated in the Articles of Association of the MFI.
c. collection from borrowers or parties receiving Financing; and
d. settlement of bad debts;

TABLE 5: LIST OF DOCUMENTS FOR REPORTING THE IMPLEMENTATION OF BUSINESS ACTIVITIES OF MICROFINANCE INSTITUTIONS

NO.	DOCUMENT LIST	NOTES
1.	Proof of implementation of Deposit management activities
2.	Proof of implementation of Loan/Financing disbursement activities.

TABLE 6: LIST OF DOCUMENT REQUIREMENTS FOR APPLICATION FOR APPROVAL OF CONVERSION OF CONVENTIONAL MFI TO SHARIA

NO.	DOCUMENT LIST	NOTES
1.	Proof of announcement regarding the conversion plan and the impact of conversion on customers via the announcement board at the MFI office.
2.	Draft minutes of the General Meeting of Shareholders (GMS) or members' meeting approving the conversion into an MFI based on Sharia Principles.
3.	Draft amendment to the Articles of Association stating:
a. name of the MFI based on Sharia Principles; b. purpose and objectives of the MFI based on Sharia Principles to conduct business activities based on Sharia Principles; and
c. authority and responsibility of the DPS.
4.	Plan for settling the rights and obligations of Users.	The term "plan for settling the rights and obligations of Users" includes, among others:
a. settlement of rights of Users who do not agree to the conversion; b. amount of Users' rights transferred;
c. effective time of transfer.
5.	Projection of initial financial reports from the business activities of the MFI based on Sharia Principles resulting from the conversion.
---	---	---
6.	Work plan related to business activities based on Sharia Principles to be conducted for the first 3 (three) years after obtaining the business license as an MFI based on Sharia Principles.
7.	Draft cooperation agreement for Escrow Account and Virtual Account with a bank conducting business activities based on Sharia Principles.
8.	Organizational structure supplemented with job descriptions, authority, responsibility, and personnel.

TABLE 7: LIST OF DOCUMENT REQUIREMENTS FOR IMPLEMENTATION OF GMS OR MEMBERS' MEETING APPROVING CONVERSION INTO MFI BASED ON SHARIA PRINCIPLES

NO.	DOCUMENT LIST	NOTES
1.	Copy of the deed of amendment to the Articles of Association.
2.	Photocopy of the tax identification number (NPWP) in the name of the MFI based on Sharia Principles resulting from the conversion.
3.	Copy of the deed of minutes of the GMS or members' meeting approving the conversion into an MFI based on Sharia Principles.
4.	Copy of the deed of minutes of the GMS or members' meeting stating the appointment of members of the Board of Directors, members of the Board of Commissioners, and/or members of the DPS.
5.	Proof of appointment of DPS members and proof of approval by the institution having authority in setting fatwas in the field of Sharia regarding the appointment of DPS members.
6.	Proof of DPS approval of business activities based on Sharia Principles.
7.	Cooperation agreement for Escrow Account and Virtual Account with a general bank conducting business activities based on Sharia Principles.
8.	Proof of settlement of rights and obligations of Users.	Proof of settlement of rights and obligations of Users, including:
a. proof of transfer of return of funds to Users who do not agree to the conversion; b. proof of the amount of Users' rights transferred to another MFI;

TABLE 8: LIST OF DOCUMENT REQUIREMENTS FOR REPORTING THE IMPLEMENTATION OF CONVERSION OF CONVENTIONAL MFI TO MFI BASED ON SHARIA PRINCIPLES

NO.	DOCUMENT LIST	NOTES
1.	Proof of implementation of conversion activities.
2.	Proof of implementation of Loan/Financing disbursement activities based on Sharia principles.

TABLE 9: LIST OF DOCUMENT REQUIREMENTS FOR IMPLEMENTATION OF OPENING OF BRANCH OFFICES OF MICROFINANCE INSTITUTIONS

NO.	DOCUMENT LIST	NOTES
1.	Photocopy of proof of implementation of Deposit management activities and/or Loan/Financing disbursement activities.
2.	Proof of control of the branch office.
3.	Organizational structure and personnel of the branch office.

