Implementation of Good Corporate Governance for Rural Economic Banks and Sharia Rural Economic Banks

COPY
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 9 OF 2024
CONCERNING
THE IMPLEMENTATION OF CORPORATE GOVERNANCE FOR RURAL ECONOMIC BANKS AND SHARIA RURAL ECONOMIC BANKS BY THE GRACE OF THE ALMIGHTY GOD THE BOARD OF COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that in order to enhance the competitiveness and encourage the growth of stable and sustainable rural economic banks and sharia rural economic banks, and in line with the development of product and information technology innovations that increase risks for rural economic banks and sharia rural economic banks, it is necessary to strengthen the implementation of corporate governance for rural economic banks and sharia rural economic banks; b. that Financial Services Authority Regulation Number 4/POJK.03/2015 concerning the Implementation of Corporate Governance for Rural Credit Banks and Financial Services Authority Regulation Number 24/POJK.03/2018 concerning the Implementation of Corporate Governance for Sharia Rural Financing Banks are no longer in accordance with the needs and development of the rural economic bank industry, so adjustments are necessary;
c. that in order to implement the provisions of Article 20B of Law Number 7 of 1992 concerning Banking as amended several times, lastly by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector, and the provisions of Article 34 of Law Number 21 of 2008 concerning Sharia Banking as amended several times, lastly by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector;
d. that based on the considerations referred to in letters a, b, and c, it is necessary to establish a Financial Services Authority Regulation concerning the Implementation of Corporate Governance for Rural Economic Banks and Sharia Rural Economic Banks;

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Considering:

Law Number 7 of 1992 concerning Banking (State Gazette of the Republic of Indonesia Year 1992 Number 31, Supplement to the State Gazette of the Republic of Indonesia Number 3472) as amended several times, lastly by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (State Gazette of the Republic of Indonesia Year 2023 Number 4, Supplement to the State Gazette of the Republic of Indonesia Number 6845);
Law Number 21 of 2008 concerning Sharia Banking (State Gazette of the Republic of Indonesia Year 2008 Number 94, Supplement to the State Gazette of the Republic of Indonesia Number 4867) as amended several times, lastly by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (State Gazette of the Republic of Indonesia Year 2023 Number 4, Supplement to the State Gazette of the Republic of Indonesia Number 6845);
Law Number 21 of 2011 concerning the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Supplement to the State Gazette of the Republic of Indonesia Number 5253) as amended by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (State Gazette of the Republic of Indonesia Year 2023 Number 4, Supplement to the State Gazette of the Republic of Indonesia Number 6845);

DECIDES:
Establish: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING THE IMPLEMENTATION OF CORPORATE GOVERNANCE FOR RURAL ECONOMIC BANKS AND SHARIA RURAL ECONOMIC BANKS.

CHAPTER I
GENERAL PROVISIONS

Article 1
In this Financial Services Authority Regulation, the following definitions apply:

