Implementation of Corporate Governance for Commercial Banks

To:
The Board of Directors of Conventional Commercial Banks

COPY

CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 13 /SEOJK.03/2017

CONCERNING

THE IMPLEMENTATION OF CORPORATE GOVERNANCE FOR COMMERCIAL BANKS

In light of the enforcement of the Financial Services Authority Regulation Number 4/POJK.03/2016 concerning the Assessment of the Health Level of Commercial Banks (State Gazette of the Republic of Indonesia Year 2016 Number 16, Supplement to the State Gazette of the Republic of Indonesia Number 5840) and the Financial Services Authority Regulation Number 55/POJK.03/2016 concerning the Implementation of Corporate Governance for Commercial Banks (State Gazette of the Republic of Indonesia Year 2016 Number 286, Supplement to the State Gazette of the Republic of Indonesia Number 5980), it is necessary to regulate the implementation of the Implementation of Corporate Governance for Commercial Banks in this Financial Services Authority Circular as follows:

I. GENERAL PROVISIONS

In order to improve Bank performance, protect the interests of Stakeholders, and increase compliance with applicable laws and regulations and ethical values generally applicable in the banking industry, Banks are required to conduct business activities based on the principles of Good Corporate Governance as regulated in the Financial Services Authority Regulation Number 55/POJK.03/2016 concerning the Implementation of Corporate Governance for Commercial Banks, hereinafter referred to as the POJK on Corporate Governance for Commercial Banks.

The implementation of Corporate Governance in the banking industry must always be based on 5 (five) basic principles of Good Corporate Governance as follows:
a. Transparency (transparency) namely openness in presenting material and relevant information and openness in carrying out the decision-making process. b. Accountability (accountability) namely clarity of function and implementation of accountability of the Bank's organs so that management runs effectively.
c. Responsibility (responsibility) namely the suitability of Bank management with laws and regulations and healthy Bank management principles.
d. Independence (independency) namely professional Bank management without influence or pressure from any party. e. Fairness (fairness) namely justice and equality in fulfilling the rights of Stakeholders arising from agreements and laws and regulations.

In order to ensure the implementation of the 5 (five) basic principles of Good Corporate Governance as referred to in item 1, Banks must conduct regular self-assessments that at least cover 11 (eleven) assessment factors for the implementation of Corporate Governance, namely:
a. implementation of the duties and responsibilities of the Board of Directors; b. implementation of the duties and responsibilities of the Board of Commissioners;
c. completeness and implementation of committee duties;
d. handling of conflicts of interest; e. implementation of the compliance function; f. implementation of the internal audit function; g. implementation of the external audit function; h. implementation of risk management including the internal control system;
i. provision of funds to related parties and large exposure provision;
j. transparency of the Bank's financial and non-financial conditions, corporate governance implementation reports, and internal reporting; and k. the Bank's strategic plan.

In addition, other information related to the implementation of Bank Corporate Governance outside the 11 (eleven) assessment factors for the implementation of Corporate Governance must be considered, such as problems arising as a result of remuneration policies at a Bank or internal disputes at the Bank that disrupt operations and/or the continuity of the Bank's business. As an example, the determination of bonuses based on target achievement at the end of the year with the determination of very high (ambitious) targets that result in unhealthy practices by Bank management or employees in achieving those targets.

Experience from the global financial crisis drives the need to improve the effectiveness of risk management and Corporate Governance implementation so that Banks are able to identify problems earlier, take appropriate and rapid corrective action, and be more resilient in facing crises. In this regard, the Financial Services Authority is refining the Bank Health Level assessment method by using a risk-based approach (Risk Based Bank Rating/RBBR) both individually and on a consolidated basis, which among other things includes the assessment of Corporate Governance factors.
The assessment of Corporate Governance factors in the Bank Health Level assessment using the risk-based approach or RBBR replaces the assessment of management factors in the Bank Health Level assessment based on the CAMELS rating.
Based on Financial Services Authority regulations concerning the Assessment of the Health Level of Commercial Banks using the risk-based approach or RBBR, the assessment of the implementation of Corporate Governance based on the 5 (five) basic principles of Good Corporate Governance is grouped into a governance system consisting of 3 (three) governance aspects, namely governance structure, governance process, and governance outcome.
Banks apply the principles of Good Corporate Governance in every business activity at all levels or tiers of the organization, including the Board of Directors and Board of Commissioners down to operational staff.
In the implementation of Corporate Governance, the existence of Independent Commissioners and Independent Parties is required to avoid conflicts of interest (conflict of interest) in the implementation of duties at all levels or tiers of the Bank's organization, check and balance, and to protect the interests of Stakeholders, particularly depositors and non-controlling shareholders. To support independence in the implementation of these duties, regulations regarding the waiting period (cooling off) for parties who will become Independent Parties are necessary.
In efforts to improve and enhance the quality of Corporate Governance implementation, Banks regularly conduct comprehensive self-assessments regarding the adequacy of Corporate Governance implementation so that Banks can immediately establish an action plan, which includes corrective actions required in case there are deficiencies in Corporate Governance implementation.
In the implementation of the transparency principle as referred to in item 1.a., Banks submit corporate governance implementation reports and inform them on the Bank's website.

II. BOARD OF DIRECTORS

The President Director or Chief Director must come from a party independent of the controlling shareholders of the Bank.
Independence of the President Director or Chief Director can be fulfilled if the person concerned does not have financial relationships, managerial relationships, ownership relationships, and/or family relationships with the controlling shareholders of the Bank. a. The term controlling shareholder refers to legal entities, individuals, and/or business groups as referred to in Financial Services Authority regulations concerning the assessment of competence and propriety for key parties of financial service institutions. Included in the definition of controlling shareholders of the Bank are Bank shareholders up to ultimate shareholders. b. The term having a financial relationship means that a person receives income, financial assistance, and/or loans from the controlling shareholders of the Bank.
c. The term having a managerial relationship means that a person holds a position as a member of the Board of Directors, member of the Board of Commissioners, or Executive Officer at the company that is the controlling shareholder of the Bank.
d. The term having an ownership relationship means that a person becomes:

a shareholder in the company that is the controlling shareholder of the Bank; and/or
a shareholder of the Bank together with the controlling shareholder of the Bank.
Ownership of Bank shares originating from the Management Shares Option Program (MSOP) which is no more than 5% (five percent) of the Bank's paid-up capital is not included in the aforementioned ownership relationship. e. The term having a family relationship means having a family relationship up to the second degree, both vertical and horizontal relationships, including in-laws, so that the term family includes:
biological/step/adoptive parents;
biological/step/adoptive siblings together with their husband or wife;
biological/step/adoptive children;
biological/step/adoptive grandparents;
biological/step/adoptive grandchildren;
biological/step/adoptive siblings of parents together with their husband or wife;
husband or wife;
parents-in-law;
siblings-in-law;
husband or wife of biological/step/adoptive children;
grandparents of husband or wife;
husband or wife of biological/step/adoptive grandchildren; and/or
biological/step/adoptive siblings of husband or wife together with their husband or wife.
In the event that the controlling shareholder of the Bank is a legal entity, the family relationship between the President Director or Chief Director and the controlling shareholder of the Bank is viewed from the family relationship between a person and the controlling shareholder of the legal entity that is the controlling shareholder of the Bank.

The Board of Directors discloses to employees the Bank's strategic policies in the field of human resources. The term strategic policies in the field of human resources includes, among others, policies regarding the recruitment system, promotion system, remuneration system, and the Bank's plan to conduct efficiency through staff reduction. Disclosure of these policies must be done through means known or easily accessible by employees.
The Board of Directors is prohibited from granting general power of attorney to other parties that results in the transfer of the duties and functions of the Board of Directors as regulated in the POJK on Corporate Governance for Commercial Banks. The term granting general power of attorney refers to granting power to 1 (one) or more employees or other persons that results in the overall transfer of the duties, authority, and responsibilities of the Board of Directors, namely without limitations on scope and time.
All decisions of the Board of Directors are taken in accordance with guidelines and working rules, which bind and are the responsibility of all Board of Directors members. In the event of a difference of opinion (dissenting opinion), it must be clearly stated in the Board of Directors meeting minutes along with the reasons for the difference of opinion. Regarding this matter, a copy of the Board of Directors meeting minutes signed by all attending Board of Directors members must be distributed to all Board of Directors members.

III. BOARD OF COMMISSIONERS

Independent Commissioners are appointed to be at least 50% (fifty percent) of the total members of the Board of Commissioners. Independent Commissioners are members of the Board of Commissioners who do not have financial relationships, managerial relationships, ownership relationships, and/or family relationships with Board of Directors members, other Board of Commissioners members, and/or controlling shareholders, or relationships with the Bank that can influence the ability to act independently.
The definition of "having financial relationships, managerial relationships, ownership relationships, and/or family relationships with Board of Directors members, other Board of Commissioners members, and/or controlling shareholders, or relationships with the Bank that can influence the ability to act independently" is as follows:
a. The term controlling shareholder refers to legal entities, individuals, and/or business groups as referred to in Financial Services Authority regulations concerning the assessment of competence and propriety for key parties of financial service institutions. Included in the definition of controlling shareholders of the Bank are Bank shareholders up to ultimate shareholders. b. The term having a financial relationship means that a person receives income, financial assistance, or loans from:

Board of Directors members and/or Board of Commissioners members of the Bank;
companies whose controlling shareholders are Board of Directors members and/or Board of Commissioners members of the Bank; and/or
controlling shareholders of the Bank.
c. The term having a managerial relationship means that a person holds a position as:
a Board of Directors member or Board of Commissioners member at a company whose Board of Commissioners members become Board of Directors members and/or Board of Commissioners members of the Bank;
a Board of Directors member or Board of Commissioners member at a company whose controlling shareholders are Board of Directors members and/or Board of Commissioners members of the Bank; and/or
a Board of Directors member, Board of Commissioners member, or Executive Officer at the company that is the controlling shareholder of the Bank.
d. The term having an ownership relationship means that a person becomes a shareholder in:
companies jointly owned by Board of Directors members, Board of Commissioners members, and/or controlling shareholders of the Bank so that together they become controlling shareholders in that company; and/or
the company that is the controlling shareholder of the Bank.
e. The term having a family relationship means having a family relationship up to the second degree, both vertical and horizontal relationships, including in-laws, so that the term family includes:
biological/step/adoptive parents;
biological/step/adoptive siblings together with their husband or wife;
biological/step/adoptive children;
biological/step/adoptive grandparents;
biological/step/adoptive grandchildren;
biological/step/adoptive siblings of parents together with their husband or wife;
husband or wife;
parents-in-law;
siblings-in-law;
husband or wife of biological/step/adoptive children;
grandparents of husband or wife;
husband or wife of biological/step/adoptive grandchildren; and/or
biological/step/adoptive siblings of husband or wife together with their husband or wife.
In the event that the controlling shareholder of the Bank is a legal entity, the family relationship between the Independent Commissioner and the controlling shareholder of the Bank is viewed from the family relationship between a person and the controlling shareholder of the legal entity that is the controlling shareholder of the Bank. f. The term relationship with the Bank that can influence a person's ability to act independently refers to relationships in the form of:
ownership of Bank shares with ownership amounting to more than 5% (five percent) of the Bank's paid-up capital; and/or
receiving or giving income, financial assistance, or loans from or to the Bank that causes the party giving income, financial assistance, or loans to have the ability to influence (controlling influence) the party receiving income, financial assistance, or loans, such as:
a) affiliated parties, namely parties providing services to the Bank, including public accountants, appraisers, legal consultants, and other consultants; and/or b) financial transactions with the Bank that can influence the continuity of the Bank's business and/or the party conducting the financial transaction, including core debtors, core depositors, or companies whose majority of funding sources are obtained from the Bank. The term core debtor and core depositor refers to core debtors and core depositors as referred to in regulations concerning periodic reports of commercial banks.