TABLE 10: LIST OF DOCUMENT REQUIREMENTS FOR IMPLEMENTATION OF CLOSURE OF BRANCH OFFICES OF MICROFINANCE INSTITUTIONS

NO.	DOCUMENT LIST	NOTES
1.	Reasons for closure.
2.	Proof of transfer or settlement of rights and obligations of Depositors, borrowers or recipients of Financing and/or other parties.
3.	Proof of announcement to the public regarding the closure of the branch office via the announcement board at the MFI office, in a place easily accessible to the public.

TABLE 11: LIST OF DOCUMENT REQUIREMENTS FOR CHANGES IN SCOPE OF BUSINESS AREA OF MICROFINANCE INSTITUTIONS DUE TO AREA EXPANSION

NO.	DOCUMENT LIST	NOTES
1.	List of Borrower Customers/Recipients of Financing.	Accompanied by information on the nominal amount of loans/financing and due dates.
2.	List of Depositor Customers.	Accompanied by information on the nominal amount of deposits.
3.	Report on the plan for expanding the scope of business area.
4.	Minutes of the General Meeting of Shareholders or members' meeting regarding the expansion of the scope of business area of the MFI.

TABLE 12: LIST OF DOCUMENT REQUIREMENTS FOR CHANGES IN SHAREHOLDERS

NO.	DOCUMENT LIST	NOTES
1.	Proof of change in shareholders that has been approved or recorded by the competent authority.
2.	Shareholder data documents:
a. In the case of individuals, must be accompanied by:

  1) photocopy of identification in the form of an Identity Card (KTP);  
  2) a stamped statement letter stating that the capital deposit does not originate from loans and does not originate from and for money laundering criminal acts.  

b. In the case of cooperatives or village/village-owned enterprises, must be accompanied by:
1) deed of establishment including Articles of Association including the latest amendments in accordance with applicable laws and regulations or proof of establishment of village/village-owned enterprises;
2) financial reports audited by public accountants or the latest financial reports or latest financial accounting;
3) photocopy of identification in the form of an Identity Card (KTP) for the Board of Directors or management of village/village-owned enterprises and/or cooperatives:
4) stamped statement letter from the shareholder that the capital deposit does not originate from loans and does not originate from and for money laundering criminal acts.
c. In the case where the shareholder is a District/City/Provincial Local Government, accompanied by a decision or Regional Regulation of the District/City/Province regarding capital participation in the MFI. | |

TABLE 13: LIST OF DOCUMENT REQUIREMENTS FOR CHANGES IN THE BOARD OF DIRECTORS OF MICROFINANCE INSTITUTIONS

NO.	DOCUMENT LIST	NOTES
1.	Proof of change in the Board of Directors that has been approved or reported to the competent authority.
2.	Minutes of the General Meeting of Shareholders or members' meeting.
3.	Board of Directors data includes:
a. photocopy of identification in the form of an Identity Card (KTP); b. curriculum vitae;
c. stamped statement letter from the Board of Directors stating:

  1) not included in the list of parties prohibited from becoming main managers;  
  The term "main manager" refers to the main manager as regulated in the Financial Services Authority Regulation regarding Reassessment of Main Parties of Financial Service Institutions.  
  2) not recorded in the list of bad debts in the financial service sector;  
  3) never sentenced for committing criminal acts in the field of financial service business and/or the economy based on a court decision that has acquired permanent legal force;  
  4) never sentenced for committing criminal acts based on a court decision that has acquired permanent legal force in the last 5 (five) years;  
  5) never declared bankrupt or caused a business entity to be declared bankrupt based on a court decision that has acquired permanent legal force in the last 5 (five) years;  
  6) does not hold concurrent positions as a Director; and  
  7) does not hold concurrent positions as a Commissioner of more than 2 (two) other MFIs;  

d. statement letter from the Board of Directors stating that the person concerned is willing to manage and administer the MFI responsibly and in accordance with applicable laws and regulations; e. letter of certificate/written proof regarding operational experience in microfinance institutions or other financial service institutions for at least 1 (one) year for one of the Directors; The term "operational experience" refers to experience in the fields of financing, lending, marketing, collection and/or accounting/accounting. f. letter of certificate or written proof of having operational experience in the field of microfinance institutions conducting business activities based on Sharia Principles or other Sharia financial service institutions for at least 1 (one) year for one of the Directors, for MFIs conducting business activities based on Sharia Principles. | |