Rural Economic Bank, hereinafter abbreviated as BPR, is a conventional bank type that does not provide services in giro circulation directly in its activities.
Sharia Rural Economic Bank, hereinafter abbreviated as BPR Syariah, is a sharia bank type that does not provide services in giro circulation directly in its activities.
Board of Directors is the board of directors for BPR or BPR Syariah in the form of a limited liability company, regional public enterprise, regional joint-stock company, or regional enterprise, or the management for BPR or BPR Syariah in the form of a cooperative legal entity.
Board of Commissioners is the board of commissioners for BPR or BPR Syariah in the form of a limited liability company, commissioner for BPR or BPR Syariah in the form of a regional joint-stock company, supervisory board for BPR in the form of a regional public enterprise and regional enterprise, and supervisor for BPR or BPR Syariah in the form of a cooperative legal entity.
Independent Commissioner is a member of the Board of Commissioners who does not have financial, managerial, shareholding, and/or family relationships with members of the Board of Directors, other members of the Board of Commissioners, and/or controlling shareholders, including the ultimate controlling shareholder, or other relationships that may affect their ability to act independently.
Independent Party is a party outside the BPR or BPR Syariah that does not have financial, managerial, shareholding, and/or family relationships with members of the Board of Directors, members of the Board of Commissioners, and/or controlling shareholders, or does not have other relationships that may affect their ability to act independently.
Executive Officer is an official of the BPR or BPR Syariah who is directly responsible to members of the Board of Directors or has significant influence over the policies and/or operations of the BPR or BPR Syariah.
General Meeting of Shareholders, hereinafter abbreviated as GMS, is the general meeting of shareholders for BPR or BPR Syariah in the form of a limited liability company or regional joint-stock company, the regional head meeting representing the regional government in the ownership of separated regional assets in regional public enterprises for BPR in the form of a regional public enterprise legal entity, the member meeting for BPR or BPR Syariah in the form of a cooperative legal entity, or the shareholder meeting for BPR in the form of a regional enterprise legal entity.
Good Corporate Governance on BPR and BPR Syariah is the structure, process, and mechanism for managing BPR and BPR Syariah to achieve the implementation of business activities of BPR and BPR Syariah while considering the interests of all relevant stakeholders, creating and optimizing company value on BPR and BPR Syariah sustainably, and based on applicable laws and regulations, standards, ethical principles, and general practices.

CHAPTER II
IMPLEMENTATION OF GOOD CORPORATE GOVERNANCE ON BPR AND BPR SYARIAH

Article 2
(1) BPR and BPR Syariah must implement Good Corporate Governance on BPR and BPR Syariah in the conduct of business activities at all levels or tiers of the organization.
(2) The implementation of Good Corporate Governance on BPR and BPR Syariah as referred to in paragraph (1) must at least cover the principles:
a. transparency; b. accountability;
c. responsibility;
d. independence; and e. fairness.
(3) The implementation of Good Corporate Governance on BPR and BPR Syariah as referred to in paragraph (1) must at least be manifested in:
a. shareholder aspects; b. the execution of duties, responsibilities, and authorities of the Board of Directors;
c. the execution of duties, responsibilities, and authorities of the Board of Commissioners;
d. completeness and execution of committee duties; e. handling of conflicts of interest; f. implementation of compliance functions; g. implementation of internal audit functions; h. implementation of external audit functions;
i. implementation of risk management and anti-fraud strategies, including internal control systems;
j. maximum credit limits for BPR and maximum fund distribution limits for BPR Syariah; k. reporting integrity and information technology systems; and
l. business plans for BPR and BPR Syariah.
(4) In addition to the implementation of corporate governance as referred to in paragraph (1), BPR and BPR Syariah must follow industry dynamics developments to encourage the implementation of Good Corporate Governance on BPR and BPR Syariah.

Article 3
(1) BPR and BPR Syariah must have internal procedures regarding the implementation of Good Corporate Governance on BPR and BPR Syariah in the conduct of business activities.
(2) BPR and BPR Syariah must conduct evaluations and reviews of the internal procedures as referred to in paragraph (1) to comply with laws and regulations.
(3) The Financial Services Authority has the authority to order BPR and BPR Syariah to have internal procedures regarding the implementation of Good Corporate Governance on BPR and BPR Syariah in the conduct of activities other than business activities as referred to in paragraph (1) in accordance with laws and regulations. (4) BPR and BPR Syariah must execute the orders of the Financial Services Authority as referred to in paragraph (3).

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Article 4
The Financial Services Authority conducts assessments of the implementation of Good Corporate Governance on BPR and BPR Syariah.

