FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 6 /POJK.03/2016

CONCERNING

BUSINESS ACTIVITIES AND OFFICE NETWORKS

BASED ON CORE CAPITAL OF BANKS

BY THE GRACE OF GOD THE ALMIGHTY,

THE COMMISSIONERS COUNCIL OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that in order to face regional and global dynamics, and to support the optimal and sustainable economic growth of Indonesia, it is necessary to increase the resilience, competitiveness, and efficiency of the national banking industry; b. that in order to increase the resilience, competitiveness, and efficiency of the national banking industry, it is necessary to reorganize the scope of business activities and the opening of office networks in accordance with the capital capacity of banks;
c. that to support the sustainable economic growth of Indonesia, Indonesian banks also need to optimally increase their intermediary function, particularly towards productive businesses;
d. that based on the considerations as referred to in letters a, b, and c, it is deemed necessary to establish a Financial Services Authority Regulation concerning Business Activities and Office Networks Based on Core Capital of Banks;

Recalling:

1. Law Number 7 of 1992 concerning Banking (State Gazette of the Republic of Indonesia Year 1992 Number 31, Supplement to the State Gazette of the Republic of Indonesia Number 3472) as amended by Law Number 10 of 1998 (State Gazette of the Republic of Indonesia Year 1998 Number 182, Supplement to the State Gazette of the Republic of Indonesia Number 3790);
2. Law Number 21 of 2008 concerning Sharia Banking (State Gazette of the Republic of Indonesia Year 2008 Number 94, Supplement to the State Gazette of the Republic of Indonesia Number 4867);
3. Law Number 21 of 2011 concerning the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Supplement to the State Gazette of the Republic of Indonesia Number 5253);

DECIDING:

To Establish: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING BUSINESS ACTIVITIES AND OFFICE NETWORKS BASED ON CORE CAPITAL OF BANKS.

CHAPTER I

GENERAL PROVISIONS

Article 1

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

1. Bank is a commercial bank as referred to in Law Number 7 of 1992 concerning Banking as amended by Law Number 10 of 1998, including branch offices of banks located outside the country, and commercial sharia banks and sharia business units as referred to in Law Number 21 of 2008 concerning Sharia Banking.

2. Core Capital:
   a. for Banks with Indonesian legal entity status is core capital as referred to in regulations governing minimum capital provision requirements; or b. for branch offices of banks located outside the country is business funds allocated as Capital Equivalency Maintained Asset (CEMA) as referred to in regulations governing minimum capital provision requirements.

3. Business Activities are commercial bank business activities as referred to in Law Number 7 of 1992 concerning Banking as amended by Law Number 10 of 1998 and commercial sharia bank and sharia business unit business activities as referred to in Law Number 21 of 2008 concerning Sharia Banking.

4. Commercial Bank based on Business Activities, hereinafter referred to as BOOK, is the classification of Banks based on Business Activities adjusted to the Core Capital owned.

5. Bank Office Network is:
   a. Bank offices within the country which include branch offices, regional offices conducting operational activities, sub-branch offices, functional offices conducting operational activities, and/or cash offices; and b. Bank offices outside the country which include branch offices, representative offices, and/or other types of offices outside the country, as referred to in regulations governing commercial banks, commercial sharia banks, or sharia business units.

6. Opening of Office Network is the opening of Bank offices including the opening of offices resulting from the relocation of addresses or change of status of Bank offices.

7. Bank Business Plan, hereinafter abbreviated as RBB, is the bank business plan as referred to in regulations governing bank business plans.

Article 2

Banks may only conduct Business Activities and have Office Networks in accordance with the Core Capital they own.

Article 3

(1) Based on the Core Capital owned, Banks are classified into 4 (four) BOOKs, namely:
a. BOOK 1 is a Bank with Core Capital up to less than Rp1,000,000,000,000.00 (one trillion rupiah); b. BOOK 2 is a Bank with Core Capital of at least Rp1,000,000,000,000.00 (one trillion rupiah) up to less than Rp5,000,000,000,000.00 (five trillion rupiah);
c. BOOK 3 is a Bank with Core Capital of at least Rp5,000,000,000,000.00 (five trillion rupiah) up to less than Rp30,000,000,000,000.00 (thirty trillion rupiah); and
d. BOOK 4 is a Bank with Core Capital of at least Rp30,000,000,000,000.00 (thirty trillion rupiah).

(2) The BOOK classification for sharia business units is based on the Core Capital of the conventional commercial bank that is its parent.