TABLE 14: LIST OF DOCUMENT REQUIREMENTS FOR THE BOARD OF COMMISSIONERS OF MICROFINANCE INSTITUTIONS

NO.	DOCUMENT LIST	NOTES
1.	Proof of change in the Board of Commissioners that has been approved or reported to the competent authority.
2.	Minutes of the General Meeting of Shareholders or members' meeting.
3.	Board of Commissioners data includes:
a. photocopy of identification in the form of an Identity Card (KTP); b. curriculum vitae;
c. stamped statement letter from the Board of Commissioners stating:

  1) not included in the list of parties prohibited from becoming main managers;  
  The term "main manager" refers to the main manager as regulated in the Financial Services Authority Regulation regarding Reassessment of Main Parties of Financial Service Institutions.  
  2) not recorded in the list of bad debts in the financial service sector;  
  3) never sentenced for committing criminal acts in the field of financial service business and/or the economy based on a court decision that has acquired permanent legal force;  
  4) never sentenced for committing criminal acts based on a court decision that has acquired permanent legal force in the last 5 (five) years;  
  5) never declared bankrupt or caused a business entity to be declared bankrupt based on a court decision that has acquired permanent legal force in the last 5 (five) years;  
  6) does not hold concurrent positions as a Commissioner of more than 3 (three) other MFIs. | |

TABLE 15: REPORT ON CHANGES IN THE SHARIA SUPERVISORY BOARD OF MICROFINANCE INSTITUTIONS

NO.	DOCUMENT LIST	NOTES
1.	Proof of change in the Sharia Supervisory Board (DPS) that has been approved or reported to the competent authority.
2.	Minutes of the General Meeting of Shareholders or members' meeting.
3.	Sharia Supervisory Board data includes:
a. photocopy of identification in the form of an Identity Card (KTP); b. curriculum vitae; and
c. stamped statement letter from the Board of Directors stating:

  1) not included in the list of parties prohibited from becoming main managers;  
  The term "main manager" refers to the main manager as regulated in the Financial Services Authority Regulation regarding Reassessment of Main Parties of Financial Service Institutions.  
  2) not recorded in the list of bad debts in the financial service sector;  
  3) never sentenced for committing criminal acts in the field of financial service business and/or the economy based on a court decision that has acquired permanent legal force;  
  4) never sentenced for committing criminal acts based on a court decision that has acquired permanent legal force in the last 5 (five) years;  
  5) never declared bankrupt or caused a business entity to be declared bankrupt based on a court decision that has acquired permanent legal force in the last 5 (five) years;  

d. recommendation letter from the National Sharia Board of the Indonesian Ulema Council (DSN MUI) or DPS training certificate from DSN MUI. | |

TABLE 16: LIST OF DOCUMENT REQUIREMENTS FOR CHANGES IN CAPITAL OF MICROFINANCE INSTITUTIONS

NO.	DOCUMENT LIST	NOTES
1.	Proof of capital change that has been approved or reported to the competent authority.	Filled with information regarding:

1. Old and new authorized capital amount
2. Old and new paid-up capital amount
3. Name of old shareholders and their share value
4. Name of new shareholders and their share value |
   | 2. | Minutes of the General Meeting of Shareholders or members' meeting. | |
   | --- | --- | --- |
   | 3. | Proof of capital deposit addition and MFI bank statements. | |

TABLE 17: LIST OF DOCUMENT REQUIREMENTS FOR CHANGES IN THE NAME OF MICROFINANCE INSTITUTIONS

NO.	DOCUMENT LIST	NOTES
1.	Minutes of the General Meeting of Shareholders or members' meeting regarding the change of the MFI name.
2.	Proof of amendment to the Articles of Association that has been approved by the competent authority/proof of reporting to the competent authority.
3.	Proof of announcement of the name change via the announcement board at the MFI office.

TABLE 18: LIST OF DOCUMENT REQUIREMENTS FOR MOVING THE OFFICE ADDRESS OF MICROFINANCE INSTITUTIONS

NO.	DOCUMENT LIST	NOTES
1.	Information on the relocation of the office address. Filled with Old Office Address and New Office Address.
2.	Proof of announcement to the public regarding the relocation of the office address via the announcement board at the old MFI office, in a place easily accessible to the public.
3.	Proof of control of the new office.