Article 5
(1) BPR and BPR Syariah that violate the provisions as referred to in Article 2 paragraph (1), Article 3 paragraph (1), paragraph (2), and/or paragraph (4) are subject to administrative sanctions in the form of written reprimands. (2) In the event that BPR and BPR Syariah have been subject to administrative sanctions as referred to in paragraph (1) and continue to violate the provisions as referred to in Article 2 paragraph (1), Article 3 paragraph (1), paragraph (2), and/or paragraph (4), BPR and BPR Syariah are subject to administrative sanctions in the form of:
a. reduction of health level; b. temporary suspension of some operational activities of BPR and BPR Syariah; and/or
c. prohibition on expanding business activities.
(3) In the event that BPR and BPR Syariah have been subject to administrative sanctions as referred to in paragraph (1) and/or paragraph (2), the principal parties of BPR and BPR Syariah may be subject to administrative sanctions in the form of prohibitions as principal parties in accordance with Financial Services Authority Regulations regarding re-evaluation for principal parties of financial service institutions. (4) In addition to the administrative sanctions as referred to in paragraph (1), paragraph (2), and/or paragraph (3), BPR, BPR Syariah, and/or controlling shareholders may be subject to administrative sanctions in the form of fines of at least IDR 10,000,000.00 (ten million rupiah) and at most IDR 100,000,000.00 (one hundred million rupiah) for each violation committed.

CHAPTER III
SHAREHOLDER ASPECTS

Article 6
To support the implementation of business activities and the management of BPR and BPR Syariah that are healthy, competitive, and in accordance with prudential principles and risk management, shareholders and controlling shareholders must:
a. communicate the vision and mission for the development of BPR and BPR Syariah to members of the Board of Directors and/or members of the Board of Commissioners, and monitor the development of BPR and BPR Syariah through the results of the Board of Commissioners' supervision; b. support the development of healthy BPR and BPR Syariah and maintain the continuity of business of BPR and BPR Syariah, demonstrated by capital planning or other development support for BPR and BPR Syariah; and
c. avoid conflicts of interest and/or intervention for personal or specific group interests.

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Article 7
(1) BPR and BPR Syariah must stipulate in the articles of association regarding policies and procedures for the use of profits and dividend distribution in accordance with laws and regulations.
(2) BPR and BPR Syariah must have procedures regarding the procedures for the use of profits and dividend distribution which contain at least:
a. the use of profits for the formation of reserves is carried out in accordance with laws and regulations; b. considerations for fulfilling capital adequacy in accordance with laws and regulations, as well as projections for the healthy development of BPR and BPR Syariah; and
c. the approval mechanism for proposals, payment, and amount of dividends, including considerations for BPR and BPR Syariah based on external and internal considerations.
(3) In the event that BPR and BPR Syariah experience financial condition problems, capital needs, and projections for the development of BPR and BPR Syariah, the Board of Directors must propose to the GMS to evaluate the use of profits and dividend distribution. (4) The Financial Services Authority has the authority to order BPR and BPR Syariah to:
a. adjust policies and/or decisions on the use of profits and dividend distribution; and/or b. hold a GMS again to adjust the use of profits and dividend distribution.
(5) BPR and BPR Syariah must execute the orders of the Financial Services Authority as referred to in paragraph (4).

Article 8
BPR and BPR Syariah must consider shareholder rights, including protection for minority shareholders.

Article 9
(1) BPR and BPR Syariah that violate the provisions as referred to in Article 6, Article 7 paragraph (2), and/or paragraph (5) are subject to administrative sanctions in the form of written reprimands.
(2) In the event that BPR and BPR Syariah have been subject to administrative sanctions as referred to in paragraph (1) and continue to violate the provisions as referred to in Article 6, Article 7 paragraph (2), and/or paragraph (5), BPR and BPR Syariah are subject to administrative sanctions in the form of:
a. reduction of health level; b. temporary suspension of some operational activities of BPR and BPR Syariah; and/or
c. prohibition on expanding business activities.

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(3) In the event that BPR and BPR Syariah have been subject to administrative sanctions as referred to in paragraph (1) and/or paragraph (2), the principal parties of BPR and BPR Syariah may be subject to administrative sanctions in the form of prohibitions as principal parties in accordance with Financial Services Authority Regulations regarding re-evaluation for principal parties of financial service institutions. (4) In addition to the administrative sanctions as referred to in paragraph (1), paragraph (2), and/or paragraph (3), BPR, BPR Syariah, and/or controlling shareholders may be subject to administrative sanctions in the form of fines of at least IDR 10,000,000.00 (ten million rupiah) and at most IDR 100,000,000.00 (one hundred million rupiah) for each violation committed.