Former members of the Board of Directors of the Bank, former Executive Officers of the Bank, or parties having relationships with the Bank that can influence the ability to act independently, cannot become Independent Commissioners at the respective Bank before serving a waiting period (cooling off) of at least 1 (one) year. The term waiting period (cooling off) refers to the interval between the effective end of the person's position as declared in writing as a member of the Board of Directors of the Bank or Executive Officer of the Bank or other parties having relationships with the Bank, and the effective appointment of the person as an Independent Commissioner.
The waiting period (cooling off) regulations for becoming an Independent Commissioner as referred to in item 2 do not apply to former Board of Directors members or former Executive Officers who have duties only performing supervisory functions for at least 1 (one) year.
Applications for competence and propriety assessment for Independent Commissioner candidates must be submitted at least 30 (thirty) days before the waiting period (cooling off) ends.
Changes in job status from Commissioner to Independent Commissioner at the same Bank must receive approval from the Financial Services Authority. To obtain approval, Independent Commissioner candidates must, among other things, submit a statement of independence letter with the format as shown in Appendix I, which is an integral part of this Financial Services Authority Circular. Financial Services Authority approval refers to Financial Services Authority regulations concerning the assessment of competence and propriety for key parties of financial service institutions.
The Board of Commissioners is prohibited from participating in the decision-making of the Bank's operational activities, except for:
a. provision of funds to related parties; and b. matters regulated in the Bank's Articles of Association or laws and regulations.
Participation or approval of the Board of Commissioners in the decision-making of operational activities as referred to in letters a and b is part of the early supervision efforts conducted by the Board of Commissioners. Participation or approval of the Board of Commissioners does not negate the responsibility of the Board of Directors in the management of the Bank.
The Board of Commissioners must notify the Financial Services Authority within a maximum of 7 (seven) working days from the discovery of:
a. violations of laws and regulations in the field of finance and banking; and/or b. conditions or estimated conditions that can endanger the continuity of the Bank's business, among others based on recommendations from committees that assist in the effectiveness of the Board of Commissioners' duties. The reported findings are those referred to in letters a and b that have not been or were not reported by the Bank and/or by the director overseeing the compliance function to the Financial Services Authority.
Board of Commissioners meetings are held regularly at least 4 (four) times in 1 (one) year and attended physically by all Board of Commissioners members at least 2 (two) times in 1 (one) year, preferably for the purpose of evaluating or setting strategic policies and evaluating the realization of the Bank's business plan. In the event that Non-Independent Commissioners cannot attend Board of Commissioners meetings physically, they may attend via teleconference technology. In the event that Board of Commissioners meetings are held using teleconference technology, they must be accompanied by:
a. the basis for the decision to hold the meeting using teleconference technology, such as internal Bank regulations and Board of Commissioners meeting minutes; b. evidence of the meeting recording; and
c. meeting minutes regarding the aforementioned matter signed by all participants present physically or via teleconference technology.
Copies of Board of Commissioners meeting minutes signed by all attending Board of Commissioners members must be distributed to all Board of Commissioners members.

IV. COMMITTEES

The Board of Commissioners forms at least an audit committee, a risk monitoring committee, and a remuneration and nomination committee, to support the effectiveness of the implementation of the duties and responsibilities of the Board of Commissioners.
The membership of the audit committee consists of at least 1 (one) Independent Commissioner who also serves as chairman, 1 (one) Independent Party with expertise in finance or accounting, and 1 (one) Independent Party with expertise in law or banking.
Independent Party members of the audit committee are considered to have expertise in finance or accounting if they meet the criteria:
a. having knowledge in finance and/or accounting; and b. having at least 5 (five) years of work experience in finance and/or accounting.
Independent Party members of the audit committee are considered to have expertise in law or banking if they meet the criteria:
a. having knowledge in law and/or banking; and b. having at least 5 (five) years of work experience in law and/or banking.
The membership of the risk monitoring committee consists of at least 1 (one) Independent Commissioner who also serves as chairman, 1 (one) Independent Party with expertise in finance, and 1 (one) Independent Party with expertise in risk management.
Independent Party members of the risk monitoring committee are considered to have expertise in finance if they meet the criteria:
a. having knowledge in economics, finance, and/or banking; and b. having at least 5 (five) years of work experience in economics, finance, and/or banking.
Independent Party members of the risk monitoring committee are considered to have expertise in risk management if they meet the criteria:
a. having knowledge in risk management; and/or b. having at least 2 (two) years of work experience in risk management.
The membership of the remuneration and nomination committee consists of at least 1 (one) Independent Commissioner serving as Chairman, 1 (one) Non-Independent Commissioner, and 1 (one) Executive Officer overseeing human resources or 1 (one) employee representative.
Executive Officers overseeing human resources or employee representatives who are members of the committee must have knowledge regarding the Bank's remuneration and/or nomination systems and succession plans. In the event that the Bank forms separate remuneration and nomination committees, Executive Officers or employee representatives who are members of the remuneration committee must have knowledge regarding the Bank's remuneration system, and Executive Officers or employee representatives who are members of the nomination committee must have knowledge regarding the nomination system and succession plans.
Independent Parties are parties outside the Bank who do not have financial relationships, managerial relationships, ownership relationships, and/or family relationships with Board of Directors members, Board of Commissioners members, and/or controlling shareholders, or relationships with the Bank that can influence the ability to act independently.
The definition of "having financial relationships, managerial relationships, ownership relationships, and/or family relationships with Board of Directors members, other Board of Commissioners members, and/or controlling shareholders, which can influence the ability to act independently" is as referred to in item III.1. As for the term relationship with the Bank that can influence a person's ability to act independently, it refers to relationships in the form of:
a. ownership of Bank shares with ownership amounting to more than 5% (five percent) of the Bank's paid-up capital; and/or

b. receiving or providing income, financial assistance, or loans from or to a Bank that causes the party providing the income, financial assistance, or loan to have the ability to influence (controlling influence) the party receiving the income, financial assistance, or loan, such as:

affiliated parties, namely parties that provide services to the Bank, including public accountants, appraisers, legal consultants, and other consultants;
receiving income from the Bank, except for income received by Independent Parties due to holding concurrent positions as members of other committees within the same Bank;
and/or
financial transactions with the Bank that can affect the continuity of the Bank's business and/or the party conducting the financial transaction, including core debtors, core depositors, or companies whose majority of funding sources are obtained from the Bank.
What is meant by core debtors and core depositors are core debtors and core depositors as referred to in regulations governing periodic reports of commercial banks.

The Bank must verify the truthfulness of all documents or supporting data for the fulfillment of Independent Party requirements, including personal statements regarding the integrity of Independent Parties.
The Chairman of a committee may only hold concurrent positions as Chairman of at most 1 (one) other committee within the same Bank.
Committee members who are Independent Parties may hold concurrent positions as Independent Party members of other committees within the same Bank, another Bank, and/or another company, provided that:
a. they meet all required competencies; b. they meet independence criteria;
c. they are able to maintain Bank confidentiality;
d. they observe applicable codes of ethics; and e. they do not neglect the execution of duties and responsibilities as committee members.
Members of the Audit Committee, Risk Monitoring Committee, and Remuneration and Nomination Committee are prohibited from being members of the Board of Directors, both within the same Bank and in other Banks.
Former members of the Bank's Board of Directors, former Executive Officers of the Bank, or parties who have relationships with the Bank that can influence the ability to act independently, cannot become Independent Parties in the Audit Committee and/or Risk Monitoring Committee members of the relevant Bank, before serving a waiting period (cooling off) of at least 6 (six) months.
What is meant by the waiting period (cooling off) is the interval between the effective end of the relevant position, declared in writing as a member of the Board of Directors or Executive Officer or other party having a relationship with the Bank, and the effective appointment of the relevant party as an Independent Party.
The waiting period (cooling off) provisions for becoming an Independent Party as stated in item 10 do not apply to former members of the Bank's Board of Directors or former Executive Officers who only perform supervisory functions for at least 6 (six) months.
In carrying out their duties and responsibilities, the Audit Committee, Risk Monitoring Committee, and Remuneration and Nomination Committee must have internal policies, which at least include:
a. work guidelines, including work mechanisms, clear descriptions of duties and responsibilities of each member; and b. work regulations, including arrangements for work ethics, working hours, and meeting arrangements including voting rights arrangements, which must be known and binding for every committee member.
Committee meeting decisions are made based on deliberation for consensus. In the event that deliberation for consensus is not reached, decision-making is conducted based on the majority vote with the principle of 1 (one) person 1 (one) vote.

V. CONFLICT OF INTEREST

In the event of a conflict of interest between the Bank and the Bank's owners, members of the Board of Directors, members of the Board of Commissioners, Executive Officers, and/or other parties related to the Bank, members of the Board of Directors, members of the Board of Commissioners, and Executive Officers are prohibited from taking actions that can harm or reduce the Bank's profits. Members of the Board of Directors, members of the Board of Commissioners, and Executive Officers must disclose the aforementioned conflict of interest in every decision.
The disclosure of conflict of interest as referred to in item 1 is recorded in meeting minutes which at least cover the name of the party having the conflict of interest, the main issue of the conflict of interest, and the basis for consideration in decision-making.
To avoid decision-making that has the potential to harm or reduce the Bank's profits, the Bank must have and apply internal policies regarding:
a. arrangements for handling conflicts of interest that bind every manager and employee of the Bank, including procedures for decision-making; and b. administration of recording, documentation, and disclosure of conflicts of interest in meeting minutes.