CHAPTER II

BANK BUSINESS ACTIVITIES

First Section

Business Activities of Conventional Commercial Banks

Article 4

Business activities conducted by conventional commercial banks are classified as:
a. fund gathering; b. fund disbursement;
c. trade finance;
d. treasury activities; e. foreign currency activities; f. agency and cooperation activities; g. payment system and electronic banking activities; h. equity participation activities;
i. temporary equity participation activities in the context of credit rescue;
j. other services; and k. other activities commonly conducted by Banks as long as they do not conflict with legislation.

Article 5

Business activities of conventional commercial banks that can be conducted in each BOOK are established as:
a. BOOK 1 may only conduct:

1. Business Activities in Rupiah which include:
   a) fund gathering activities that are basic products or activities; b) fund disbursement activities that are basic products or activities; c) trade finance activities; d) limited scope activities for agency and cooperation; e) limited scope payment system and electronic banking activities; f) temporary equity participation activities in the context of credit rescue; and g) other services;
2. activities as a foreign currency trader; and
3. other activities classified as basic products or activities in Rupiah commonly conducted by Banks and not conflicting with legislation.

b. BOOK 2 may conduct:

1. Business Activities in Rupiah and foreign currency:
   a) fund gathering activities as conducted in BOOK 1; b) fund disbursement activities as conducted in BOOK 1 with a broader scope; c) trade finance activities; d) limited treasury activities; and e) other services;
2. Business Activities as in BOOK 1 with a broader scope for:
   a) agency and cooperation; and b) payment system and electronic banking activities;
3. equity participation activities in financial institutions in Indonesia;
4. temporary equity participation activities in the context of credit rescue; and
5. other activities commonly conducted by Banks as long as they do not conflict with legislation;

c. BOOK 3 may conduct all Business Activities as referred to in Article 4 both in Rupiah and in foreign currency and equity participation in financial institutions in Indonesia and/or outside the country limited to the Asian regional area;

d. BOOK 4 may conduct all Business Activities as referred to in Article 4 both in Rupiah and in foreign currency and equity participation in financial institutions in Indonesia and/or all areas outside the country with a larger volume than BOOK 3.

Second Section

Business Activities of Commercial Sharia Banks and Sharia Business Units

Article 6

Business activities conducted by commercial sharia banks and sharia business units are classified as:
a. fund gathering; b. fund disbursement;
c. trade finance;
d. treasury activities; e. foreign currency activities; f. agency and cooperation activities; g. payment system and electronic banking activities; h. equity participation activities;
i. temporary equity participation activities in the context of financing rescue;
j. other services; and k. other activities commonly conducted in the banking and social fields as long as they do not conflict with sharia principles and legislation.

Article 7

Business activities of commercial sharia banks and sharia business units that can be conducted in each BOOK are established as:
a. BOOK 1 may only conduct:

1. Business Activities in Rupiah which include:
   a) fund gathering activities that are basic products or activities; b) fund disbursement activities that are basic products or activities; c) trade finance activities; d) limited scope activities for agency and cooperation; e) limited scope payment system and electronic banking activities; f) temporary equity participation activities in the context of financing rescue; and g) other services;
2. activities as a foreign currency trader; and
3. other activities classified as basic products or activities in Rupiah commonly conducted by Banks that do not conflict with sharia principles and legislation.

b. BOOK 2 may conduct:

1. Business Activities in Rupiah and foreign currency:
   a) fund gathering activities as conducted in BOOK 1; b) fund disbursement activities as conducted in BOOK 1 with a broader scope; c) trade finance activities; d) limited treasury activities; and e) other services;
2. Business Activities as in BOOK 1 with a broader scope for:
   a) agency and cooperation; and b) payment system and electronic banking activities;
3. equity participation activities in sharia financial institutions in Indonesia;
4. temporary equity participation activities in the context of financing rescue; and
5. other activities commonly conducted by Banks as long as they do not conflict with sharia principles and legislation;

c. BOOK 3 may conduct all Business Activities as referred to in Article 6 both in Rupiah and in foreign currency and equity participation in sharia financial institutions in Indonesia and/or outside the country limited to the Asian regional area;

d. BOOK 4 may conduct all Business Activities as referred to in Article 6 both in Rupiah and in foreign currency and equity participation in sharia financial institutions in Indonesia and/or all areas outside the country with a larger volume than BOOK 3.

Article 8

(1) Business activities that can be conducted by sharia business units refer to the BOOK of the conventional commercial bank that is its parent. (2) Certain Business Activities in the BOOK of the conventional commercial bank that is its parent as referred to in paragraph (1) may be conducted by sharia business units after obtaining approval from the Financial Services Authority. (3) Further provisions regarding Certain Business Activities as referred to in paragraph (2) are regulated in a Circular Letter of the Financial Services Authority.