CHAPTER IV
BOARD OF DIRECTORS
First Section
Number, Composition, Criteria, and Independence of the Board of Directors

Article 10
(1) BPR and BPR Syariah with core capital of at least IDR 50,000,000,000.00 (fifty billion rupiah) must have at least 3 (three) members of the Board of Directors.
(2) BPR and BPR Syariah with core capital of less than IDR 50,000,000,000.00 (fifty billion rupiah) must have at least 2 (two) members of the Board of Directors.
(3) The Financial Services Authority has the authority to determine a number of Board of Directors members greater than the number of Board of Directors members as referred to in paragraph (1) and/or paragraph (2).

Article 11
(1) BPR and BPR Syariah must stipulate in the articles of association regarding:
a. criteria; b. mechanisms; and
c. procedures,
for the appointment, replacement, dismissal, and/or resignation of Board of Directors members in accordance with laws and regulations.
(2) Each proposal for the appointment and/or replacement of Board of Directors members must consider recommendations from the remuneration and nomination committee.
(3) For BPR and BPR Syariah that do not have a remuneration and nomination committee, proposals for appointment and/or replacement as referred to in paragraph (2) must consider recommendations from members of the Board of Commissioners.

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Article 12
(1) The dismissal or replacement of Board of Directors members must prioritize the principal interests of BPR and BPR Syariah.
(2) The dismissal or replacement of Board of Directors members must consider at least:
a. Board of Directors members are assessed as unable to perform duties and responsibilities in the management and implementation of BPR and BPR Syariah strategies; b. the dismissal or replacement of Board of Directors members is not based on subjective assessments by shareholders, but is based on objective assessments regarding the management of BPR and BPR Syariah;
c. the dismissal or replacement of Board of Directors members has gone through established planning and mechanisms, which at least consider assessments from members of the Board of Commissioners or the remuneration and nomination committee, and has been scheduled in the GMS; and
d. the dismissal or replacement of Board of Directors members does not result in organizational problems and/or problems that endanger the continuity of business of BPR and BPR Syariah.
(3) The Financial Services Authority may conduct evaluations and order BPR and BPR Syariah to take corrective actions regarding decisions on the dismissal or replacement of Board of Directors members.
(4) BPR and BPR Syariah must execute the orders of the Financial Services Authority as referred to in paragraph (3).

Article 13
(1) Board of Directors members may resign from their positions before the end of their term of office in accordance with the procedures in the articles of association of BPR and BPR Syariah.
(2) The Financial Services Authority may conduct evaluations and order BPR and BPR Syariah to take corrective actions regarding the resignation of Board of Directors members.
(3) BPR and BPR Syariah must execute the orders of the Financial Services Authority as referred to in paragraph (2).

Article 14
The authority of the Financial Services Authority to conduct evaluations and order BPR and BPR Syariah to take corrective actions regarding actions:
a. appointments for candidate Board of Directors members; and/or b. dismissal, replacement, and/or resignation of Board of Directors members, can be communicated by the Financial Services Authority through written instructions and/or written orders in accordance with Financial Services Authority Regulations regarding written orders.

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Article 15
All members of the Board of Directors must reside in the same province or regency/city in another province that borders directly with the regency/city of the province where the headquarters of BPR and BPR Syariah are located.

Article 16
Board of Directors members must have competence in accordance with Financial Services Authority Regulations regarding the assessment of ability and propriety for principal parties of financial service institutions.

Article 17
(1) A majority of Board of Directors members are prohibited from having family relationships up to the second degree with:
a. fellow Board of Directors members; and/or b. members of the Board of Commissioners.
(2) Board of Directors members, individually or collectively, are prohibited from holding shares of 25% (twenty-five percent) or more of the paid-up capital in banks or meeting the criteria for controlling shareholders in banks and/or other companies.

Article 18
Board of Directors members are prohibited from holding concurrent positions in banks, financial service institutions, companies, and/or other institutions, except as members of the management of BPR and BPR Syariah industry associations and/or educational institutions aimed at improving the competence of human resources for BPR and BPR Syariah, provided that it does not interfere with the execution of duties as members of the Board of Directors of BPR and BPR Syariah.