VI. IMPLEMENTATION OF CORPORATE GOVERNANCE AT BRANCH OFFICES OF BANKS Domiciled ABROAD

Branch offices of banks domiciled abroad must implement good Corporate Governance at all levels or organizational tiers.
The implementation of the Board of Commissioners' functions and the formation of committees are adjusted to the organizational structure applicable at the branch office of the bank domiciled abroad and its head office.
In the event that the organizational structure of the branch office of the bank domiciled abroad and its head office does not have the function of the Board of Commissioners and committees, or has the function of the Board of Commissioners and committees but does not yet comply with the provisions as regulated in the POJK on Corporate Governance of Commercial Banks, the Financial Services Authority (OJK) is authorized to request adjustments to the organizational structure of the branch office of the bank domiciled abroad to ensure the implementation of good Corporate Governance in accordance with the provisions as regulated in the POJK on Corporate Governance of Commercial Banks.

VII. GENERAL PRINCIPLES OF CORPORATE GOVERNANCE FACTOR ASSESSMENT

The Bank conducts a self-assessment of the bank's health level using a risk-based approach or RBBR, both individually and on a consolidated basis, conducted at least every semester for the end of June and end of December positions as regulated in Financial Services Authority regulations regarding the Assessment of the Health Level of Commercial Banks. One of the factors in the Assessment of the Health Level of the Bank is the Corporate Governance factor. In this regard, the Bank conducts a self-assessment of the implementation of Corporate Governance according to the assessment period of the Health Level of the Bank.
The assessment of the Corporate Governance factor is an assessment of the quality of the Bank's management regarding the implementation of good Corporate Governance principles, considering the significance or materiality of an issue to the implementation of Corporate Governance on a bank-wide basis, according to the Bank's scale, characteristics, and business complexity. In order to ensure the implementation of the 5 (five) basic principles of good Corporate Governance as referred to in item I.1, the Bank conducts periodic self-assessment of at least 11 (eleven) assessment factors for the implementation of Corporate Governance and other information related to the Bank's Corporate Governance implementation, as referred to in item I.2. The self-assessment is conducted comprehensively and structurally, integrated into 3 (three) governance aspects, namely governance structure, governance process, and governance outcome, as a continuous process.
The assessment of governance structure aims to assess the adequacy of the Bank's Corporate Governance structure and infrastructure so that the process of implementing good Corporate Governance principles produces outcomes that meet the expectations of the Bank's Stakeholders.
Included in the Bank's Corporate Governance structure are the Board of Directors, Board of Commissioners, committees, and work units within the Bank. Included in the Bank's Corporate Governance infrastructure are Bank policies and procedures, management information systems, and the main duties and functions of each organizational structure.
The assessment of governance process aims to assess the effectiveness of the process of implementing good Corporate Governance principles, supported by the adequacy of the Bank's Corporate Governance structure and infrastructure, thereby producing outcomes that meet the expectations of the Bank's Stakeholders.
The assessment of governance outcome aims to assess the quality of outcomes that meet the expectations of the Bank's Stakeholders, which are the results of the process of implementing good Corporate Governance principles and supported by the adequacy of the Bank's Corporate Governance structure and infrastructure.
Included in the outcome covers qualitative aspects and quantitative aspects, including:
a. adequacy of report transparency; b. compliance with legislation;
c. consumer protection;
d. objectivity in conducting assessments or audits; e. Bank performance such as profitability, efficiency, and capitalization; and/or f. increase or decrease in compliance with regulations and resolution of problems faced by the Bank, such as fraud, violations of Maximum Credit Limit (BMPK), and violations of regulations related to bank reports to the Financial Services Authority.
The results of the assessment of the three governance aspects, which at least include 11 (eleven) assessment factors for the implementation of Corporate Governance and other information related to the Bank's Corporate Governance implementation, are conducted based on a comprehensive and structured analysis framework established in the Corporate Governance Factor Rating. The assessment of the three governance aspects is a unity, so that if one aspect is assessed as inadequate, weaknesses in one aspect can affect the Corporate Governance Factor Rating.
For Banks that exercise Control over Subsidiary Companies, in conducting the assessment of Corporate Governance implementation and establishing the Corporate Governance Factor Rating on a consolidated basis, must pay attention to the following:
a. The determination of Subsidiary Companies to be consolidated refers to regulations governing the application of consolidated risk management for banks exercising control over subsidiary companies. b. The Bank's Corporate Governance implementation assessment factors used individually can be used by the Bank when assessing Corporate Governance on a consolidated basis. The Subsidiary Company's Corporate Governance implementation assessment factors used for consolidated Corporate Governance assessment are determined by considering the scale, characteristics, and business complexity of the Subsidiary Company and supported by adequate data and information.
c. The determination of the Bank's Corporate Governance Factor Rating on a consolidated basis is conducted by considering:

the significance and materiality of the Subsidiary Company's share to the Bank on a consolidated basis; and/or
issues related to the implementation of good Corporate Governance principles in the Subsidiary Company that significantly affect the implementation of good Corporate Governance principles on a consolidated basis.
d. The determination of the significance and materiality of the Subsidiary Company's share can be determined through a comparison of the Subsidiary Company's total assets to the Bank's total assets on a consolidated basis, or the significance of specific positions in the Subsidiary Company that affect the Bank's performance on a consolidated basis.

The determination of the Corporate Governance Factor Rating is categorized into 5 (five) Ratings, namely Rating 1, Rating 2, Rating 3, Rating 4, and Rating 5. A smaller Corporate Governance Factor Rating order reflects better Corporate Governance implementation. The determination of the Corporate Governance Factor Rating is guided by the Corporate Governance Factor Rating matrix as shown in Appendix II, which is an inseparable part of this Financial Services Authority Circular.

VIII. SELF-ASSESSMENT OF CORPORATE GOVERNANCE IMPLEMENTATION

The Bank conducts periodic self-assessment of Corporate Governance implementation according to the Health Level of the Bank assessment period.
If necessary, the Bank updates the self-assessment of Corporate Governance implementation as referred to in Financial Services Authority regulations governing the Assessment of the Health Level of Commercial Banks.
The self-assessment of Corporate Governance implementation is conducted using the self-assessment working paper of Corporate Governance implementation as shown in Appendix III, which is an inseparable part of this Financial Services Authority Circular.
In conducting the self-assessment as referred to in item 2, the Bank must first understand the purpose of the Corporate Governance implementation assessment, which covers 3 (three) governance aspects, namely governance structure, governance process, and governance outcome, as well as criteria or indicators for each assessment factor.
The self-assessment of Corporate Governance implementation is conducted by compiling an analysis of the adequacy and effectiveness of the implementation of good Corporate Governance principles, documented in the self-assessment working paper of Corporate Governance implementation, with the following steps:
a. Collecting relevant data and information to assess the adequacy and effectiveness of the implementation of good Corporate Governance principles, such as management data, ownership data, business group structure, Board of Directors meeting minutes, Board of Commissioners meeting minutes, committee meeting minutes, and reports, including annual reports, special reports by the director overseeing the compliance function, reports related to the tasks of the internal audit work unit, public accountant reports, especially comments regarding the reliability of the Bank's internal control system, reports on the results of the self-assessment of the bank's health level or RBBR, business plan reports, and business plan realization reports, Board of Commissioners reports, and other reports related to the implementation of good Corporate Governance principles. b. Assessing the adequacy and effectiveness of the implementation of good Corporate Governance principles, conducted comprehensively and structurally on the three governance aspects, namely governance structure, governance process, and governance outcome, considering the principle of significance or materiality.
c. Concluding positive factors and negative factors from each governance aspect.
In concluding the positive and negative factors of the three governance aspects, the following matters must be considered:
a. The assessment must focus on the substance of Corporate Governance implementation and not just on the fulfillment of formal procedural (normative) requirements.
In the assessment of Corporate Governance implementation, it is also necessary to consider, among other things, whether Corporate Governance policies and procedures have been implemented well.
Thus, in conducting the assessment of Corporate Governance implementation, the Bank does not only answer questions with "yes" or "no," but must disclose the substance of the Bank's answer.
For example, in assessing the fulfillment of the completeness of organs in the Bank's organizational structure, it is also necessary to assess whether those organs have functioned as they should. b. The assessment of governance structure, governance process, and governance outcome is an integrated, comprehensive, and structured series of assessments, so that the conclusion of the governance outcome assessment reflects the extent to which the governance process has been implemented and the adequate support from the governance structure, which needs to be tested and proven further. For example, there is a problem in the governance structure such as the absence of a director overseeing the compliance function. The absence of a director overseeing the compliance function results in weaknesses in the governance process in the implementation of the Bank's compliance function, namely the absence of preventive actions against policies and/or decisions of the Bank's Board of Directors in the credit field that deviate from Financial Services Authority regulations. Furthermore, the weakness in the governance process impacts the governance outcome in the form of violations of BMPK regulations.
c. The assessment of governance outcome, in addition to covering qualitative aspects, also includes quantitative aspects, including:

Bank performance such as profitability, efficiency, and capitalization; and
increase or decrease in compliance with legislation and resolution of problems faced by the Bank, such as fraud, BMPK violations, and violations of regulations related to Bank reports to the Financial Services Authority.
In this case, the Bank must pay attention to whether such violations occur repeatedly and/or the materiality or significance of the problem to the Bank's performance, both currently and in the future. Furthermore, the Bank also needs to pay attention to the fact that the assessment of governance outcome has included follow-up actions that the Bank needs to take to address current problems and anticipate the emergence of problems in the future. d. In determining the Corporate Governance Factor Rating, the Bank must pay attention to the consistency of the determination of the Corporate Governance Factor Rating with the level of significance of the problems faced by the Bank as obtained from the conclusions in the Bank's Corporate Governance implementation assessment. e. The assessment of governance structure, governance process, and governance outcome must be supported by adequate data or information and documents.

Based on the self-assessment working paper of Corporate Governance implementation, the Bank makes a general conclusion of the results of the self-assessment of Corporate Governance implementation and determines the Corporate Governance Factor Rating by referring to the Corporate Governance Factor Rating matrix as shown in Appendix II, which is an inseparable part of this Financial Services Authority Circular.
In conducting the assessment of Corporate Governance implementation, the Bank must pay attention to the assessment of the quality of risk management implementation in the context of assessing the Bank's risk profile, considering that the Corporate Governance factor generally has a correlation with the quality of risk management implementation. Generally, good Corporate Governance implementation will ensure good risk management as reflected in the assessment of the quality of risk management implementation.
Subsequently, the Bank compiles the self-assessment report of Corporate Governance implementation as shown in Appendix IV, which is an inseparable part of this Financial Services Authority Circular, which at least includes:
a. Corporate Governance Factor Rating and rating definitions; and b. Corporate Governance Factor analysis, including:

identification of problems in the form of weaknesses and causes of problems (root cause); and
strengths of Corporate Governance implementation.
In the event that the result of the self-assessment of Corporate Governance implementation obtains a Corporate Governance Factor Rating of Rating 3, Rating 4, or Rating 5, the Bank compiles and submits an action plan containing comprehensive and systematic improvement steps and the target time for the implementation of the action plan to the Financial Services Authority.