Third Section

Equity Participation

Article 9

Equity participation as referred to in Article 4 letter h and Article 6 letter h is established at:
a. BOOK 2 at most 15% (fifteen percent) of the Bank's capital; b. BOOK 3 at most 25% (twenty-five percent) of the Bank's capital; and
c. BOOK 4 at most 35% (thirty-five percent) of the Bank's capital.

Article 10

For conventional commercial banks that conduct equity participation in commercial sharia banks of at least 5% (five percent) of the conventional commercial bank's capital, the equity participation limits in BOOK 2 and BOOK 3 as referred to in Article 9 become:
a. BOOK 2 becomes at most 20% (twenty percent) of the conventional commercial bank's capital; b. BOOK 3 becomes at most 30% (thirty percent) of the conventional commercial bank's capital.

Article 11

Additional equity participation in subsidiary companies derived from profits obtained from the same subsidiary company is excluded from the equity participation limits as referred to in Article 9 and Article 10.

Fourth Section

Obligation to Disburse Credit or Financing to Productive Businesses

Article 12

Banks in each BOOK are obligated to disburse credit or financing to productive businesses with the following provisions:
a. at least 55% (fifty-five percent) of total credit or financing, for BOOK 1; b. at least 60% (sixty percent) of total credit or financing, for BOOK 2;
c. at least 65% (sixty-five percent) of total credit or financing, for BOOK 3; and
d. at least 70% (seventy percent) of total credit or financing, for BOOK 4.

Article 13

(1) The obligation to disburse credit or financing to productive businesses as referred to in Article 12 does not apply to Banks that focus on the disbursement of credit or financing for home ownership for the people with a disbursement amount of at least 75% (seventy-five percent) of the Bank's total credit or financing. (2) The provisions as referred to in paragraph (1) do not reduce the Bank's obligation to disburse credit or financing to Micro, Small, and Medium Enterprises (MSMEs) in a certain percentage as referred to in regulations governing the provision of credit or financing to MSMEs. (3) In the event that the disbursement of credit or financing for Banks focusing on the disbursement of credit or financing for home ownership as referred to in paragraph (1) falls below 75% (seventy-five percent), the Bank is obligated to submit an action plan for the fulfillment of home ownership credit or financing disbursement in accordance with the amount as referred to in paragraph (1).

Fifth Section

Miscellaneous

Article 14

Banks that will conduct Business Activities as referred to in Article 4 and Article 6 which are not basic products or activities and/or have high risk and complexity, are obligated to obtain approval from the Financial Services Authority.

Article 15

Further provisions regarding the scope of Business Activities of each BOOK as referred to in Article 5 and Article 7 and Business Activities requiring approval as referred to in Article 14 are regulated by a Circular Letter of the Financial Services Authority.

Article 16

(1) In the event that a Bank experiences a decrease in Core Capital resulting in a change of BOOK for 3 (three) consecutive months, the Bank is obligated to submit an action plan in order to fulfill Core Capital requirements according to the BOOK. (2) The action plan as referred to in paragraph (1) is submitted to the Financial Services Authority at the latest in the fourth month since the occurrence of the BOOK decrease. (3) The action plan as referred to in paragraph (2) must obtain approval from the Financial Services Authority and the resolution of the action plan is at most 1 (one) year since the approval of the Financial Services Authority.

CHAPTER III

OFFICE NETWORKS

Article 17

(1) Banks that will conduct Opening of Office Networks in the form of:
a. branch offices; or b. representative offices and other offices outside the country, are obligated to obtain a license from the Financial Services Authority.

(2) The Opening of Office Networks of Banks other than the types of offices as referred to in paragraph (1) is obligated to be reported and obtain confirmation from the Financial Services Authority.

Article 18

The Opening of Office Networks outside the country as referred to in Article 17 paragraph (1) letter b may only be conducted by BOOK 3 and BOOK 4 with the provisions:
a. BOOK 3 may conduct Opening of Office Networks outside the country limited to the Asian regional area; and b. BOOK 4 may conduct Opening of Office Networks in all areas outside the country.

Article 19

Banks that will conduct Opening of Office Networks must meet the requirements:
a. Bank health level with Composite Rating 1 (CR-1), Composite Rating 2 (CR-2), or Composite Rating 3 (CR-3) for the last 1 (one) year; and b. availability of Core Capital allocation according to location and type of office (theoretical capital).