Article 19
Board of Directors members are prohibited from granting general powers of attorney that result in the transfer of duties and responsibilities of the Board of Directors.

Second Section
Duties, Responsibilities, and Authorities of the Board of Directors

Article 20
(1) The Board of Directors is responsible for managing and being responsible for the administration of BPR and BPR Syariah for the interests of BPR and BPR Syariah in accordance with the purposes and objectives of BPR and BPR Syariah established in laws and regulations, articles of association, and GMS decisions. (2) The Board of Directors must execute duties, responsibilities, and authorities with good faith and with prudential principles. (3) The Board of Directors has the authority to represent BPR and BPR Syariah in accordance with laws and regulations, articles of association, and GMS decisions. (4) The Board of Directors implements Good Corporate Governance on BPR and BPR Syariah, risk management, and compliance in an integrated manner.

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Article 21
The Board of Directors must follow up on:
a. audit or examination findings and recommendations from work units or officials performing internal audit functions of BPR and BPR Syariah and external auditors; and b. the results of supervision by the Board of Commissioners, the Financial Services Authority, and/or other authorities and institutions.

Article 22
(1) In implementing Good Corporate Governance on BPR and BPR Syariah:
a. The Board of Directors in BPR and BPR Syariah with core capital of at least IDR 50,000,000,000.00 (fifty billion rupiah) must establish at least:

an internal audit work unit;
a risk management work unit; and
a compliance work unit.
b. The Board of Directors in BPR and BPR Syariah with core capital of less than IDR 50,000,000,000.00 (fifty billion rupiah) must assign or appoint Executive Officers who perform:
internal audit functions;
risk management functions; and
compliance functions.
(2) The risk management work unit and compliance work unit as referred to in paragraph (1) letter a numbers 2 and 3 can be combined into 1 (one) work unit handling risk management and compliance.
(3) Executive Officers assigned to perform risk management functions as referred to in paragraph (1) letter b number 2 can concurrently serve as Executive Officers performing compliance functions as referred to in paragraph (1) letter b number 3. (4) The implementation of risk management functions, including the formation of risk management work units, is in accordance with Financial Services Authority Regulations concerning the implementation of risk management for rural credit banks and Financial Services Authority Regulations concerning the implementation of risk management for sharia rural financing banks. (5) The Financial Services Authority has the authority to order BPR and BPR Syariah with core capital as referred to in paragraph (1) letter b to increase the number of human resources performing internal audit, risk management, and/or compliance functions. (6) BPR and BPR Syariah must execute the orders of the Financial Services Authority as referred to in paragraph (5).

Article 23
(1) The Board of Directors must formulate and establish remuneration policies for Executive Officers and employees which contain at least:
a. remuneration structure at least:

remuneration scale based on level and position; and
remuneration components; and
b. methods and mechanisms for determining remuneration.
(2) The Board of Directors must periodically evaluate remuneration policies as referred to in paragraph (1).

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Article 24
The Board of Directors must be accountable for the execution of their duties to shareholders through the GMS.

Article 25
The Board of Directors must disclose to employees regarding BPR and BPR Syariah policies that are strategic and can affect employee rights and obligations.

Article 26
The Board of Directors must provide accurate, relevant, and timely data and information related to BPR and BPR Syariah to parties entitled to receive data and information in accordance with laws and regulations.

Article 27
(1) The Board of Directors is prohibited from using:
a. individual advisors; and/or b. professional services, as experts or consultants.
(2) The prohibition on using professional service providers as referred to in paragraph (1) letter b does not apply to the use of professional services with the following provisions:
a. for specific projects with characteristics requiring specialized expertise; b. based on clear written agreements, which at least cover the scope of work, responsibilities, products produced, duration of work, and costs; and
c. carried out by Independent Parties who have qualifications to handle projects requiring specialized expertise as referred to in letter a.