The self-assessment report of Corporate Governance implementation is signed by the Bank's Board of Directors.
The Bank submits the self-assessment report of the Bank's Corporate Governance implementation, both individually and on a consolidated basis, to the Financial Services Authority as shown in Appendix IV, accompanied by the self-assessment working paper of Corporate Governance implementation as shown in Appendix III, simultaneously with the submission of the results of the self-assessment of the Health Level of the Bank.
The Financial Services Authority conducts an assessment or evaluation of the results of the self-assessment of Corporate Governance implementation submitted by the Bank. In the event that there is a material difference in the results of the self-assessment of Corporate Governance implementation by the Bank, namely resulting in a difference in the Corporate Governance Factor Rating from the results of the assessment or evaluation conducted by the Financial Services Authority, the Bank must revise the results of the self-assessment of Corporate Governance implementation.
Furthermore, in the event that the result of the Corporate Governance Factor Rating by the Financial Services Authority is classified as worse, namely Rating 3, Rating 4, or Rating 5, the Financial Services Authority may request the Bank to submit an action plan containing comprehensive and systematic improvement steps and the target time for the implementation of the action plan.
If necessary, the Financial Services Authority may request the Bank to adjust the action plan that has been submitted by the Bank.
The action plan as referred to in items 11 and 12 is submitted according to the submission procedures as referred to in Financial Services Authority regulations governing the Assessment of the Health Level of Commercial Banks. The Bank may submit the action plan earlier, simultaneously with the submission of the self-assessment report of Corporate Governance implementation individually.
The report on the implementation of the Corporate Governance action plan, including the completion time and obstacles or hindrances to the completion of the action plan (if any), is submitted to the Financial Services Authority by referring to the submission procedures for the report on the implementation of the action plan as referred to in Financial Services Authority regulations governing the Assessment of the Health Level of Commercial Banks.
Documents related to the self-assessment of Corporate Governance implementation, including the self-assessment working paper of Corporate Governance implementation and the self-assessment report of Corporate Governance implementation, must be properly documented.

IX. TRANSPARENCY OF CORPORATE GOVERNANCE IMPLEMENTATION

Transparency of Corporate Governance implementation, at least includes the disclosure of all aspects of the implementation of good Corporate Governance principles, namely:

Disclosure of Corporate Governance implementation at least includes:
a. Execution of duties and responsibilities of the Board of Directors and Board of Commissioners, consisting of:

number, composition, criteria, and independence of members of the Board of Directors and members of the Board of Commissioners;
duties and responsibilities of the Board of Directors and Board of Commissioners; and
recommendations of the Board of Commissioners.
b. Completeness and execution of duties of committees, consisting of:
structure, membership, expertise, and independence of committee members;
duties and responsibilities of committees;
frequency of committee meetings; and
committee work programs and realization of committee work programs.
c. Implementation of compliance, internal audit, and external audit functions
The information disclosed is the performance of the implementation of the compliance, internal audit, and external audit functions, including:
Compliance Function
The Bank's compliance level with all regulations and legislation as well as fulfillment of commitments with competent authorities.
Internal Audit Function
The effectiveness and scope of internal audit in assessing all aspects and elements of Bank activities.
Function of external audit
The effectiveness of external audit implementation and the Bank's compliance with regulations regarding the relationship between the Bank, public accountants and/or public accounting firms, and the Financial Services Authority for conventional banks, as regulated in provisions concerning the transparency of the bank's financial condition. d. Implementation of risk management including internal control systems. Information disclosed regarding the implementation of risk management including internal control systems covers:
active supervision by the Board of Directors and Board of Commissioners;
adequacy of risk management policies and procedures as well as the establishment of risk limits;
adequacy of the process for identifying, measuring, monitoring, and controlling risks as well as the risk management information system; and
comprehensive internal control systems.
e. Provision of funds to related parties and large exposure.
Information that needs to be disclosed is the total debit balance of funds provided to related parties and to core debtors (individuals or groups) as of the reporting position, as shown in Appendix V which is an integral part of this Financial Services Authority Circular. f. Bank's strategic plan includes:
long-term plan (corporate plan); and
medium-term and short-term plan (business plan).
g. Transparency of the Bank's financial and non-financial conditions not yet disclosed in other reports. h. Other information related to Bank Corporate Governance, including owner intervention, internal disputes, or issues arising as a result of remuneration policies at the Bank.

Share ownership of members of the Board of Directors and members of the Board of Commissioners reaching 5% (five percent) or more of paid-up capital, including the type and number of share certificates in:
a. The Bank itself; b. other banks;
c. non-bank financial institutions; and
d. other companies, located both domestically and abroad.
Financial relationships and family relationships of members of the Board of Directors and members of the Board of Commissioners with other members of the Board of Directors, other members of the Board of Commissioners, and/or controlling shareholders of the Bank.
Frequency of Board of Commissioners Meetings
Disclosure regarding the frequency of Board of Commissioners meetings must at least cover:
a. the number of meetings held within 1 (one) year; b. the number of meetings attended physically and/or via teleconference technology; and
c. the attendance of each member at each meeting.
Number of Deviations (Internal Fraud)
The term deviation (internal fraud) refers to fraud committed by members of the Board of Directors, members of the Board of Commissioners, permanent employees, non-permanent employees (casual labor), and/or outsourced workers. The definition of fraud refers to provisions regarding the implementation of anti-fraud strategies for commercial banks. The nominal value of deviations (internal fraud) disclosed is deviations valued at more than IDR 100,000,000.00 (one hundred million rupiah). Disclosure regarding deviations (internal fraud) must at least cover:
a. the number of deviations (internal fraud) that have been resolved; b. the number of deviations (internal fraud) currently in the process of resolution within the Bank;
c. the number of deviations (internal fraud) for which resolution has not yet been attempted within the Bank; and
d. the number of deviations (internal fraud) that have been followed up through legal processes, as shown in Appendix V which is an integral part of this Financial Services Authority Circular.
Legal Issues
a. The term legal issues refers to civil legal issues and criminal legal issues faced by the Bank during the reporting year period and which have been submitted through legal processes. b. Disclosure regarding legal issues must at least cover:

the number of civil and criminal issues faced and which have received final and binding judgments; and
the number of civil and criminal issues faced and which are still in the process of resolution,
as shown in Appendix V which is an integral part of this Financial Services Authority Circular.

Transactions Containing Conflicts of Interest
Disclosure regarding transactions containing conflicts of interest must at least cover the name and position of the party having the conflict of interest, the name and position of the decision-maker for the transaction containing the conflict of interest, the type of transaction, the transaction value, and notes, as shown in Appendix V which is an integral part of this Financial Services Authority Circular.
Bank Share and/or Bond Buy Back
a. The term buy back of Bank shares or bonds refers to efforts to reduce the number of shares or bonds issued by the Bank by repurchasing such shares or bonds with payment procedures implemented in accordance with regulations. b. Disclosure of buy back of Bank shares or bonds must at least cover:

policy in conducting buy back of Bank shares or bonds;
the number of share and/or bond certificates repurchased;
the repurchase price per share and/or bond; and
the increase in earnings per share and/or bond.

Provision of Funds for Social and/or Political Activities During the Reporting Period
Disclosure regarding the provision of funds for social and/or political activities must at least cover the recipient of the funds and the amount of funds provided.
X. CORPORATE GOVERNANCE IMPLEMENTATION REPORT
The Bank prepares a corporate governance implementation report at the end of each fiscal year.
The corporate governance implementation report must at least consist of:
a. Transparency of the implementation of Bank Corporate Governance as referred to in numeral IX; and b. Self-assessment report of corporate governance implementation according to the assessment period of the Bank's Health Level in the last 1 (one) year with the format as shown in Appendix IV which is an integral part of this Financial Services Authority Circular.
c. Action plan and implementation of the action plan including completion time and obstacles or hindrances to completion (if any).
The corporate governance implementation report can be a separate chapter in the Bank's annual report or presented separately from the Bank's annual report submitted together with the Bank's annual report.
The Financial Services Authority requests the Bank to revise the corporate governance implementation report if, based on the evaluation conducted by the Financial Services Authority, the report does not match the Bank's actual conditions. The revision of the corporate governance implementation report must be submitted completely to the Financial Services Authority and published on the Bank's website.
In the event of a difference between the Corporate Governance Factor Rating resulting from the self-assessment of Bank Corporate Governance implementation in the corporate governance implementation report and the result of the Corporate Governance implementation assessment by the Financial Services Authority, the Bank must revise the corporate governance implementation report related to the result of the self-assessment of Bank Corporate Governance implementation. The revision of the corporate governance implementation report:
a. must be submitted completely to the Financial Services Authority and published on the Bank's website; b. must be published immediately in the Bank's public financial report in the nearest period, at least covering the Corporate Governance Factor Rating accompanied by an explanation of the Rating definition.
XI. REPORT SUBMISSION ADDRESS
Submission of reports to the Financial Services Authority as referred to in this Financial Services Authority Circular is addressed to:
The Department of Supervision of the relevant Bank for Banks with headquarters or branch offices of banks located abroad that are in the Special Capital Region of Jakarta Province; or
The Regional Office of the Financial Services Authority or the local Financial Services Authority Office according to the area where the Bank's headquarters is located.
XII. CLOSING
At the time this Financial Services Authority Circular takes effect, Bank Indonesia Circular Number 15/15/DPNP dated 29 April 2013 concerning the Implementation of Good Corporate Governance for Commercial Banks is repealed and declared invalid. The provisions in this Financial Services Authority Circular take effect on the date of determination.

This copy is consistent with the original
Director of Law 1
Legal Department signed
Yuliana
Determined in Jakarta on 17 March 2017
CHIEF EXECUTIVE OF BANKING SUPERVISOR
FINANCIAL SERVICES AUTHORITY, signed
NELSON TAMPUBOLON

APPENDIX I
FINANCIAL SERVICES AUTHORITY CIRCULAR
NUMBER 13 /SEOJK.03/2017
CONCERNING
IMPLEMENTATION OF CORPORATE GOVERNANCE FOR COMMERCIAL BANKS

INDEPENDENCE STATEMENT LETTER
PT BANK ………………………………..
I, the undersigned:
Name :
Place/date of birth :
Domicile address (copy of ID card/Driver's license attached) :
Home phone number :
Position :
Company name :
Company phone number :
Hereby declare that I:

Do not have financial, managerial, ownership, and/or family relationships with members of the Board of Directors, other members of the Board of Commissioners, and/or controlling shareholders or relationships with the Bank, which could influence my ability to act independently as regulated in Financial Services Authority provisions concerning the Implementation of Corporate Governance for Commercial Banks.