Article 20

(1) In the event that a Bank has met the health level requirements but does not meet the availability of Core Capital allocation requirements as referred to in Article 19 letter b, the Bank may conduct Opening of Office Networks if it conducts:
a. disbursement of credit or financing to:

1. MSMEs at least 20% (twenty percent) of total credit or financing portfolio; or
2. micro and small businesses at least 10% (ten percent) of total credit or financing portfolio; and
   b. capital raising.

(2) For Banks that have met the health level requirements and have the availability of Core Capital allocation as referred to in Article 19, may obtain additional incentives for the number of Opening of Office Networks if they disburse credit or financing to:
a. MSMEs at least 20% (twenty percent) of total credit or financing portfolio; and/or b. micro and small businesses at least 10% (ten percent) of total credit or financing portfolio.

Article 21

(1) The Financial Services Authority considers the achievement of the Bank's efficiency level in approving the number of Office Networks planned to be opened by the Bank according to the RBB. (2) The achievement of the Bank's efficiency level is measured among others through the Operating Cost to Operating Income ratio (BOPO) and the Net Interest Margin (NIM) ratio or Net Operating Margin (NOM) ratio.

Article 22

In order to obtain a license or confirmation for the Opening of Office Networks, in addition to meeting the provisions as referred to in Article 19, Banks are also obligated to meet regulations governing commercial banks, commercial sharia banks, or sharia business units.

Article 23

(1) In considering the availability of Core Capital allocation for Opening of Office Networks as referred to in Article 19 letter b, the Financial Services Authority establishes:
a. zone division considering the saturation level of Banks and balanced development; b. coefficient for each zone; and
c. investment cost for Opening of Office Networks of Banks for each BOOK.

(2) The zones as referred to in paragraph (1) letter a consist of Zone 1 indicating the most saturated zone up to Zone 6 indicating the least saturated zone.

(3) The coefficients in each zone as referred to in paragraph (1) letter b are based on the saturation level of the zone, with the highest coefficient being in the most saturated zone.

Article 24

The calculation of the availability of Core Capital allocation for Opening of Office Networks is obtained from the multiplication of the zone coefficient for the location of the Bank's Office Network with the investment cost of the Bank's Office Network according to the BOOK.

Article 25

The Core Capital allocation availability requirements as referred to in Article 19 letter b do not apply to:
a. the opening of functional offices conducting specific activities of disbursement of credit to micro and small businesses; and/or b. Opening of Office Networks for Banks owned by local governments in the province where the Bank's head office is located.

Article 26

Further provisions regarding the calculation method of Core Capital allocation in the context of Opening of Office Networks are regulated by a Circular Letter of the Financial Services Authority.

Article 27

(1) In order to balance the distribution of Office Networks, Banks that open Office Networks in Zone 1 or Zone 2 in a certain amount are obligated to be followed by the opening of Office Networks in Zone 5 or Zone 6 in a certain amount.

(2) The obligation as referred to in paragraph (1) applies to BOOK 3 and BOOK 4 and its implementation must meet the availability of Core Capital allocation for Opening of Office Networks.

(3) The obligation to Open Office Networks as referred to in paragraph (2) does not apply to Banks owned by local governments and conducting Opening of Office Networks in Zone 1 or Zone 2 which are the province areas where the Bank's head office is located.

(4) Further provisions regarding the balanced distribution of Bank Office Networks as referred to in paragraph (1) are regulated by a Circular Letter of the Financial Services Authority.

CHAPTER IV

MISCELLANEOUS PROVISIONS

Article 28

The Financial Services Authority may, based on certain considerations, grant approval or rejection for certain Business Activities for a certain period.

Article 29

The Financial Services Authority may grant approval or rejection to Banks to conduct Opening of Office Networks in certain areas based on certain considerations.

CHAPTER V

SANCTIONS

Article 30

Banks that do not comply with the provisions as regulated in Article 2, Article 12, Article 13 paragraph (3), Article 14, Article 16, Article 17, Article 18, Article 27, Article 31, Article 32, or Article 33, are subject to administrative sanctions in the form of:
a. written reprimand; b. downgrade of the Bank's health level rating;
c. prohibition on opening new office networks; and/or
d. suspension of certain Business Activities.

CHAPTER VI

TRANSITIONAL PROVISIONS

Article 31

(1) Banks that conduct Business Activities that do not correspond to the Bank's BOOK activities are obligated to:
a. adjust Business Activities to follow the BOOK as referred to in Article 5, Article 7, or Article 9; or b. increase Core Capital.