Article 28
(1) The Board of Directors must have guidelines and work rules that are binding for each member of the Board of Directors.
(2) The guidelines and work rules as referred to in paragraph (1) contain at least:
a. duties, responsibilities, and authorities of the Board of Directors; b. the organization of BPR and BPR Syariah and the division of tasks for the Board of Directors; and
c. procedures for Board of Directors decision-making.

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Article 29
Directorial decisions taken in accordance with guidelines and rules of procedure are binding and become the responsibility of all members of the Board of Directors.

Third Section
Board of Directors Meetings

Article 30
(1) Every strategic policy and decision must be decided in a Board of Directors meeting, taking into account supervision in accordance with the duties and responsibilities of the Board of Commissioners.
(2) Decision-making in the Board of Directors meeting as referred to in paragraph (1) is first conducted through deliberation to reach consensus.
(3) In the event that deliberation to reach consensus as referred to in paragraph (2) does not occur, decision-making is conducted based on the majority vote.
(4) The Board of Directors is required to record the results of the Board of Directors meeting as referred to in paragraph (1) in the meeting minutes and document them in accordance with applicable legislation.

Fourth Section
Transparency Aspects of the Board of Directors

Article 31
In the implementation of Good Corporate Governance in BPR and Sharia BPR, members of the Board of Directors are required to disclose in the transparency report on the implementation of governance:
a. their share ownership in the relevant BPR and Sharia BPR and other companies; b. financial and/or family relationships up to the second degree with members of the Board of Commissioners, other members of the Board of Directors, and/or controlling shareholders of the BPR and Sharia BPR; and
c. remuneration and facilities established based on the decision of the Annual General Meeting of Shareholders (AGMS).

Article 32
(1) Members of the Board of Directors are prohibited from utilizing the BPR and Sharia BPR for personal, family, and/or third-party interests that can harm or reduce the profits of the BPR and Sharia BPR.
(2) Members of the Board of Directors are prohibited from taking and/or receiving personal profits from the BPR and Sharia BPR, other than remuneration and facilities established based on the decision of the AGMS.

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Fifth Section
Administrative Sanctions

Article 33
(1) BPR and Sharia BPR that violate the provisions as referred to in Article 10 paragraph (1), paragraph (2), Article 12 paragraph (1), paragraph (4), Article 13 paragraph (3), Article 15, Article 17, Article 18, Article 19, Article 20 paragraph (2), Article 21, Article 22 paragraph (1), paragraph (6), Article 23, Article 24, Article 25, Article 26, Article 27 paragraph (1), Article 28 paragraph (1), Article 30 paragraph (1), paragraph (4), Article 31, and/or Article 32, are subject to administrative sanctions in the form of a written warning. (2) In the event that BPR and Sharia BPR have been subject to administrative sanctions as referred to in paragraph (1) and continue to violate the provisions as referred to in Article 10 paragraph (1), paragraph (2), Article 12 paragraph (1), paragraph (4), Article 13 paragraph (3), Article 15, Article 17, Article 18, Article 19, Article 20 paragraph (2), Article 21, Article 22 paragraph (1), paragraph (6), Article 23, Article 24, Article 25, Article 26, Article 27 paragraph (1), Article 28 paragraph (1), Article 30 paragraph (1), paragraph (4), Article 31, and/or Article 32, BPR and Sharia BPR are subject to administrative sanctions in the form of:
a. reduction in health level; b. temporary suspension of some operational activities of the BPR and Sharia BPR; and/or
c. prohibition on expanding business activities.
(3) In the event that BPR and Sharia BPR have been subject to administrative sanctions as referred to in paragraph (1) and/or paragraph (2), the principal parties of the BPR and Sharia BPR may be subject to administrative sanctions in the form of prohibition as a principal party in accordance with Financial Services Authority Regulations regarding re-evaluation of principal parties of financial service institutions. (4) In addition to administrative sanctions as referred to in paragraph (1), paragraph (2), and/or paragraph (3), BPR, Sharia BPR, and/or controlling shareholders may be subject to administrative sanctions in the form of fines of at least IDR 10,000,000.00 (ten million rupiah) and at most IDR 100,000,000.00 (one hundred million rupiah) for each violation committed.

