FINANCIAL SERVICES AUTHORITY

REPUBLIC OF INDONESIA

FINANCIAL SERVICES AUTHABILITY REGULATION

NUMBER 61 /POJK.05/2015

CONCERNING

AMENDMENTS TO FINANCIAL SERVICES AUTHORITY

REGULATION NUMBER 12/POJK.05/2014 CONCERNING BUSINESS LICENSING

AND INSTITUTIONAL ASPECTS OF MICROFINANCE INSTITUTIONS

BY THE GRACE OF GOD THE ALMIGHTY,

THE BOARD OF COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY,

Considering: a. that in order to facilitate the licensing process, harmonize policies, and encourage the development of microfinance institutions, it is necessary to refine regulations concerning the business licensing and institutional aspects of microfinance institutions; b. that based on the considerations mentioned in letter a, it is necessary to establish a Financial Services Authority Regulation regarding Amendments to Financial Services Authority Regulation Number 12/POJK.05/2014 concerning Business Licensing and Institutional Aspects of 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);
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);
3. Government Regulation Number 89 of 2014 concerning Interest Rates on Loans or Financing Returns and the Scope of Business Operations of Microfinance Institutions (State Gazette of the Republic of Indonesia Year 2014 Number 321, Supplement to the State Gazette of the Republic of Indonesia Number 5616);
4. Financial Services Authority Regulation Number 12/POJK.05/2014 concerning Business Licensing and Institutional Aspects of Microfinance Institutions (State Gazette of the Republic of Indonesia Year 2014 Number 342, Supplement to the State Gazette of the Republic of Indonesia Number 5621);

DECIDES:

To establish: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING AMENDMENTS TO FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 12/POJK.05/2014 CONCERNING BUSINESS LICENSING AND INSTITUTIONAL ASPECTS OF MICROFINANCE INSTITUTIONS.

Article I

Several provisions in Financial Services Authority Regulation Number 12/POJK.05/2014 concerning Business Licensing and Institutional Aspects of Microfinance Institutions (State Gazette of the Republic of Indonesia Year 2014 Number 342, Supplement to the State Gazette of the Republic of Indonesia Number 5621) are amended as follows:

1. The provisions of paragraph (3) and paragraph (4) of Article 5 are amended, so that Article 5 reads as follows:

Article 5

(1) Microfinance Institutions (LKM) may conduct business activities on a conventional basis or based on Sharia Principles.

(2) Before conducting business activities, LKM must have a business license from OJK.

(3) To obtain the business license as referred to in paragraph (2), the Board of Directors of LKM submits a business license application to OJK according to the format in Appendix I, which is an integral part of this OJK Regulation, and must be accompanied by:

a. the deed of establishment of the legal entity including the articles of association and any amendments thereto (if any) that have been approved/consented by the competent authority or reported to the competent authority, which at a minimum contains:

1. name and domicile;
2. business activities as an LKM on a conventional basis or based on Sharia Principles;
3. capital;
4. ownership; and
5. authority, responsibilities, and term of office of the Board of Directors, Board of Commissioners, and DPS;

b. data of the Board of Directors, Board of Commissioners, and DPS including:

1. photocopy of valid identification cards (KTP);
2. curriculum vitae;
3. a stamped statement letter from the Board of Directors, Board of Commissioners, and DPS for LKM conducting business activities based on Sharia Principles:
   a) not recorded in the list of non-performing loans in the financial services sector; b) never sentenced for committing criminal offenses in the field of financial services business and/or the economy based on a court decision that has acquired permanent legal force; c) never sentenced for committing criminal offenses based on a court decision that has acquired permanent legal force within the last 5 (five) years; d) never declared bankrupt or caused a legal entity to be declared bankrupt based on a court decision that has acquired permanent legal force within the last 5 (five) years; e) does not hold concurrent positions as Directors in other LKMs for Directors; f) does not hold concurrent positions as Members of the Board of Commissioners in more than 2 (two) other LKMs for Directors; and g) does not hold concurrent positions as Members of the Board of Commissioners in more than 3 (three) other LKMs for Members of the Board of Commissioners;
4. a letter of certification or written proof of operational experience in the field of microfinance institutions or other financial service institutions for at least 1 (one) year for one of the Directors; and
5. a letter of certification 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 LKM conducting business activities based on Sharia Principles;

c. data of shareholders or members:

1. in the event that shareholders or members are individuals, the attached documents are photocopies of valid identification cards (KTP) and a stamped statement letter that the capital deposit:
   a) does not originate from loans; and b) does not originate from and for money laundering criminal offenses;
2. in the event that LKM is in the form of a cooperative, the provisions as referred to in paragraph (3) letter c number 1) only apply to founding members;
3. in the event that shareholders are village/district-owned enterprises and/or cooperatives, the attached documents are:
   a) the deed of establishment including the articles of association and any amendments thereto (if any) that have been approved/consented by the competent authority or reported to the competent authority, or proof of establishment of village/district-owned enterprises; b) financial reports that have been audited by public accountants or the latest financial reports or the latest financial accounting; c) photocopies of valid identification cards (KTP) for the Board of Directors or managers of village/district-owned enterprises and/or cooperatives; and d) a stamped statement letter that the capital deposit:
   i. does not originate from loans; and
   ii. does not originate from and for money laundering criminal offenses;
4. in the event that shareholders are District/City Governments, the attached documents are District/City Regulations regarding capital participation in LKM;

d. a letter of recommendation for the appointment of DPS from the MUI Sharia Board or DPS training certification from the MUI Sharia Board for LKM conducting business activities based on Sharia Principles;

e. organizational structure and management which must at least have credit decision, collection, and administrative functions;

f. LKM work systems and procedures, at a minimum including:

1. provision of Loans or Financing;
2. acceptance of Deposits;
3. collection from borrowers or recipients of Financing;
4. procedures for resolving non-performing loans; and
5. procedures for closing Deposits;

g. work plan for the first 2 (two) years which must at least contain:

1. LKM business activities and steps to be taken to realize the aforementioned plan;
2. projections of financial position reports and annual financial performance reports starting from when LKM conducts operational activities; and
3. projections of financial position reports and financial performance reports as referred to in number 2) refer to regulations regarding LKM financial reports;

h. proof of paid-up capital or principal deposits, mandatory savings, and grants made in cash in the form of photocopies of valid time deposits in the name of one of the Directors at one of the banks in Indonesia or one of the Sharia banks or Sharia business units in Indonesia for LKM conducting business activities based on Sharia Principles, accompanied by a statement letter from the Directors; and

i. proof of operational readiness including:

1. list of fixed assets (if any) and inventory; and
2. proof of ownership or control of the office.

(4) The work plan as referred to in paragraph (3) letter g does not apply to LKM with a business scope of villages/districts.

2. Between Article 5 and Article 6, 1 (one) article is inserted, namely Article 5A, which reads as follows:

Article 5A

(1) In the event that LKM submits a business license application with non-cash capital deposits, the business license application is submitted according to the format in Appendix IA, which is an integral part of this OJK Regulation, accompanied by:

a. the deed of establishment of the legal entity including the articles of association and any amendments thereto as referred to in Article 5 paragraph (3) letter a;

b. projections of financial position reports and annual financial performance reports starting from when LKM conducts operational activities for the first 2 (two) years as referred to in Article 5 paragraph (3) letter g number 2);

c. annual financial reports consisting of at least financial position reports and financial performance reports for the last 2 (two) years;

d. closing financial position reports and opening financial position reports from LKM;

e. a list of LKM Loans/Financing for the last 2 (two) years according to the format in Appendix IB, which is an integral part of this OJK Regulation; and

f. data of the Board of Directors, Board of Commissioners, DPS, shareholders, or members, as referred to in Article 5 paragraph (3) letter b and letter c except for statement letters regarding capital deposits.

(2) Fulfillment of non-cash capital deposits as referred to in paragraph (1) is calculated based on equity in the opening financial position report as referred to in paragraph (1) letter d.

(3) Projections of financial position reports and annual financial performance reports as referred to in paragraph (1) letter b do not apply to LKM with a business scope of villages/districts.

(4) Regarding applications as referred to in paragraph (1), OJK conducts:

a. research on document completeness; and

b. analysis of compliance with regulations in the field of LKM.

(5) OJK grants approval for the business license application within a maximum period of 40 (forty) working days since the business license application as referred to in paragraph (1) is received completely and correctly.

(6) In the event that the business license application as an LKM as referred to in paragraph (1) is submitted incompletely but the equity calculation as referred to in paragraph (2) has met the provisions for the amount of paid-up capital or principal deposits, mandatory savings, and grants of LKM as regulated in this OJK Regulation, OJK grants conditional business license approval within a maximum of 20 (twenty) working days after the application is received.