(2) The adjustment as referred to in paragraph (1) is conducted at the latest by the end of June 2016.

Article 32

The Bank's obligation to disburse credit or financing to productive businesses as referred to in Article 12 or to focus on the disbursement of credit or financing for home ownership as referred to in Article 13 paragraph (1), is fulfilled at the latest by the end of June 2016.

Article 33

The obligations as referred to in Article 31 and Article 32 for Banks owned by local governments are fulfilled at the latest by the end of June 2018.

Article 34

BOOK 3 Banks that have branch offices, representative offices, and other types of offices outside the Asian regional area before December 27, 2012 may continue to operate Office Networks at those locations.

CHAPTER VII

CLOSING PROVISIONS

Article 35

(1) At the time this Financial Services Authority Regulation comes into force, Bank Indonesia Regulation Number 14/26/PBI/2012 dated December 27, 2012 concerning Business Activities and Office Networks Based on Core Capital of Banks (State Gazette of the Republic of Indonesia Year 2012 Number 286, Supplement to the State Gazette of the Republic of Indonesia Number 5384) is revoked and declared invalid.

(2) Implementation regulations of Bank Indonesia Regulation Number 14/26/PBI/2012 dated December 27, 2012 concerning Business Activities and Office Networks Based on Core Capital of Banks remain in force as long as they do not conflict with the provisions in this Financial Services Authority Regulation.

Article 36

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

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

Established in Jakarta on January 26, 2016

CHAIRMAN OF THE COMMISSIONERS COUNCIL
FINANCIAL SERVICES AUTHORITY,

signed

MULIAMAN D. HADAD

Promulgated in Jakarta
On January 27, 2016

MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA,

signed

YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2016 NUMBER 18

A copy in accordance with the original
Director of Law 1
Ministry of Law

signed

Yuliana

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 6/POJK.03/2016
ON
BUSINESS ACTIVITIES AND OFFICE NETWORKS
BASED ON CORE CAPITAL OF BANKS

I. GENERAL

The development direction of the global economy, resulting in the increasing integration of the national economy with regional and international economies, constitutes an opportunity and a challenge that must be utilized and anticipated to provide a positive impact on the advancement of the national economy.

In line with the plan for ASEAN financial sector integration in 2020, which allows banks with certain qualifications (Qualified ASEAN Banks) to operate freely within the ASEAN region, national banks need to enhance resilience, competitiveness, and efficiency. Furthermore, the development of the global economy will impact the increasing complexity of Business Activities and the need for Opening Bank Office Networks.

In this regard, it is necessary to strengthen Bank capital to anticipate risks arising from the complexity of Business Activities and to ensure that the Opening of Office Networks does not use funds collected from the public.

To enhance resilience and competitiveness, in conducting Business Activities and Opening Bank Office Networks, priority must be given to efforts to improve efficiency.

Strengthening and competitiveness of the banking sector must be accompanied by an increased role of Banks as intermediation institutions, particularly for productive businesses including the development of MSMEs (Micro, Small, and Medium Enterprises), so that the national banking industry plays an active role in the advancement of the national economy.

II. ARTICLE BY ARTICLE

Article 1
Clear enough.

Article 2
Clear enough.

Article 3
Paragraph (1)
Letter a
Minimum Core Capital of Banks refers to regulations governing the minimum core capital of general banks.
Letter b
Clear enough.
Letter c
Clear enough.
Letter d
Clear enough.
Paragraph (2)
Clear enough.

Article 4
Letter a
Fund collection includes, inter alia, checking accounts, savings, deposits, deposit certificates, received loans, issuance of debt instruments including equity debt, and/or asset securitization. Letter b Fund disbursement includes, inter alia, credits, factoring, purchase of securities, placement with Bank Indonesia, and/or placement with other Banks. Letter c Trade financing includes financing through the issuance of Domestic Documentary Credit (SKBDN), Letters of Credit, as well as other trade financing services and facilities. Letter d Treasury activities include, inter alia, spot transactions, plain vanilla derivative transactions, and/or complex derivative transactions such as structured products and credit derivatives. Letter e Foreign currency activities include, inter alia, foreign currency activities for fund collection, fund disbursement, trade financing, and/or treasury activities. Letter f Agency and cooperation activities include, inter alia, mutual fund sales agents, Government Securities (SBN) sales agents, Sharia Government Securities (SBSN) sales agents, custodians, trustees, trust with management (trust), and/or marketing cooperation with insurance companies (bancassurance) in various forms of business models including reference, distribution, and integration. Letter g Business activities related to payment systems and electronic banking conducted by Banks include, inter alia:

1. fund transfers, both for the Bank's own interests and for customer interests, including fund transfers via electronic media;
2. clearing organizers;
3. final settlement organizers (settlement);
4. card payment instrument organizers, including Automated Teller Machine (ATM) cards, debit cards, and credit cards;
5. electronic money organizers; and
6. other banking activities via electronic media.
   Letter h
   The term "capital participation" refers to capital participation in financial institutions as referred to in regulations governing capital participation. Letter i The term "temporary capital participation" refers to temporary capital participation as referred to in regulations governing capital participation. Letter j Other services include, inter alia, the issuance of bank guarantees and the provision of storage facilities for goods and securities (safe deposit box). Letter k The term "other activities commonly conducted by Banks" refers to other activities conducted by Banks in accordance with the Bank's function.

Article 5
Letter a
Number 1
Letter a)
Fund collection activities that are basic products or activities include, inter alia:

1. checking accounts;
2. savings;
3. deposits;
4. deposit certificates;
5. received loans; and
6. issuance of debt instruments including equity debt.
   Letter b)
   Fund disbursement activities that are basic products or activities include, inter alia:
7. credit disbursement;
8. purchase of securities issued by the government;
9. placement with Bank Indonesia; and
10. placement with other Banks.
    Letter c)
    Included in trade financing (trade finance) activities in Rupiah is financing through the issuance of SKBDN.
    Letter d)
    Limited scope activities for agency and cooperation include, inter alia, bancassurance with a reference business model.
    Letter e)
    Limited scope payment system and electronic banking activities include, inter alia:
11. fund transfers, both for the Bank's own interests and for customer interests, including limited fund transfers via electronic media;
12. clearing organizers;
13. final settlement organizers (settlement);
14. card payment instrument organizers, excluding credit cards;
15. electronic money organizers; and
16. other banking activities via electronic media, excluding internet banking, except for internet banking services used for branchless financial services in the context of inclusive finance (Laku Pandai) as regulated in provisions governing branchless financial services in the context of inclusive finance.
    Letter f)
    Clear enough.
    Letter g)
    Other services include, inter alia, the issuance of bank guarantees and the provision of storage facilities for goods and securities (safe deposit box). Number 2 The term "foreign currency trader" refers to foreign currency traders as referred to in regulations governing foreign currency traders. Number 3 Clear enough. Letter b Number 1 Letter a) Clear enough. Letter b) Broader fund disbursement activities include, inter alia, syndicated credits with the Bank as arranger. Letter c) Included in trade financing (trade finance) activities in Rupiah and foreign currencies include financing through the issuance of Letters of Credit and SKBDN. Letter d) Limited treasury activities cover spot transactions and plain vanilla derivative transactions. Letter e) Other services include, inter alia, the issuance of bank guarantees and the provision of storage facilities for goods and securities (safe deposit box). Number 2 Letter a) Broader agency and cooperation activities include, inter alia, mutual fund sales agents, SBN sales agents, SBSN sales agents, and bancassurance with a distribution business model. Letter b) Broader payment system and electronic banking activities include, inter alia, card payment instrument organizers involving credit cards and other banking activities involving internet banking. Number 3 Clear enough. Number 4 Clear enough. Number 5 Clear enough. Letter c Clear enough. Letter d Clear enough.

Article 6
Letter a
Fund collection activities, including:

1. deposits in the form of checking accounts and savings;
2. investments in the form of deposits and savings;
3. issuance of investment instruments; and
4. asset securitization,
   are based on agreements that do not contradict Sharia principles.
   Letter b
   Fund disbursement activities, including:
5. financing based on profit-sharing principles, asset leasing, sales, lending, and service leasing;
6. debt takeover;
7. purchase of Sharia securities; and
8. placement with Bank Indonesia and/or placement with other Sharia Banks,
   are based on agreements that do not contradict Sharia principles.
   Letter c
   Trade financing (trade finance) activities include:
9. financing through the issuance of SKBDN;
10. issuance of Letters of Credit; and
11. other trade financing services and facilities,
    are based on agreements that do not contradict Sharia principles.
    Letter d
    Treasury activities include, inter alia, spot transactions or other transactions, based on agreements that do not contradict Sharia principles. Letter e Foreign currency activities, including:
12. fund collection activities;
13. fund disbursement activities;
14. trade financing (trade finance); and
15. treasury activities,
    are based on agreements that do not contradict Sharia principles.
    Letter f
    Agency and cooperation activities include, inter alia:
16. Sharia mutual fund sales agents;
17. SBSN sales agents;
18. marketing cooperation with Sharia insurance companies (bancassurance) with reference, distribution, and integration business models;
19. custodians;
20. trustees; and
21. trust with management (trust),
    are based on agreements that do not contradict Sharia principles.
    Letter g
    Business activities related to payment systems and electronic banking conducted by Banks, including:
22. fund transfers, both for the Bank's own interests and for customer interests, including fund transfers via electronic media;
23. clearing organizers;
24. final settlement organizers (settlement);
25. card payment instrument organizers, including ATM cards, debit cards, and Sharia cards;
26. electronic money organizers; and
27. other banking activities via electronic media,
    are based on agreements that do not contradict Sharia principles.
    Letter h
    The term "capital participation" refers to capital participation in Sharia financial institutions as referred to in regulations governing prudential principles in capital participation activities. Letter i The term "temporary capital participation" refers to temporary capital participation as referred to in regulations governing prudential principles in capital participation activities. Letter j Other services include, inter alia:
28. issuance of bank guarantees; and
29. provision of storage facilities for goods and securities (safe deposit box),
    are based on agreements that do not contradict Sharia principles.
    Letter k
    Social field activities include, inter alia, matters related to zakat, infaq, sedekah, or other social funds, as well as wakaf, in accordance with applicable laws and regulations.

Article 7
Letter a
Number 1
Letter a)
Fund collection activities that are basic products or activities include, inter alia:

1. checking accounts;
2. savings;
3. deposits;
4. deposit certificates; and
5. issuance of investment instruments,
   are based on agreements that do not contradict Sharia principles.
   Letter b)
   Fund disbursement activities that are basic products or activities include, inter alia:
6. financing based on profit-sharing principles;
7. asset leasing;
8. sales;
9. lending;
10. service leasing;
11. debt takeover;
12. purchase of Sharia securities issued by the government; and
13. placement with Bank Indonesia and/or placement with other Sharia Banks,
    are based on agreements that do not contradict Sharia principles.
    Letter c)
    Included in trade financing (trade finance) activities in Rupiah is financing through the issuance of SKBDN based on agreements that do not contradict Sharia principles. Letter d) Limited scope activities for agency and cooperation include, inter alia, SBSN sales agents and bancassurance with a reference business model, are based on agreements that do not contradict Sharia principles. Letter e) Limited scope payment system and electronic banking activities include, inter alia:
14. fund transfers, both for the Bank's own interests and for customer interests, including limited fund transfers via electronic media;
15. clearing organizers;
16. final settlement organizers (settlement);
17. card payment instrument organizers, excluding Sharia cards;
18. electronic money organizers;
19. other banking activities via electronic media, excluding internet banking, except for internet banking services used for branchless financial services in the context of inclusive finance (Laku Pandai) as regulated in provisions governing branchless financial services in the context of inclusive finance,
    are based on agreements that do not contradict Sharia principles.
    Letter f)
    Clear enough.
    Letter g)
    Other services, including:
20. issuance of bank guarantees; and
21. provision of storage facilities for goods and securities (safe deposit box),
    are based on agreements that do not contradict Sharia principles.
    Number 2
    The term "foreign currency trader" refers to foreign currency traders as referred to in regulations governing foreign currency traders. Number 3 Clear enough. Letter b Number 1 Letter a) Clear enough. Letter b) Broader fund disbursement activities include, inter alia, syndicated financing with the Bank as arranger, are based on agreements that do not contradict Sharia principles. Letter c) Included in trade financing activities in Rupiah and foreign currencies is financing through the issuance of Letters of Credit and SKBDN, are based on agreements that do not contradict Sharia principles. Letter d) Limited treasury activities cover spot transactions, are based on agreements that do not contradict Sharia principles. Letter e) Other services include, inter alia, the issuance of bank guarantees and the provision of storage facilities for goods and securities (safe deposit box), are based on agreements that do not contradict Sharia principles. Number 2 Letter a) Broader agency and cooperation activities include, inter alia, Sharia mutual fund sales agents and bancassurance with distribution and integration business models, are based on agreements that do not contradict Sharia principles. Letter b) Broader payment system and electronic banking activities include, inter alia, card payment instrument organizers involving Sharia cards and other banking activities involving internet banking. Number 3 Clear enough. Number 4 Clear enough. Number 5 Clear enough. Letter c Clear enough. Letter d Clear enough.

Article 8
Clear enough.

Article 9
The term "capital" refers to capital as regulated in provisions regarding minimum capital provision requirements.