TABLE 19: LIST OF DOCUMENT REQUIREMENTS FOR APPROVAL OF MERGER/CONSOLIDATION OF MICROFINANCE INSTITUTIONS

NO.	DOCUMENT LIST	NOTES
1.	Minutes of the General Meeting of Shareholders or members' meeting of the MFI conducting the merger or consolidation.
2.	Draft amendment to the Articles of Association of the MFI receiving the merger if any, or draft Articles of Association of the MFI resulting from the consolidation.
3.	Plan for settling the rights and obligations of the MFI to be merged or consolidated without reducing the rights of depositors and borrowers or recipients of Financing.
4.	Projection of financial position reports and income statements from the MFI to receive the merger or result of consolidation for 2 (two) years.

TABLE 20: LIST OF DOCUMENTS FOR REPORTING THE IMPLEMENTATION OF THE RESULTS OF MFI MERGER

NO.	DOCUMENT LIST	NOTES
1.	Photocopy of the amendment to the Articles of Association of the MFI receiving the merger that has been approved or agreed upon, by or reported to the competent authority.
2.	Organizational structure and management of the MFI resulting from the merger, data of the Board of Directors, Board of Commissioners, and DPS, and data of shareholders or members receiving the merger.
3.	Data of the Board of Directors, Board of Commissioners, and DPS resulting from the consolidation, including:
a. photocopy of identification in the form of an Identity Card (KTP); b. curriculum vitae;
c. stamped statement letter from the Board of Directors, Board of Commissioners, and DPS stating:

  1) not included in the list of parties prohibited from becoming main managers;  
  The term "main manager" refers to the main manager as regulated in the Financial Services Authority Regulation regarding Reassessment of Main Parties of Financial Service Institutions.  
  2) not recorded in the list of bad debts in the financial service sector;  
  3) never sentenced for committing criminal acts in the field of financial service business and/or the economy based on a court decision that has acquired permanent legal force;  
  4) never sentenced for committing criminal acts based on a court decision that has acquired permanent legal force in the last 5 (five) years;  
  5) never declared bankrupt or caused a business entity to be declared bankrupt based on a court decision that has acquired permanent legal force in the last 5 (five) years;  
  6) does not hold concurrent positions as a Director;  
  7) does not hold concurrent positions as a Commissioner of more than 2 (two) other MFIs for Directors; and  
  8) does not hold concurrent positions as a Commissioner of more than 3 (three) other MFIs for Commissioners;  

d. statement letter from the Board of Directors stating that the person concerned is willing to manage and administer the MFI responsibly and in accordance with applicable laws and regulations; e. letter of certificate/written proof regarding operational experience in microfinance institutions or other financial service institutions for at least 1 (one) year for one of the Directors; The term "operational experience" refers to experience in the fields of financing, lending, marketing, collection and/or accounting/accounting. f. letter of certificate or written proof of having operational experience in the field of microfinance institutions conducting business activities based on Sharia Principles or other Sharia financial service institutions for at least 1 (one) year for one of the Directors, for MFIs conducting business activities based on Sharia Principles; |
| 4. | Data of shareholders resulting from the consolidation including details of share ownership/data of founding members:
a. in the event that shareholders or founding members are individuals, the attached documents are:
1) photocopy of identification in the form of an Identity Card (KTP);
2) photocopy of tax notification letter (SPT) for the last 2 (two) years before the capital participation was made;
3) stamped statement letter stating that the capital deposit:
a) does not originate from loans; and b) does not originate from and is not for the purpose of money laundering, terrorism financing, financing of proliferation of weapons of mass destruction, and other financial crimes; b. in the event that the shareholder is a village-owned enterprise and/or cooperative, the attached documents consist of:
1) copy of the deed of establishment of the legal entity accompanied by proof of approval by the competent authority including a copy of the latest amendment to the Articles of Association (if any) accompanied by proof of approval, proof of approval and/or letter of acceptance of notification from the competent authority, or proof of establishment of village-owned enterprises;
2) financial reports audited by public accountants or the latest financial reports or latest financial accounting;
The term "latest financial reports or latest financial accounting" refers to the financial report or financial accounting period no later than 4 (four) months before the date of submission of the business license application for the MFI.
3) photocopy of identification in the form of an Identity Card for the Board of Directors or management of village-owned enterprises and/or cooperatives; and
4) stamped statement letter stating that the capital deposit:
a) does not originate from loans; and b) does not originate from and is not for the purpose of money laundering, terrorism financing, financing of proliferation of weapons of mass destruction, and other financial crimes;
c. in the event that the shareholder is a district/city/provincial local government, the attached documents consist of a copy of the relevant district/city/provincial regional regulation regarding capital participation in the MFI. | |