This copy is consistent with the original
Director of Law 1
Legal Department signed
Yuliana
2. If it is later found that I have relationships as referred to in numeral 1, I am willing to resign from my Independent Commissioner position and be willing to be replaced.
Thus, this is my independence statement, which I have made truthfully.
Jakarta, ……………………….
Acknowledged : Stamp Duty
Full Name Full Name
Chief Director PT Bank………
Determined in Jakarta on 17 March 2017
CHIEF EXECUTIVE OF BANKING SUPERVISOR
FINANCIAL SERVICES AUTHORITY, signed
NELSON TAMPUBOLON

APPENDIX II
FINANCIAL SERVICES AUTHORITY CIRCULAR
NUMBER 13 /SEOJK.03/2017
CONCERNING
IMPLEMENTATION OF CORPORATE GOVERNANCE FOR COMMERCIAL BANKS

CORPORATE GOVERNANCE FACTOR RATING MATRIX
Rating Definition
1 Reflects that the Bank's management has implemented Corporate Governance that is generally very good. This is reflected in the very adequate fulfillment of Corporate Governance principles. In the event of weaknesses in the implementation of Corporate Governance principles, generally such weaknesses are not significant and can be immediately improved by the Bank's management. 2 Reflects that the Bank's management has implemented Corporate Governance that is generally good. This is reflected in the adequate fulfillment of Corporate Governance principles. In the event of weaknesses in the implementation of Corporate Governance principles, generally such weaknesses are less significant and can be resolved with normal actions by the Bank's management. 3 Reflects that the Bank's management has implemented Corporate Governance that is generally fairly good. This is reflected in the fairly adequate fulfillment of Corporate Governance principles. In the event of weaknesses in the implementation of Corporate Governance principles, generally such weaknesses are fairly significant and require fairly close attention from the Bank's management. 4 Reflects that the Bank's management has implemented Corporate Governance that is generally less good. This is reflected in the less adequate fulfillment of Corporate Governance principles. There are weaknesses in the implementation of Corporate Governance principles that are generally significant and require comprehensive improvement by the Bank's management. 5 Reflects that the Bank's management has implemented Corporate Governance that is generally not good. This is reflected in the inadequate fulfillment of Corporate Governance principles. There are weaknesses in the implementation of Corporate Governance principles that are generally very significant and difficult to improve by the Bank's management.

APPENDIX III
FINANCIAL SERVICES AUTHORITY CIRCULAR
NUMBER 13 /SEOJK.03/2017
CONCERNING
IMPLEMENTATION OF CORPORATE GOVERNANCE FOR COMMERCIAL BANKS

SELF-ASSESSMENT WORKSHEET
CORPORATE GOVERNANCE IMPLEMENTATION
Purpose

The governance structure assessment aims to evaluate the adequacy of the Bank's Corporate Governance structure and infrastructure so that the implementation process of good Corporate Governance principles produces outcomes in line with the expectations of the Bank's Stakeholders. Included in the Bank's Corporate Governance structure are the Board of Directors, Board of Commissioners, committees, and work units at the Bank. Included in the Bank's Corporate Governance infrastructure, among others, are Bank policies and procedures, management information systems, and the main duties and functions of each organizational structure.
The governance process assessment aims to evaluate the effectiveness of the implementation process of Corporate Governance principles supported by the adequacy of the Bank's Corporate Governance structure and infrastructure so as to produce outcomes in line with the expectations of the Bank's Stakeholders.
The governance outcome assessment aims to evaluate the quality of outcomes that meet the expectations of the Bank's Stakeholders, which are the result of the implementation process of good Corporate Governance principles supported by the adequacy of the Bank's Corporate Governance structure and infrastructure.
Included in the outcome covers qualitative aspects and quantitative aspects, among others:
a. adequacy of report transparency; b. compliance with legislation;
c. consumer protection;
d. objectivity in conducting assessment or audit; e. Bank performance such as profitability, efficiency, and capitalization; and/or f. increase or decrease in compliance with regulations and resolution of issues faced by the Bank such as fraud, violations of BMPK (Banking Business Best Practices), violations of regulations related to bank reports to the Financial Services Authority.
Execution of Duties and Responsibilities
Board of Directors a. Governance Structure

The number of Board of Directors members is at least
3 (three) people.
All Board of Directors members have
resided in Indonesia.
The majority of Board of Directors members have
had at least
5 (five) years of experience in the operational field as Executive Officers of the Bank.
Board of Directors members do not hold concurrent
positions as members of the Board of Directors, members of the Board of Commissioners, or Executive Officers at Banks, companies, and/or other institutions except for matters established in the POJK on Corporate Governance of Commercial Banks, namely serving as members of the Board of Commissioners in the context of carrying out supervisory duties over equity investments in non-bank subsidiary companies controlled by the Bank.
Board of Directors members, either individually or jointly,
do not hold shares exceeding 25%
(twenty-five percent) of paid-up capital in another company.
The majority of Board of Directors members do not have
family relationships up to the second degree with fellow Board of Directors members and/or with members of the Board of Commissioners.
Replacement and/or appointment of
Board of Directors members has taken into account the recommendation of the nomination committee or remuneration and nomination committee.
The Board of Directors has guidelines and rules of procedure that include provisions on work ethics, working hours,
and meetings.
The Board of Directors does not use individual advisors and/or professional services as consultants except for
projects that are special, based on a clear contract including scope of work, responsibilities, project duration, and costs, and the consultant is an Independent Party qualified to handle special projects.
All Board of Directors members have adequate integrity, competence, and financial reputation.
The President Director or Chief Director,
comes from a party independent of controlling shareholders, namely having no financial, managerial, ownership, and family relationships.
All Board of Directors members have passed the fit and proper test and have obtained approval letters from the Financial Services Authority.
Board of Directors members have adequate and relevant competence for their positions to carry out duties
and responsibilities and are able to implement the competence possessed in the execution of duties and responsibilities.
Board of Directors members have the willingness and ability to conduct continuous learning in order to increase knowledge about banking and recent developments related to the financial field or other fields that support the execution of duties
and responsibilities.
Board of Directors members cultivate continuous learning in order to increase knowledge about banking and recent developments related to the financial field or other fields that support the execution of duties
and responsibilities at all levels or organizational tiers.
The Board of Directors composition does not meet the requirements due to owner intervention.
b. Governance Process
The Board of Directors has appointed committee members, based on a Board of Commissioners meeting decision.
Board of Directors members do not give general power of attorney to other parties that results in the transfer of duties and functions of the Board of Directors.
The Board of Directors is fully responsible for the execution of Bank management.
The Board of Directors manages the Bank according to its authority and responsibilities as regulated in the articles of association and legislation.
The Board of Directors has carried out its duties and responsibilities independently from shareholders.
The Board of Directors has applied good Corporate Governance principles in every business activity of the Bank at all levels or organizational tiers.
The Board of Directors has followed up on audit findings and recommendations from the Internal Audit Work Unit (SKAI), external auditors, and the results of supervision by the Financial Services Authority and/or the results of supervision by other authorities.
The Board of Directors has provided complete, accurate, up-to-date, and timely data and information to the Board of Commissioners.
Decision-making in Board of Directors meetings has been conducted based on deliberation for consensus or majority vote in the event that deliberation for consensus does not occur.
Every decision taken in meetings by the Board of Directors can be implemented and is in accordance with applicable policies, guidelines, and rules of procedure.
The Board of Directors has established policies and strategic decisions through Board of Directors meeting mechanisms.
The Board of Directors does not utilize the Bank for personal, family, and/or third-party interests that can harm or reduce the Bank's profits.
The Board of Directors does not take and/or receive personal benefits from the Bank other than remuneration and other facilities established by the General Meeting of Shareholders (GMS).
Owners intervene in the execution of the Board of Directors' duties, causing Bank operational activities to be disrupted, thereby impacting reduced Bank profits and/or causing Bank losses.
c. Governance Outcome
The Board of Directors has accounted for the execution of its duties to shareholders through the GMS.
The Board of Directors' accountability for the execution of its duties is accepted by shareholders through the GMS.
The Board of Directors has disclosed the Bank's strategic policies in the personnel field to employees using media easily accessible to employees.
The Board of Directors has communicated to employees regarding the Bank's business direction in order to achieve the Bank's mission and vision.
Board of Directors meeting results have been recorded in meeting minutes and documented well, including clear disclosure of dissenting opinions that occurred in Board of Directors meetings.
In the corporate governance implementation report, all Board of Directors members have at least disclosed:
a) share ownership reaching
5% (five percent) or more in the Bank itself as well as in other banks and companies located domestically and abroad; b) financial relationships and family relationships with other Board of Directors members, Board of Commissioners members, and/or controlling shareholders of the Bank; c) remuneration and other facilities; d) share options held by the Board of Directors.
Increased knowledge, skills, and abilities of Board of Directors members in Bank management, demonstrated among others by improved Bank performance, resolution of issues faced by the Bank, and achievement of results in line with Stakeholder expectations.
Increased knowledge, skills, and abilities of all Bank employees at all levels or organizational tiers, demonstrated among others by improved individual performance according to duties and responsibilities.
Increased culture of continuous learning in order to increase knowledge about banking and recent developments related to the financial field or other fields that support the execution of duties
and responsibilities at all levels or organizational tiers, demonstrated among others by increased employee participation in banking certification and/or education or training for individual quality development.
Bank operational activities are disrupted and/or provide unfair profits to owners, impacting reduced Bank profits and/or causing Bank losses, due to owner intervention in the composition and/or execution of the Board of Directors' duties.