Article 10
The term "capital" refers to capital as regulated in provisions regarding minimum capital provision requirements.

Article 11
The term "subsidiary company" refers to subsidiary companies as referred to in regulations governing minimum capital provision requirements for general banks.

Article 12
The obligation to disburse credits or financing to productive businesses is carried out in an effort to optimize the Bank's intermediation function. The term "credit" refers to credits as referred to in regulations governing asset quality assessment. The term "financing" refers to financing as referred to in regulations governing asset quality assessment. Credits or financing included as credits or financing to productive businesses are credits or financing for investment purposes and/or working capital, both to MSME debtors or customers and non-MSMEs. The obligation to disburse credits or financing to productive businesses for Sharia business units is calculated based on the disbursement of credits or financing by conventional general banks that are their parent companies. The definition of MSMEs refers to Law Number 20 of 2008 concerning Micro, Small, and Medium Enterprises.

Article 13
Paragraph (1)
The term "home ownership credit or financing" refers to home ownership credits as referred to in regulations governing monthly Bank reports. Paragraph (2) Clear enough. Paragraph (3) Clear enough.

Article 14
Examples of Business Activities requiring approval include, inter alia, the issuance of equity debt instruments, issuance of structured products and credit derivatives, payment system activities, and mutual fund sales agency.

Article 15
Clear enough.

Article 16
Clear enough.

Article 17
Paragraph (1)
Licenses are granted based on an assessment of the fulfillment of requirements for Opening Office Networks.
Paragraph (2)
Confirmation is granted based on an assessment of the fulfillment of requirements for Opening Office Networks.

Article 18
Clear enough.

Article 19
Letter a
The term "health level" refers to the health level as referred to in regulations governing the assessment of the health level of general banks or the assessment of the health level of Sharia general banks. Health level fulfillment requirements for Sharia business units are based on the health level assessment of the conventional general bank that is their parent company. The health level assessment used is the health level assessment conducted by the Financial Services Authority. Letter b Clear enough.

Article 20
Paragraph (1)
Letter a
The definition of MSMEs and micro and small businesses refers to Law Number 20 of 2008 concerning Micro, Small, and Medium Enterprises. Letter b The term "capital reinforcement" refers to capital additions originating from profit allocations and/or additional capital contributions. Paragraph (2) The definition of MSMEs and micro and small businesses refers to Law Number 20 of 2008 concerning Micro, Small, and Medium Enterprises.

Article 21
Clear enough.

Article 22
Requirements as regulated in provisions governing general banks, Sharia general banks, or Sharia business units include, inter alia, administrative requirements such as document completeness, submission timeframes, and coordination scope with the head office.

Article 23
Paragraph (1)
Letter a
The measurement of Bank saturation levels and the distribution of development in each zone is conducted using parameters such as national and regional economic growth and the performance of fund disbursement and collection linked to population numbers. Letter b Clear enough. Letter c Clear enough. Paragraph (2) Clear enough. Paragraph (3) Clear enough.

Article 24
Clear enough.

Article 25
Letter a
The term "functional office conducting operational activities" refers to functional offices as referred to in regulations governing general banks. Letter b The term "Banks owned by local governments" refers to Banks whose shares are majority-owned by provincial, regency, and/or city governments. This regulation is intended to support the role of Banks owned by local governments in the development of regional economic development.

Article 26
Clear enough.

Article 27
Paragraph (1)
Clear enough.
Paragraph (2)
Clear enough.
Paragraph (3)
The term "Banks owned by local governments" refers to Banks whose shares are majority-owned by provincial, regency, and/or city governments. This regulation is intended to support the role of Banks owned by local governments in the development of regional development. Paragraph (4) Clear enough.

Article 28
Specific considerations include, inter alia, supporting financial system stability and/or encouraging the development of the national economy.

Article 29
The term "specific considerations" refers to healthy competition, efforts to distribute development, and the expansion of financial access for low-income and productive members of society (financial inclusion).

Article 30
Clear enough.

Article 31
Paragraph (1)
Letter a
Adjustment of Business Activities is carried out by stopping or reducing Business Activities that are not permitted.
Letter b
Core Capital enhancement is carried out to meet Core Capital requirements according to the Business Activity Classification (BUKU) of the activities conducted. Paragraph (2) Clear enough.

Article 32
Clear enough.

Article 33
The term "Banks owned by local governments" refers to Banks whose shares are majority-owned by provincial, regency, and/or city governments.

Article 34
Clear enough.

Article 35
Clear enough.

Article 36
Clear enough.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5842