5.	Financial position report and income statement of the MFI receiving the merger.	The financial position report is part of the financial report of an MFI generated in a certain accounting period showing the financial position of the MFI at the end of that period. Meanwhile, the income statement is part of the financial report of an MFI generated in a certain accounting period showing the elements of income and expenses of the MFI.
6.	Full address of the MFI receiving the merger.

TABLE 21: LIST OF DOCUMENTS FOR REPORTING THE IMPLEMENTATION OF THE RESULTS OF MFI CONSOLIDATION

NO.	DOCUMENT LIST	NOTES
1.	Photocopy of the Articles of Association of the MFI resulting from the consolidation that has been approved by the competent authority.
2.	Organizational structure and management of the MFI resulting from the consolidation, data of the Board of Directors, Board of Commissioners, and DPS, and data of shareholders or members resulting from the consolidation.
3.	Data of the Board of Directors, Board of Commissioners, and DPS resulting from the consolidation, including:
a. photocopy of identification in the form of an Identity Card (KTP); b. curriculum vitae;
c. stamped statement letter from the Board of Directors, Board of Commissioners, and DPS stating:

  1) not included in the list of parties prohibited from becoming main managers;  
  The term "main manager" refers to the main manager as regulated in the Financial Services Authority Regulation regarding Reassessment of Main Parties of Financial Service Institutions.  
  2) not recorded in the list of bad debts in the financial service sector;  
  3) never sentenced for committing criminal acts in the field of financial service business and/or the economy based on a court decision that has acquired permanent legal force;  
  4) never sentenced for committing criminal acts based on a court decision that has acquired permanent legal force in the last 5 (five) years;  
  5) never declared bankrupt or caused a business entity to be declared bankrupt based on a court decision that has acquired permanent legal force in the last 5 (five) years;  
  6) does not hold concurrent positions as a Director;  
  7) does not hold concurrent positions as a Commissioner of more than 2 (two) other MFIs for Directors; and  
  8) does not hold concurrent positions as a Commissioner of more than 3 (three) other MFIs for Commissioners;  

d. statement letter from the Board of Directors stating that the person concerned is willing to manage and administer the MFI responsibly and in accordance with applicable laws and regulations; e. letter of certificate/written proof regarding operational experience in microfinance institutions or other financial service institutions for at least 1 (one) year for one of the Directors; The term "operational experience" refers to experience in the fields of financing, lending, marketing, collection and/or accounting/accounting. f. letter of certificate or written proof of having operational experience in the field of microfinance institutions conducting business activities based on Sharia Principles or other Sharia financial service institutions for at least 1 (one) year for one of the Directors, for MFIs conducting business activities based on Sharia Principles; |
| 4. | Data of shareholders resulting from the consolidation including details of share ownership/data of founding members:
a. in the event that shareholders or founding members are individuals, the attached documents are:
1) photocopy of identification in the form of an Identity Card (KTP);
2) photocopy of tax notification letter (SPT) for the last 2 (two) years before the capital participation was made;
3) stamped statement letter stating that the capital deposit:
a) does not originate from loans; and b) does not originate from and is not for the purpose of money laundering, terrorism financing, financing of proliferation of weapons of mass destruction, and other financial crimes; |

massal, and other financial crimes, b. in the event that the shareholder is a village-owned enterprise and/or cooperative, the attached documents consist of:

1. a copy of the deed of establishment of the legal entity accompanied by proof of approval from the competent authority, including a copy of the deed of the latest amendment to the articles of association (if any) accompanied by proof of approval, proof of approval, and/or a notice of receipt from the competent authority, or proof of establishment of the village-owned enterprise;
2. audited financial reports by a public accountant or the latest financial report or the latest financial bookkeeping;
   What is meant by "the latest financial report or the latest financial bookkeeping" is a financial report or financial bookkeeping period of at most 4 (four) months before the date of submission of the MFI business license application.
3. photocopy of identification cards in the form of Resident Identity Cards for the board of directors or management of the village-owned enterprise and/or cooperative; and
4. a stamped letter of statement stating that the capital deposit:
   a) does not originate from loans; and b) does not originate from and is not for the purpose of money laundering, terrorism financing, financing of weapons of mass destruction proliferation, and other financial crimes;
   c. in the event that the shareholder is a district/city/provincial government, the attached documents consist of a copy of the district/city/provincial regional regulation related to capital participation in the MFI.

5. The MFI's financial position report and income statement that receives the merger; and
6. The complete address of the merged MFI.

TABLE 22: LIST OF DOCUMENTS FOR BUSINESS LICENSE REVOCATION APPLICATION

NO. DOCUMENT LIST DESCRIPTION

1. Minutes of the general meeting of shareholders or members meeting regarding approval of the business license revocation plan upon request by the MFI shareholder or member.
2. Proof of tax settlement and other obligations to the state.
3. Proof of settlement of all MFI obligations to customers, creditors, employees, and other parties.
4. The MFI's final financial position report; and
5. MFI business license.

TABLE 23: LIST OF DOCUMENTS FOR LIQUIDATION TEAM MEMBER APPROVAL APPLICATION

NO. DOCUMENT LIST DESCRIPTION

1. Photocopy of identity proof of the proposed liquidation team members.
2. Curriculum vitae of the proposed liquidation team members.
3. Statement from the proposed liquidation team members that they are willing to carry out the liquidation process.

TABLE 24: LIST OF DOCUMENTS FOR LIQUIDATION IMPLEMENTATION PERIOD EXTENSION APPROVAL REQUIREMENTS

NO. DOCUMENT LIST DESCRIPTION

1. Reasons for the extension of the liquidation implementation period.
2. Report on the progress of the liquidation process up to the date of the application along with supporting evidence.
3. Work plan and budget during the extension of the liquidation implementation period.

This copy is consistent with the original
Director of Legal Development
Legal Department signed
Aat Windradi

TABLE 25: LIST OF DOCUMENTS FOR APPLICATION FOR APPROVAL OF OTHER BUSINESS ACTIVITIES

DEPUTY CHAIRMAN OF THE COMMISSIONERS BOARD
FINANCIAL SERVICES AUTHORITY OF THE
REPUBLIC OF INDONESIA AS A SUBSTITUTE MEMBER OF THE COMMISSIONERS BOARD OF THE FINANCIAL SERVICES AUTHORITY OF THE REPUBLIC OF INDONESIA, MIRZA ADITYASWARA

NO. DOCUMENT LIST DESCRIPTION

1. Business activities to be carried out.
2. Analysis of the prospects of other business activities to be carried out.
3. Procedures and schemes for other business activities to be carried out.
4. Rights and obligations of the parties.
5. Risk mitigation for other business activities to be carried out.
6. Example of the agreement to be used.
   signed

APPENDIX II
FINANCIAL SERVICES AUTHORITY OF THE
REPUBLIC OF INDONESIA
REGULATION
NUMBER 41 YEAR 2024
REGARDING
MICROFINANCE INSTITUTIONS
REPORT ON INCREASE IN MAXIMUM LOAN INTEREST RATE OR MAXIMUM FINANCING YIELD

I. MFI (Conventional)
To
Yth.
Director of Microfinance Institution Supervision, Pawnshop and Coordination of Financing Institutions, Venture Capital Companies, Microfinance Institutions and Other Financial Service Institutions Regional/Head of Regional Office OJK**)/Head of OJK Office**)/Registrator/Mayor*) Jalan ...........)
....................
....................
Referring to Financial Services Authority Regulation Number …. Year 2024 regarding Microfinance Institutions, we hereby submit a report on the increase in the maximum interest rate of Loans for the month of … or a 3 (three) monthly period ending in March/June/ September/December) year ......, originally:
No. Type of Loan Payment Period
Maximum Loan Interest Rate
(%)

1. Investment/Working
   Capital/Consumptive daily/weekly/ monthly/decadal/ seasonal/annual per day/per week/ per month/per decadal/ per season/ per year 2.
2. etc.
   becoming:
   No. Type of Loan Payment Period
   Maximum Loan Interest Rate
   (%)
3. Investment/Working
   Capital/Consumptive daily/weekly/ monthly/decadal/ seasonal/annual per day/per week/ per month/per decadal/ per season/ per year 2.
4. etc.