(7) Parties who have obtained conditional business license approval as referred to in paragraph (6) must submit documents as referred to in paragraph (1) within a maximum of 2 (two) years calculated from the date the conditional business license approval is established and cannot be extended.

(8) In the event that parties who have obtained conditional business license approval have submitted documents as referred to in paragraph (1) completely and correctly, OJK grants approval for the business license application within a maximum period of 40 (forty) working days since the business license application is received completely and correctly.

(9) In the event that the time limit as referred to in paragraph (7) has expired and parties who have obtained conditional business license approval have not submitted documents as referred to in paragraph (1) completely and correctly, the conditional business license approval is declared void and invalid.

3. The provisions of paragraph (1) and paragraph (3) of Article 6 are amended, so that they read as follows:

Article 6

(1) OJK grants approval or rejection of business license applications as referred to in Article 5 paragraph (3) within a maximum period of 40 (forty) working days since the business license application is received completely and correctly.

(2) In order to grant approval or rejection of business license applications, OJK conducts:

a. research on document completeness;

b. feasibility analysis of the work plan; and

c. analysis of compliance with regulations in the field of LKM.

(3) In the event that business license applications as referred to in Article 5 paragraph (3) are submitted incompletely and/or incorrectly, OJK issues a notification letter containing unfulfilled requirements to the applicant, no later than 20 (twenty) working days after the application is received.

(4) Rejection of business license applications is accompanied by reasons for rejection.

(5) In the event that business license applications are approved, OJK establishes business licenses as LKM to the applicants.

4. The provisions of Article 8 are amended, so that Article 8 reads as follows:

Article 8

The name of LKM must be clearly stated in the articles of association as referred to in Article 5 paragraph (3) letter a number 1) starting with the form of the legal entity followed by the phrase:

a. “Microfinance Institution” and the name of LKM for LKM conducting business activities on a conventional basis;

b. “Sharia Microfinance Institution” and the name of LKM for LKM conducting business activities based on Sharia Principles.

5. The provisions in Article 9 remain unchanged with amendments to the Explanation of Article 9 as established in the article-by-article explanation in this OJK Regulation.

6. The provisions of paragraph (2) of Article 12 are amended, so that Article 12 reads as follows:

Article 12

(1) LKM conducting business activities based on Sharia Principles must establish DPS.

(2) DPS as referred to in paragraph (1) is appointed in the general meeting of shareholders or members based on recommendations from the MUI Sharia Board or DPS training certification from the MUI Sharia Board.

(3) The establishment of DPS as referred to in paragraph (1) can be carried out by several LKMs.

(4) DPS as referred to in paragraph (1) executes supervision tasks and provides advice to the Board of Directors so that its business activities are in accordance with Sharia Principles.

(5) Supervision and advisory tasks as referred to in paragraph (4) are carried out in the form of:

a. ensuring and supervising the conformity of LKM operational activities with fatwas established by the MUI Sharia Board;

b. assessing Sharia aspects of operational guidelines and products issued by LKM; and

c. studying new products and services for which there are no fatwas to request fatwas from the MUI Sharia Board.

(6) Regulations regarding the requirements for the Board of Directors and Board of Commissioners of LKM as referred to in Article 10 except for letter e and letter f, mutatis mutandis apply to DPS.

7. The provisions of paragraph (1) of Article 14 are amended, so that Article 14 reads as follows:

Article 14

(1) The Board of Directors must report changes to the name of LKM to OJK no later than 20 (twenty) working days after obtaining the letter of approval for name changes from the competent authority or proof of reporting name changes to the competent authority, using the format in Appendix VI, which is an integral part of this OJK Regulation, accompanied by documents:

a. minutes of the general meeting of shareholders or cooperative members regarding changes to the name of LKM;

b. proof of changes to the articles of association regarding name changes that have been approved by the competent authority for LKM in the form of limited liability companies or proof of reporting to the competent authority for LKM in the form of legal entity cooperatives; and

c. proof of announcement of name changes through local daily newspapers or announcement boards at LKM offices that are easily accessible to the public.

(2) Based on the report as referred to in paragraph (1), OJK records changes to the name of LKM within a maximum period of 20 (twenty) working days calculated from the receipt of the report completely and correctly.