Execution of Duties and Responsibilities
Board of Commissioners a. Governance Structure

The number of Board of Commissioners members is at least 3 (three) people and does not exceed the number of Board of Directors members.
At least 1 (one) member of the Board of Commissioners resides in Indonesia.
At least 50% (fifty percent)
of the number of Board of Commissioners members are Independent Commissioners.
The Board of Commissioners does not hold concurrent positions except for matters established in the POJK on Corporate Governance of Commercial Banks, namely:
a) holding concurrent positions as members of the Board of Directors, members of the Board of Commissioners or Executive Officers at 1 (one) institution or company that is not a financial institution; or b) holding concurrent positions as members of the Board of Directors, members of the Board of Commissioners or Executive Officers who carry out supervisory functions at 1 (one) non-bank subsidiary company controlled by the Bank; c) Non-Independent Commissioners carry out functional tasks from the Bank's shareholders who are legal entities within the Bank's business group; and/or d) members of the Board of Commissioners hold positions in non-profit organizations or institutions.
Independent Commissioners can hold concurrent positions as committee chairs for at most 2 (two) committees in the same Bank.
The majority of the Board of Commissioners does not have family relationships up to the second degree with members of the Board of Directors and/or fellow members of the Board of Commissioners.
The Board of Commissioners has established guidelines and rules of procedure, including provisions on work ethics, working hours, and meetings.
All members of the Board of Commissioners possess adequate integrity, competence, and financial reputation.
Independent Commissioners who are former members of the Bank's Board of Directors or former Executive Officers of the Bank, or parties having a relationship with the Bank that could influence their ability to act independently, and who do not perform supervisory functions and are from the Bank in question, have undergone a cooling-off period of at least 1 (one) year.
Independent Commissioners who are former Non-Independent Commissioners, after meeting the requirements as Independent Commissioners, have undergone a cooling-off period of at least 6 (six) months and have obtained approval from the Financial Services Authority (OJK).
Independent Commissioners reappointed after serving for 2 (two) consecutive terms of office have been determined in the Board of Commissioners meeting to still be able to act independently, and the relevant Independent Commissioner has declared their independence in the General Meeting of Shareholders (GMS).
All Independent Commissioners do not have financial, managerial, ownership, or family relationships with other members of the Board of Commissioners, members of the Board of Directors and/or controlling shareholders, or relationships with the Bank, that could influence their ability to act independently.
All members of the Board of Commissioners have passed the Fit and Proper Test and have obtained a letter of approval from the Financial Services Authority (OJK).
Members of the Board of Commissioners have adequate and relevant competence for their positions to carry out their duties and responsibilities and are able to implement the competencies possessed in the execution of their duties and responsibilities.
Members of the Board of Commissioners have the willingness and ability to engage in continuous learning to increase knowledge about banking and recent developments related to the financial field or other fields supporting the execution of their duties and responsibilities.
The composition of the Board of Commissioners does not meet the provisions due to owner intervention.

b. Governance Process

The replacement and/or appointment of members of the Board of Commissioners has taken into account the recommendations of the nomination committee or the remuneration and nomination committee and has obtained approval from the General Meeting of Shareholders (GMS).
The Board of Commissioners has carried out its duties to ensure the implementation of good Governance principles in every business activity of the Bank at all levels or organizational tiers.
The Board of Commissioners has carried out supervision over the execution of the duties and responsibilities of the Board of Directors periodically and ad hoc, and has provided advice to the Board of Directors.
In carrying out supervisory duties, the Board of Commissioners has directed, monitored, and evaluated the implementation of the Bank's strategic policies.
The Board of Commissioners is not involved in decision-making on the Bank's operational activities, except in cases of providing funds to related parties and other matters stipulated in the Bank's Articles of Association and/or legislation in order to carry out supervisory functions.
The Board of Commissioners has ensured that the Board of Directors has followed up on audit findings and recommendations from the Bank's Internal Audit Unit (SKAI), external auditors, results of supervision by the Financial Services Authority (OJK) and/or results of supervision by other authorities.
The Board of Commissioners notifies the Financial Services Authority (OJK) within a maximum of 7 (seven) working days from the discovery of violations of financial and banking legislation, as well as conditions or estimated conditions that could endanger the continuity of the Bank's business.
The Board of Commissioners has carried out its duties and responsibilities independently.
The Board of Commissioners has formed an audit committee, a risk monitoring committee, and a remuneration and nomination committee.
The appointment of committee members has been carried out by the Board of Directors based on the decision of the Board of Commissioners meeting.
The Board of Commissioners has ensured that the formed committees have carried out their duties effectively.
The Board of Commissioners has provided sufficient time to carry out duties and responsibilities optimally.
Board of Commissioners meetings discuss issues according to the meeting agenda and are held periodically, at least 4 (four) times in 1 (one) year, and attended physically at least 2 (two) times in 1 (one) year, or via teleconference technology for Non-Independent Commissioners in the event that Non-Independent Commissioners cannot attend meetings physically.
Decision-making in Board of Commissioners meetings has been carried out based on deliberation for consensus or majority vote in the event that consensus is not reached.
Members of the Board of Commissioners do not utilize the Bank for personal, family, and/or third-party interests that could harm or reduce the Bank's profits.
Members of the Board of Commissioners do not take and/or receive personal benefits from the Bank other than remuneration and other facilities stipulated by the General Meeting of Shareholders (GMS).
Owners intervene in the execution of the Board of Commissioners' duties, causing the Bank's operational activities to be disrupted, thereby impacting a reduction in the Bank's profits and/or causing losses to the Bank.

c. Governance Outcome

The results of Board of Commissioners meetings have been recorded in meeting minutes and documented well, including dissenting opinions that occurred clearly.
The results of Board of Commissioners meetings have been distributed to all members of the Board of Commissioners and relevant parties.
The results of Board of Commissioners meetings are recommendations and/or directives that can be implemented by the General Meeting of Shareholders (GMS) and/or the Board of Directors.
In the governance implementation report, members of the Board of Commissioners have at least disclosed:
a) share ownership reaching 5% (five percent) or more in the relevant Bank as well as in other banks and companies located domestically and abroad; b) financial and family relationships with members of the Board of Directors, other members of the Board of Commissioners, and/or controlling shareholders of the Bank; c) remuneration and other facilities; d) share options held by the Board of Commissioners.
The increase in knowledge, skills, and abilities of Board of Commissioners members in supervising the Bank is demonstrated, among others, by improved Bank performance, resolution of problems faced by the Bank, and achievement of results according to Stakeholder expectations.
Continuous learning culture enhancement to increase knowledge about banking and recent developments related to the financial field or other fields supporting the execution of duties and responsibilities of Board of Commissioners members.
Bank operational activities are disrupted and/or provide unfair profits to owners, impacting a reduction in the Bank's profits and/or causing losses to the Bank, due to owner intervention in the composition and/or execution of the Board of Commissioners' duties.

Completeness and Execution of Committee Duties
a. Governance Structure

Audit Committee
a) Audit committee members consist of at least one Independent Commissioner, one Independent Party expert in finance or accounting, and one Independent Party expert in law or banking. b) The audit committee is chaired by an Independent Commissioner. c) At least 51% (fifty-one percent) of audit committee members are Independent Commissioners and Independent Parties. d) Audit committee members have good integrity, ethics, and morality.
Risk Monitoring Committee
a) Risk monitoring committee members consist of at least one Independent Commissioner, one Independent Party expert in finance, and one Independent Party expert in risk management. b) The risk monitoring committee is chaired by an Independent Commissioner. c) At least 51% (fifty-one percent) of risk monitoring committee members are Independent Commissioners and Independent Parties. d) Risk monitoring committee members have good integrity, ethics, and morality.
Remuneration and Nomination Committee
a) Remuneration and nomination committee members consist of at least one Independent Commissioner, one Non-Independent Commissioner, and one Executive Officer who oversees human resources or one employee representative. b) Executive Officers or employee representatives who are committee members must have knowledge and understand the Bank's remuneration and/or nomination system and succession plan. c) The remuneration and nomination committee is chaired by an Independent Commissioner. d) In the event that the number of members of the remuneration and nomination committee established is more than 3 (three) people, then there are at least 2 (two) Independent Commissioner members. e) In the event that the Bank forms these Committees separately, then:
(1) Executive Officers or employee representatives who are remuneration committee members must have knowledge regarding the Bank's remuneration system; and (2) Executive Officer members of the nomination committee must have knowledge about the nomination system and the Bank's succession plan.
Members of the audit committee and risk monitoring committee are not members of the same Bank's Board of Directors or another Bank's Board of Directors.
Concurrent positions of Independent Parties at the same Bank, other Banks, and/or other companies have taken into account competence, independence criteria, confidentiality, code of ethics, and the execution of duties and responsibilities.
All Independent Party members of the committees do not have financial, managerial, ownership, and/or family relationships with the Board of Directors, Board of Commissioners, and/or controlling shareholders or relationships with the Bank, that could influence their ability to act independently.
All Independent Parties who are former Members of the Board of Directors or former Executive Officers from the relevant Bank and do not perform supervisory functions, or other parties having a relationship with the Bank that could influence their ability to act independently, have undergone a cooling-off period of at least 6 (six) months.
Meetings of the audit committee and risk monitoring committee are attended by at least 51% (fifty-one percent) of the members, including Independent Commissioners and Independent Parties.
Meetings of the remuneration and nomination committee are attended by at least 51% (fifty-one percent) of the members, including one Independent Commissioner and an Executive Officer or employee representative.
The committee composition does not meet the provisions due to owner intervention.

b. Governance Process

Audit Committee
To provide recommendations to the Board of Commissioners:
a) The audit committee has monitored and evaluated audit planning and implementation and monitored the follow-up of audit results in order to assess the adequacy of internal controls, including the adequacy of the financial reporting process. b) The audit committee has reviewed:
(1) the execution of SKAI duties;
(2) the compliance of audit execution by public accounting firms with audit standards; (3) the compliance of financial reports with financial accounting standards; and (4) the follow-up execution by the Board of Directors on SKAI findings, public accountants, and results of supervision by the Financial Services Authority (OJK). c) The audit committee has provided recommendations for the appointment of public accountants and public accounting firms in accordance with applicable regulations to the General Meeting of Shareholders (GMS) through the Board of Commissioners.
Risk Monitoring Committee
To provide recommendations to the Board of Commissioners:
a) The risk monitoring committee evaluates risk management policies and implementation; b) The risk monitoring committee monitors and evaluates the execution of duties by the risk management committee and the Risk Management Unit (SKMR).
Remuneration and Nomination Committee
To provide recommendations to the Board of Commissioners:
a) The remuneration committee has evaluated remuneration policies for:
(1) the Board of Directors and Board of Commissioners, and has been submitted to the General Meeting of Shareholders (GMS); (2) Executive Officers and employees, and has been submitted to the Board of Directors. b) Regarding nomination policies, the committee has compiled systems and procedures for the selection and/or replacement of Board of Directors and Board of Commissioners members to be submitted to the General Meeting of Shareholders (GMS). c) The nomination committee has provided recommendations for candidates for Board of Directors and/or Board of Commissioners members to be submitted to the General Meeting of Shareholders (GMS). d) The nomination committee has provided recommendations for candidate Independent Parties who can become committee members to the Board of Commissioners.
Committee meetings are held according to the Bank's needs.
Meeting decisions are taken based on deliberation for consensus or majority vote in the event that consensus is not reached.
Committee meeting results are recommendations that can be utilized optimally by the Board of Commissioners.
Owners intervene in the execution of committee duties, such as regarding recommendations for unfair remuneration to related parties of owners, recommendations for candidates for Board of Directors or Board of Commissioners members that do not comply with the established selection and/or replacement procedures.

c. Governance Outcome

The creation of meeting minutes, including the clear disclosure of dissenting opinions, and good documentation.
Each committee has carried out its functions according to provisions, such as providing recommendations according to duties to the Board of Commissioners.