The increase in the maximum interest rate of the aforementioned Loans
is carried out with the consideration....
Thus this report is submitted and for your attention Sir/Madam*), we express our gratitude.

.........., date, month, year
Board of Directors PT/Cooperative*) MFM..........
………………………………
*) 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 domicile of the MFI *) 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 domicile of the MFI

II. MFI conducting business activities based on Sharia Principles
To
Yth.
Director of Microfinance Institution Supervision, Pawnshop and Coordination of Financing Institutions, Venture Capital Companies, Microfinance Institutions and Other Financial Service Institutions Regional/Head of Regional Office OJK**)/Head of OJK Office**)/Registrator/Mayor*) Jalan ...........)
....................
....................
Referring to Financial Services Authority Regulation Number …. Year 2024 regarding Microfinance Institutions, we hereby submit a report on the increase in the maximum yield of Financing for the month of … or a 3 (three) monthly period ending in March/June/ September/December) year ......, originally:
No. Type of Contract
Type of
Financing
Payment Period
Maximum Financing Yield
(%)

1. Murabahah Investment/
   Working
   Capital/
   Consumptive daily/weekly
   / monthly/decadal
   / seasonal/annual per day/per week/ per month/per decadal/ per season/ per year
2. Istishna’ Investment/
   Working
   Capital/
   Consumptive daily/weekly
   / monthly/decadal
   / seasonal/annual per day/per week/ per month/per decadal/ per season/ per year
3. Mudharaba
   h Investment/
   Working
   Capital/
   Consumptive daily/weekly
   / monthly/decadal
   / seasonal/annual per day/per week/ per month/per decadal/ per season/ per year
4. Musyarak
   ah Investment/
   Working
   Capital/
   Consumptive daily/weekly
   / monthly/decadal
   / seasonal/annual per day/per week/ per month/per decadal/ per season/ per year etc.

becoming:
No. Type of Contract
Type of
Financing
Payment Period
Maximum Financing Yield
(%)

1. Murabahah Investment/
   Working
   Capital/
   Consumptive daily/weekly
   / monthly/decadal
   / seasonal/annual per day/per week/ per month/per decadal/ per season/ per year
2. Istishna’ Investment/
   Working
   Capital/
   Consumptive daily/weekly
   / monthly/decadal
   / seasonal/annual per day/per week/ per month/per decadal/ per season/ per year
3. Mudharaba
   h Investment/
   Working
   Capital/
   Consumptive daily/weekly
   / monthly/decadal
   / seasonal/annual per day/per week/ per month/per decadal/ per season/ per year
4. Musyarak
   ah Investment/
   Working
   Capital/
   Consumptive daily/weekly
   / monthly/decadal
   / seasonal/annual per day/per week/ per month/per decadal/ per season/ per year etc.
   The increase in the maximum yield of the aforementioned Financing is carried
   out with the consideration....
   Thus this report is submitted and for your attention Sir/Madam*), we express our gratitude.

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

This copy is consistent with the original
Director of Legal Development
Legal Department signed
Aat Windradi
………………………………

*) 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 domicile of the MFI *) 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 domicile of the MFI

DEPUTY CHAIRMAN OF THE COMMISSIONERS BOARD
FINANCIAL SERVICES AUTHORITY OF THE
REPUBLIC OF INDONESIA AS A SUBSTITUTE MEMBER OF THE COMMISSIONERS BOARD OF THE FINANCIAL SERVICES AUTHORITY OF THE REPUBLIC OF INDONESIA, MIRZA ADITYASWARA signed

APPENDIX III
FINANCIAL SERVICES AUTHORITY OF THE
REPUBLIC OF INDONESIA
REGULATION
NUMBER 41 YEAR 2024
REGARDING
MICROFINANCE INSTITUTIONS
LOAN OR FINANCING QUALITY ASSESSMENT PARAMETERS