8. The name of Chapter VIII is amended, so that Chapter VIII reads as follows:

CHAPTER VIII

CHANGES TO THE SCOPE OF BUSINESS OPERATIONS

9. Between Article 24 and Article 25, 1 (one) article is inserted, namely Article 24A, which reads as follows:

Article 24A

(1) LKM may increase the scope of business operations.

(2) LKM that increases the scope of business operations as referred to in paragraph (1) must meet capital requirements as referred to in Article 9 paragraph (2).

(3) LKM that will increase the scope of business operations as referred to in paragraph (1) must submit a report on the plan to increase the scope of business operations to OJK within a maximum period of 20 (twenty) working days since the date of the general meeting of shareholders or members.

(4) The report as referred to in paragraph (3) is submitted according to the format in Appendix XVI, which is an integral part of this OJK Regulation, and is accompanied by minutes of the general meeting of shareholders or members regarding the increase in the scope of business operations of LKM.

10. The provisions of paragraph (1) of Article 27 are amended so that Article 27 reads as follows:

Article 27

(1) LKM that does not meet the provisions in Article 2 paragraph (2) and paragraph (4), Article 3, Article 4, Article 7 paragraph (2), Article 12 paragraph (1), Article 13 paragraph (1) and paragraph (2), Article 14 paragraph (1), Article 17 paragraph (1), paragraph (2), and paragraph (3), Article 21 paragraph (2), Article 22 paragraph (1), Article 23 paragraph (2), Article 24 paragraph (1), Article 24A paragraph (2) and paragraph (3), and Article 26 paragraph (1), paragraph (2), and paragraph (3) of this OJK Regulation, is subject to administrative sanctions in the form of written warnings.

(2) Written warning sanctions as referred to in paragraph (1) are given in writing for a maximum of 3 (three) consecutive times with each validity period of 40 (forty) working days.

(3) In the event that before the validity period of written warning sanctions as referred to in paragraph (2) expires, LKM has met the provisions as referred to in paragraph (1), OJK or the local district/city government or other parties designated by OJK revoke the written warning sanctions.

(4) In the event that the validity period of the third written warning as referred to in paragraph (2) expires and LKM still does not meet the provisions as referred to in paragraph (1), OJK requests shareholders or members to replace the Board of Directors of LKM within a maximum period of 6 (six) months since notification from OJK.

(5) In the event that the time limit as referred to in paragraph (4) expires and the general meeting of shareholders or members does not replace the Board of Directors as referred to, OJK dismisses the Board of Directors of LKM and subsequently appoints and appoints temporary replacements until the general meeting of shareholders or members appoints permanent replacements with OJK approval.

11. The provisions of Article 29 are repealed.

12. The provisions of Article 30 are amended and between Article 30 and Article 31, 2 (two) articles are inserted, namely Article 30A and Article 30B, which read as follows:

Article 30

LKM that has obtained a business license through ratification based on Financial Services Authority Regulation Number 12/POJK.05/2014 concerning Business Licensing and Institutional Aspects of Microfinance Institutions and LKM that obtains a business license with non-cash capital deposits as referred to in Article 5A paragraph (1) must meet the provisions as referred to in Article 2 paragraph (2), Article 2 paragraph (3), Article 2 paragraph (4), Article 3, and Article 4 of Financial Services Authority Regulation Number 12/POJK.05/2014 concerning Business Licensing and Institutional Aspects of Microfinance Institutions no later than 5 (five) years calculated from the date this OJK Regulation comes into force.

Article 30A

In the event that business license applications for LKM conducting business activities based on Sharia principles are submitted within a maximum period of 2 (two) years since this POJK is promulgated, recommendations for the appointment of DPS members from the MUI Sharia Board or DPS training certification from the MUI Sharia Board as referred to in Article 5 paragraph (3) letter d and Article 12 paragraph (2) are submitted no later than 2 (two) years since the LKM business license is established.

Article 30B

Business license applications through ratification that have been accepted by OJK before this OJK Regulation is promulgated remain recognized and are resolved based on this OJK Regulation.

Article II

This OJK Regulation comes into force on the date it is promulgated.

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

Established in Jakarta on 23 December 2015

CHAIRMAN OF THE BOARD OF COMMISSIONERS
FINANCIAL SERVICES AUTHORITY,

signed

MULIAMAN D. HADAD

Promulgated in Jakarta on 29 December 2015

MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA,

signed

YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2015 NUMBER 412

A copy in accordance with the original

Director of Legal Affairs 1
Department of Legal Affairs

signed

Sudarmaji