Handling Conflicts of Interest
a. Governance Structure
The Bank has policies, systems, and procedures for resolution regarding:

conflicts of interest binding every manager and employee of the Bank;
administration, documentation, and disclosure of the aforementioned conflicts of interest in meeting minutes.
b. Governance Process
In the event of a conflict of interest, members of the Board of Directors, members of the Board of Commissioners, and Executive Officers do not take actions that could harm or reduce the Bank's profits.
c. Governance Outcome
Conflicts of interest that could harm the Bank or reduce its profits have been disclosed in every decision and have been documented well.
Bank operational activities are free from owner intervention or related parties or other parties that could cause conflicts of interest that could harm the Bank or reduce its profits.
The Bank successfully resolves conflicts of interest that occur.

Implementation of Bank Compliance Function
a. Governance Structure

Independent compliance work units relative to operational work units.
Appointment, dismissal, and/or resignation of the director overseeing the compliance function in accordance with Financial Services Authority (OJK) regulations.
The Bank has provided quality human resources in the compliance work unit to complete tasks effectively.
b. Governance Process
The director overseeing the compliance function has duties and responsibilities including:
a) ensuring the Bank's compliance with Financial Services Authority (OJK) regulations and legislation, by:
(1) establishing necessary steps with attention to the prudential principle; (2) monitoring and maintaining that the Bank's business activities do not deviate from regulations; (3) monitoring and maintaining the Bank's compliance with all agreements and commitments made by the Bank to the Financial Services Authority (OJK) and competent authority agencies; b) submitting reports on the execution of duties and responsibilities at least quarterly to the Chief Executive Officer, with copies to the Board of Commissioners or relevant parties according to the Bank's organizational structure; c) formulating strategies to encourage the creation of a Bank compliance culture; d) proposing compliance policies or compliance principles to be established by the Board of Directors; e) establishing compliance systems and procedures to be used to compile the Bank's internal regulations and guidelines; f) ensuring that all policies, regulations, systems, and procedures, as well as business activities carried out by the Bank, are in accordance with Financial Services Authority (OJK) regulations and legislation; g) minimizing the Bank's Compliance Risk; h) taking preventive actions so that policies and/or decisions taken by the Bank's Board of Directors or branch managers of banks located abroad do not deviate from Financial Services Authority (OJK) regulations and legislation; i) carrying out other tasks related to the compliance function.
The appointment of the director overseeing the compliance function has been in accordance with regulations.
The Board of Directors has:
a) approved the Bank's compliance policy in the form of a formal document on the effective compliance function; b) been responsible for communicating all policies, guidelines, systems, and procedures to all relevant organizational levels; c) been responsible for creating an effective and permanent compliance function as part of the Bank's overall compliance policy.
The compliance work unit has duties and responsibilities including:
a) creating steps to support the creation of a compliance culture in all business activities of the Bank at every organizational level; b) identifying, measuring, monitoring, and controlling Compliance Risk with reference to Financial Services Authority (OJK) Regulations on the Implementation of Risk Management for Commercial Banks; c) assessing and evaluating the effectiveness, adequacy, and suitability of the Bank's policies, regulations, systems, and procedures with legislation; d) conducting reviews and/or recommending updates and improvements to the Bank's policies, regulations, systems, and procedures to be in accordance with Financial Services Authority (OJK) regulations and legislation; e) making efforts to ensure that the Bank's policies, regulations, systems, and procedures, as well as business activities, are in accordance with Financial Services Authority (OJK) regulations and legislation; f) carrying out other tasks related to the compliance function.
c. Governance Outcome
The Bank has submitted reports on the main execution of duties of the director overseeing the compliance function and special reports to the Financial Services Authority (OJK) and relevant parties.
The scope of the director overseeing the compliance function's duty execution report has been in accordance with Financial Services Authority (OJK) regulations.
The Bank has successfully reduced the level of violations against regulations.
The Bank has successfully built a compliance culture in decision-making and in bank operational activities.

Implementation of Internal Audit Function
a. Governance Structure

The Bank's Internal Audit Unit (SKAI) organizational structure is in accordance with regulations.
The Bank has Standards for the Implementation of the Bank's Internal Audit Function (SPFAIB), with:
a) compiling an Internal Audit Charter; b) forming SKAI; and c) compiling internal audit guidelines.
SKAI's institutional structure is independent of operational work units.
The Bank provides quality human resources to SKAI to complete tasks effectively.
b. Governance Process
The Board of Directors is responsible for:
a) the creation of an internal control structure, and ensuring the implementation of the Bank's internal audit function at every management level; and b) follow-up on the Bank's internal audit findings in accordance with the Board of Commissioners' policies and directives.
The Bank implements the internal audit function effectively on all aspects and elements of activities that are directly estimated to affect the Bank's interests and the public.
The Bank conducts periodic reviews of the effectiveness of SKAI's work execution and compliance with SPFAIB by external parties every 3 (three) years.
The Bank's SKAI examination plan, adequacy of examination scope, and depth of examination have been adequate.
There are no deviations in the realization of the Bank's SKAI examination plan.
The Bank plans and realizes the periodic and continuous improvement of human resource skills quality.
SKAI has carried out supervisory functions independently with adequate task coverage in accordance with plans, execution, and monitoring of audit results.
SKAI has carried out duties at least including the assessment of:
a) the adequacy of the Bank's internal control system; b) the effectiveness of the Bank's internal control system; and c) performance quality.
SKAI has reported all examination findings in accordance with regulations.
SKAI has monitored, analyzed, and reported on the progress of improvement follow-up carried out by the auditee.
SKAI has compiled and updated work guidelines and systems and procedures for internal auditors to carry out their duties periodically in accordance with regulations and legislation.
c. Governance Outcome
The Board of Directors is responsible for the availability of reports on the implementation of the Bank's internal audit function to the General Meeting of Shareholders (GMS).
SKAI examination findings have been followed up and there are no recurring findings.
SKAI acts objectively in conducting audits.
The internal audit function has been carried out adequately by considering, among others:
a) audit programs cover all work units, with implementation considering the risk level of each work unit; b) audit programs and audit scope are adequate in accordance with SPFAIB principles, including the fulfillment of independence, objectivity, no restrictions in audit scope and coverage; and c) the fulfillment of the number and quality of internal auditors.

Implementation of External Audit Function
a. Governance Structure
The assignment of audits to public accountants and public accounting firms must at least meet the aspects of:

the capacity of the appointed public accounting firm;
the legality of the work agreement;
the scope of the audit;
professional standards of public accountants; and
communication between the Financial Services Authority (OJK) and the aforementioned public accounting firm.
b. Governance Process
In the implementation of the Bank's financial report audit, the Bank appoints public accountants and public accounting firms registered with the Financial Services Authority (OJK).
The appointment of the same public accountant and public accounting firm by the Bank has been in accordance with regulations and legislation.
The appointment of public accountants and public accounting firms first obtains approval from the General Meeting of Shareholders (GMS) based on recommendations from the audit committee through the Board of Commissioners.
The appointed public accountants and public accounting firms are able to work independently, meet professional standards of public accountants, and

work agreements and the scope of audit established.
5) The public accountant has communicated with the Financial Services Authority regarding the condition of the audited Bank in the context of audit preparation and implementation.
6) The public accountant has conducted the audit independently and professionally.
7) The public accountant has reported audit results and the management letter to the Financial Services Authority.

c. Governance Outcome

Audit results and the management letter have accurately described significant Bank issues and were submitted in a timely manner to the Financial Services Authority by the appointed public accounting firm.
The scope of audit results is at least in accordance with the audit scope as regulated in the provisions.
Auditors act objectively in conducting the audit.

Implementation of risk management including internal control systems
a. Governance Structure

The Bank has an adequate organizational structure to support the implementation of good risk management and internal control, including the Internal Audit Unit (SKAI), Risk Management Committee (SKMR), risk management committee, and compliance unit.
The Bank has adequate risk management policies and procedures, as well as risk limit setting.
b. Governance Process
The Board of Directors has clear duties and responsibilities, including:
a) formulating written and comprehensive risk management policies, including strategy and risk management framework, including the setting of overall risk limits and per risk type, considering the level of risk taken and risk tolerance regarding capital adequacy. After receiving approval from the Board of Commissioners, the Board of Directors establishes the aforementioned policies, strategy, and risk management framework; b) formulating, establishing, and updating procedures and tools to identify, measure, monitor, and control risks; c) formulating and establishing transaction approval mechanisms, including those exceeding limits and authority for each job level; d) evaluating and/or updating risk management policies, strategy, and framework at least once (1) in one (1) year or more frequently if there are changes in factors affecting the Bank's business activities, risk exposure, and/or risk profile significantly; e) establishing an organizational structure including clear authority and responsibilities at each job level related to the implementation of risk management; f) being responsible for the implementation of risk management policies, strategy, and framework approved by the Board of Commissioners, and evaluating and providing guidance based on reports submitted by the SKMR, including reports regarding risk profiles; g) ensuring that all material risks and the impacts thereof have been followed up on, and submitting accountability reports to the Board of Commissioners periodically. The aforementioned reports include reports on the development and issues related to material risks, accompanied by improvement steps that have been, are being, and will be taken;

h) ensuring the implementation of improvement steps for issues or deviations in the Bank's business activities found by the SKAI; i) developing a risk management culture, including risk awareness at all organizational levels, including adequate communication to all organizational levels regarding the importance of effective internal control; j) ensuring adequate financial and infrastructure support to manage and control risks; k) ensuring that the risk management function has been applied independently, reflected by, among other things, the separation of functions between the SKMR, which performs risk identification, measurement, monitoring, and control, and the units that conduct and complete transactions.
2) The Board of Commissioners has clear duties and responsibilities, including:
a) approving risk management policies, including strategy and risk management framework established in accordance with the level of risk taken (risk appetite) and risk tolerance (risk tolerance);

b) evaluating risk management policies and risk management strategy at least once (1) in one (1) year or more frequently if there are changes in factors affecting the Bank's business activities significantly; and c) evaluating the Board of Directors' accountability and providing improvement guidance on the implementation of risk management policies periodically. Evaluation is conducted to ensure that the Board of Directors manages Bank activities and risks effectively.
3) The Bank has implemented a comprehensive and reliable internal control system.
c. Governance Outcome

The Bank implements risk management effectively, adjusted to the Bank's objectives, policies, size, and business complexity, as well as the Bank's capabilities.
The Board of Directors and Board of Commissioners are able to actively supervise the implementation of risk management policies and strategies.
The Bank does not conduct business activities that exceed its capital capacity to absorb risk losses.