I. MFI (Conventional)
Loan Quality Accuracy of Principal and/or Interest Payment Good No delay or there is a delay in principal and/or interest payment up to 10 (ten) days Special Attention If there is a delay in principal and/or interest payment that has exceeded 10 (ten) days up to 90 (ninety) days Less Good If there is a delay in principal and/or interest/yield payment that has exceeded 90 (ninety) days up to 120 (one hundred twenty) days Doubtful If there is a delay in principal and/or interest/yield payment that has exceeded 120 (one hundred twenty) days up to 180 (one hundred eighty) days Bad If there is a delay in principal and/or interest/yield payment that has exceeded 180 (one hundred eighty) days

II. MFI conducting business activities based on Sharia Principles
A. Murabahah Receivables, Istishna Receivables, Salam Receivables and Other Receivables/Financing Financing Quality Accuracy of Principal and/or Margin Payment Good No delay or there is a delay in principal and/or margin payment up to 10 (ten) days Special Attention If there is a delay in principal and/or margin payment that has exceeded 10 (ten) days up to 90 (ninety) days Less Good If there is a delay in principal and/or margin payment that has exceeded 90 (ninety) days up to 120 (one hundred twenty) days Doubtful If there is a delay in principal and/or margin payment that has exceeded 120 (one hundred twenty) days up to 180 (one hundred eighty) days Bad If there is a delay in principal and/or margin payment that has exceeded 180 (one hundred eighty) days B. Mudharabah Financing and Musyarakah Financing Financing Quality Parameter Accuracy of Principal and/or Margin Payment RBH* against PBH Good No delay or there is a delay in principal and/or profit sharing ratio payment up to 10 (ten) days and/or Ratio of RBH against PBH greater than or equal to 80% (eighty percent). (RBH ³ 80% PBH) Special Attention If there is a delay in principal and/or profit sharing ratio payment that has exceeded 10 (ten) days up to 90 (ninety) days and/or Ratio of RBH against PBH greater than 50% (fifty percent) and less than 80% (eighty percent). (50% <RBH/PBH < 80%) Less Good If there is a delay in principal and/or profit sharing ratio payment that has exceeded 90 (ninety) days up to 120 (one hundred twenty) days and/or Ratio of RBH against PBH greater than 30% (thirty percent) or equal to 50% (fifty percent). (30% <RBH/PBH £ 50%) Doubtful If there is a delay in principal and/or profit sharing ratio payment that has exceeded 120 (one hundred twenty) days up to 180 (one hundred eighty) days and/or Ratio of RBH against PBH less than or equal to 30% (thirty percent) for 3 (three) payment periods (RBH/PBH £ 30% for 3 payment periods) Bad If there is a delay in principal and/or profit sharing ratio payment that has exceeded 180 (one hundred eighty) days and/or Ratio of RBH against PBH less than 30% (thirty percent) for more than 3 (three) payment periods (RBH/PBH £ 30% for more than 3 payment periods) Note:
(*) RBH= Realized Profit Share
() PBH= Projected Profit Share
If there is a difference in the assessment result of financing quality based on installment arrears, based on financing maturity, or based on the magnitude of realized profit share against projected profit share, the financing quality is determined based on the worse assessment result. Example:

1. Murabahah receivables by customer A with a monthly installment type has an installment payment arrears of 7 (seven) months so it is categorized as "Doubtful" but 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".

This copy is consistent with the original
Director of Legal Development
Legal Department signed
Aat Windradi
2. Mudharabah financing by customer B with a monthly installment type has an installment payment arrears of 8 (eight) months so it is categorized as "Doubtful", based on payment maturity it has been in arrears for 1 (one) month so it is categorized as "Good", while based on Realized Profit Share against Projected Profit Share for customer B, the value is less than 30% for 4 (four) payment periods so it 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".

DEPUTY CHAIRMAN OF THE COMMISSIONERS BOARD
FINANCIAL SERVICES AUTHORITY OF THE
REPUBLIC OF INDONESIA AS A SUBSTITUTE MEMBER OF THE COMMISSIONERS BOARD OF THE FINANCIAL SERVICES AUTHORITY OF THE REPUBLIC OF INDONESIA, MIRZA ADITYASWARA signed