Provision of funds to related parties and large exposure provision
a. Governance Structure
The Bank has adequate written policies, systems, and procedures for the provision of funds to related parties and large exposure provision, including monitoring and issue resolution. b. Governance Process

The Bank periodically evaluates and updates the aforementioned policies, systems, and procedures to align with statutory regulations.
There are adequate processes to ensure that the provision of funds to related parties and large exposure provision comply with prudential principles.
Decision-making in fund provision is conducted by management independently without intervention from related parties and/or other parties.
c. Governance Outcome
The Bank's implementation of fund provision to related parties and/or large exposure provision has:
a) met regulations regarding maximum credit limits and considered prudential principles as well as statutory regulations; b) considered capital capacity and the spread or diversification of the fund provision portfolio.
Reports on fund provision to related parties have been submitted periodically to the Financial Services Authority in a timely manner.

Transparency of financial and non-financial conditions, governance implementation reports, and internal reporting
a. Governance Structure

The Bank has policies and procedures regarding the implementation of financial and non-financial condition transparency.
The Bank prepares governance implementation reports at the end of each fiscal year with a scope in accordance with provisions.
Complete, accurate, and timely internal reporting is available, supported by an adequate management information system.
There is a reliable information system supported by competent human resources and adequate information system security technology.

b. Governance Process

The Bank has made financial and non-financial conditions transparent to Stakeholders, including announcing quarterly published financial reports and reporting to the Financial Services Authority or Stakeholders as required.
The Bank makes Bank product information transparent in accordance with regulations governing Bank product information transparency and the use of customer personal data, including:
a) written information regarding Bank products that meets minimum requirements as determined; b) Bank personnel (customer service and marketing) have explained product information to customers; c) product information provided corresponds to actual conditions; d) the Bank has informed customers if there are changes in product information; e) product information is clearly readable and understandable; f) the Bank has product information services that are easily accessible to the public;

g) the Bank has explained the purpose and consequences of personal data dissemination to customers; h) customers whose personal data is disseminated have given consent for the provision of their personal data.
3) The Bank makes customer complaint procedures and dispute resolution transparent to customers in accordance with regulations governing customer complaints and banking mediation.
4) The Bank prepares and presents reports with procedures, types, and scopes as regulated in Financial Services Authority provisions governing transparency and bank report publication.
5) The Bank has prepared governance implementation reports with content and scope at least in accordance with provisions.
6) In the event that the governance implementation report does not reflect the Bank's actual conditions, the Bank immediately submits a complete revision to the Financial Services Authority and publishes the revision on the Bank's website.
7) In the event of a difference in the Corporate Governance factor rating in the self-assessment results in the Bank's governance implementation report with the Corporate Governance implementation assessment results by the Financial Services Authority, the Bank:
a) revises at least the Corporate Governance factor rating and the definition of the self-assessment rating results to the public through published financial reports in the nearest period; and b) immediately submits a complete revision of the Bank's Corporate Governance self-assessment results to the Financial Services Authority, and publishes the self-assessment revision on the Bank's website.
c. Governance Outcome

The Bank has submitted annual reports completely and on time to the Financial Services Authority and the Bank's shareholders.
Report transparency has been conducted in reporting media and within time limits in accordance with Financial Services Authority provisions governing Bank Report Transparency and Publication, including:
a) quarterly published financial reports; and b) annual reports.
The governance implementation report reflects the Bank's actual conditions or the Bank's self-assessment results and is attached with self-assessment results, and includes at least:
a) Corporate Governance principles as referred to in Financial Services Authority provisions regarding the Application of Corporate Governance for Commercial Banks and the self-assessment results of Corporate Governance implementation; b) share ownership of Board of Directors members as well as financial and family relationships of Board of Directors members with other Board of Directors members, Board of Commissioners members, and/or Bank shareholders; c) share ownership of Board of Commissioners members as well as financial and family relationships of Board of Commissioners members with other Board of Commissioners members, Board of Directors members, and/or Bank shareholders; d) frequency of Board of Commissioners meetings in accordance with provisions; e) the number of deviations (internal fraud) that occurred and the Bank's resolution efforts; f) transactions containing conflicts of interest; g) Bank share and/or bond buy-backs; h) provision of funds for social and/or political activities, both nominal amounts and recipients.
The governance implementation report has been submitted completely and on time to the Financial Services Authority and the Bank's shareholders.
The governance implementation report has been presented on the website in a timely manner.
Mediation for the resolution of Bank customer complaints has been conducted well.
The Bank applies transparency of information regarding products and the use of customer personal data.

Bank Strategic Plan
A. Governance Structure

The Bank's strategic plan has been formulated in the form of a corporate plan and business plan in accordance with the Bank's vision and mission.
The Bank's strategic plan is fully supported by owners, reflected in the owners' commitment and efforts to strengthen the Bank's capital.
B. Governance Process
The Bank has formulated the Bank Business Plan (RBB) realistically, comprehensively, and measurably (achievable), considering prudential principles and responsiveness to internal and external changes.
The RBB is approved by the Board of Commissioners.
The Board of Directors has communicated the RBB to:

a) Bank shareholders; and b) all organizational levels within the Bank.
4) The Board of Directors has effectively implemented the RBB.
5) In formulating and submitting the RBB, the Bank refers to Financial Services Authority provisions on RBB and has considered:
a) external and internal factors that can affect the Bank's business continuity; b) prudential principles; c) risk management implementation; and d) the principle of healthy banking.
6) The Board of Commissioners has supervised the implementation of the RBB.
7) Owners do not show seriousness and/or do not take necessary steps to support the Bank's strategic plan, reflected in the lack of owners' commitment and efforts to strengthen the Bank's capital.
C. Governance Outcome

The corporate plan and RBB are formulated by the Board of Directors and approved by the Board of Commissioners.
The corporate plan and RBB, along with their realization, have been communicated by the Board of Directors to controlling shareholders and all organizational levels within the Bank.
The RBB describes the Bank's sustainable growth.
The Bank's growth provides economic and non-economic benefits to Stakeholders.
The Bank's strategic plan is formulated based on comprehensive studies considering business opportunities and the Bank's strengths, while identifying weaknesses and threats (Strength, Weakness, Opportunity, Threat/SWOT Analysis).
The Bank's strategic plan must be supported by adequate infrastructure preparation, including human resources, information technology, office networks, as well as policies and procedures.
There is owner intervention in the distribution of bank profits conducted without considering efforts to accumulate capital to support the Bank's strategic plan.
Owners are unable to overcome worsening Bank capital conditions or Bank capital below the amount established in accordance with Financial Services Authority provisions governing minimum capital provision obligations.

This copy is consistent with the original
Legal Director 1
Legal Department signed
Yuliana
Conclusion:
Based on the analysis of all the above assessment criteria or indicators, it is concluded that:
A. Governance Structure

Positive factors of the Bank's governance structure aspect are.....
Negative factors of the Bank's governance structure aspect are.....
B. Governance Process
Positive factors of the Bank's governance process aspect are.....
Negative factors of the Bank's governance process aspect are.....
C. Governance Outcome
Positive factors of the Bank's governance outcome aspect are.....
Negative factors of the Bank's governance outcome aspect are.....
Established in Jakarta on 17 March 2017
EXECUTIVE HEAD OF BANKING SUPERVISOR
FINANCIAL SERVICES AUTHORITY, signed
NELSON TAMPUBOLON

APPENDIX IV
FINANCIAL SERVICES AUTHORITY CIRCULAR LETTER
NUMBER 13 /SEOJK.03/2017
REGARDING
APPLICATION OF CORPORATE GOVERNANCE FOR COMMERCIAL BANKS

SELF-ASSESSMENT REPORT
CORPORATE GOVERNANCE IMPLEMENTATION
Bank Name :
Position :
Self-Assessment Results of Corporate Governance Implementation Rating Definition Rating Individual Consolidated Analysis Description of conclusions regarding the assessment of Corporate Governance implementation by the Bank, considering the comprehensive and structured assessment factors of Corporate Governance implementation, covering both governance structure, governance process, and governance outcome. In this description, it must at least explain the identification of issues in the form of weaknesses and causes of issues (root cause) as well as strengths in Corporate Governance implementation. In the event that the Bank has Consolidated Subsidiary Companies, then:

Assessment is conducted on Corporate Governance implementation issues of the Subsidiary Company considered to have a significant impact on the Bank's consolidated Corporate Governance.
Assessment factors for the Subsidiary Company's Corporate Governance implementation used for assessing the implementation of good Corporate Governance principles on a consolidated basis are established by considering the business characteristics of the Subsidiary Company and supported by adequate data and information.
The establishment of the Bank's consolidated Corporate Governance rating is conducted by considering the impact of the Subsidiary Company's Corporate Governance implementation.

This copy is consistent with the original
Legal Director 1
Legal Department signed
Yuliana
Established in Jakarta on 17 March 2017
EXECUTIVE HEAD OF BANKING SUPERVISOR
FINANCIAL SERVICES AUTHORITY, signed
NELSON TAMPUBOLON

APPENDIX V
FINANCIAL SERVICES AUTHORITY CIRCULAR LETTER
NUMBER 13 /SEOJK.03/2017
REGARDING
APPLICATION OF CORPORATE GOVERNANCE FOR COMMERCIAL BANKS

I. TABLE OF PROVISION OF FUNDS TO RELATED PARTIES AND LARGE EXPOSURE PROVISION
II. TABLE OF NUMBER OF DEVIATIONS (INTERNAL FRAUD)
Deviation
(Internal Fraud) in 1 year
Number of Cases Conducted By
Board of Directors
Members
Board of
Commissioners
Members
Permanent
Employees
Non-Permanent
Employees and Contract Labor
Year
Before
Current Year
Current
Year
Year
Before
Current Year
Year
Before
Current Year
Total fraud
Resolved
In the process of resolution at internal bank
Not yet attempted resolution
Already followed up through legal process
No. Provision of Funds
Number
Debtors
Nominal
(millions of Rupiah)

To related parties
To core debtors:
a. individuals b. groups

This copy is consistent with the original
Legal Director 1
Legal Department signed
Yuliana
III. TABLE OF DISCLOSURE OF LEGAL ISSUES
Legal Issues
Number of Cases
Civil Criminal
Has received a decision with permanent legal force In the process of resolution Total
IV. TABLE OF TRANSACTIONS WITH CONFLICTS OF INTEREST
No.
Name and
Position of Party
Having Conflict of Interest
Name and
Position of
Decision Maker
Type
Transaction
Transaction
Value
(millions of Rupiah)
Description*)
*)Not in accordance with applicable systems and procedures Established in Jakarta on 17 March 2017 EXECUTIVE HEAD OF BANKING SUPERVISOR FINANCIAL SERVICES AUTHORITY, signed NELSON TAMPUBOLON

Implementation of Corporate Governance for Commercial Banks

Lineage: In force