CHAPTER V
BOARD OF COMMISSIONERS

First Section
Number, Composition, Criteria, and Independence of the Board of Commissioners

Article 34
(1) BPR and Sharia BPR that have core capital of at least IDR 50,000,000,000.00 (fifty billion rupiah) are required to have at least 3 (three) members of the Board of Commissioners and at most equal to the number of members of the Board of Directors. (2) BPR and Sharia BPR that have core capital of less than IDR 50,000,000,000.00 (fifty billion rupiah) are required to have at least 2 (two) members of the Board of Commissioners and at most equal to the number of members of the Board of Directors. (3) The Financial Services Authority has the authority to determine a number of Board of Commissioners members that is greater than the number of Board of Commissioners members as referred to in paragraph (1) and/or paragraph (2).

Article 35
(1) BPR and Sharia BPR establish in their articles of association regarding:
a. criteria; b. mechanism; and
c. procedures,
for the appointment, replacement, dismissal, and/or resignation of members of the Board of Commissioners in accordance with applicable legislation.
(2) Every proposal for the appointment and/or replacement of members of the Board of Commissioners must take into account recommendations from the remuneration and nomination committee.
(3) For BPR and Sharia BPR that do not have a remuneration and nomination committee, proposals for appointment and/or replacement as referred to in paragraph (2) must take into account recommendations from members of the Board of Commissioners.

Article 36
Provisions regarding:
a. dismissal or replacement of members of the Board of Directors as referred to in Article 12 and provisions on the imposition of sanctions related to the dismissal or replacement of members of the Board of Directors as referred to in Article 33; b. resignation of members of the Board of Directors as referred to in Article 13; and
c. the authority of the Financial Services Authority to conduct evaluation and order BPR and Sharia BPR to take corrective actions regarding the appointment, dismissal, replacement, and/or resignation of candidate members of the Board of Directors and/or members of the Board of Directors as referred to in Article 14,
apply mutatis mutandis to members of the Board of Commissioners.

Article 37
All members of the Board of Commissioners are required to be domiciled in Indonesia and at least 1 (one) member of the Board of Commissioners must reside in the same province or in another province bordering the province where the head office of the BPR and Sharia BPR is located.

Article 38
Members of the Board of Commissioners must have competence in accordance with Financial Services Authority Regulations regarding the assessment of competence and propriety of principal parties of financial service institutions.

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Article 39
The majority of members of the Board of Commissioners are prohibited from having family relationships up to the second degree with:
a. fellow members of the Board of Commissioners; and/or b. members of the Board of Directors.

Article 40
(1) Members of the Board of Commissioners are prohibited from holding concurrent positions as members of the Board of Commissioners in more than 2 (two) other BPR or Sharia BPR.
(2) Members of the Board of Commissioners are prohibited from holding concurrent positions:
a. as members of the Board of Directors or Executive Officials in other financial service institutions supervised by the Financial Services Authority; or b. in other organizations, companies, or business entities in the event that the concurrent position creates a conflict of interest that affects the effectiveness of supervision based on the assessment of the Financial Services Authority.

Article 41
Members of the Board of Commissioners are prohibited from giving general power of attorney that results in the transfer of duties and responsibilities of the Board of Commissioners.

Article 42
(1) BPR and Sharia BPR that have core capital of at least IDR 50,000,000,000.00 (fifty billion rupiah) are required to have Independent Commissioners of at least 50% (fifty percent) of the number of members of the Board of Commissioners. (2) The Financial Services Authority has the authority to determine different policies regarding Independent Commissioners as referred to in paragraph (1). (3) Candidate Independent Commissioners must have:
a. adequate knowledge in the banking and/or financial fields that is relevant to the position as Independent Commissioner; and b. experience in the banking and/or financial fields.
(4) Independent Commissioners are prohibited from holding concurrent positions as public officials.
(5) Former members of the Board of Directors or Executive Officials of BPR and Sharia BPR or parties who have relationships with BPR and Sharia BPR that can influence the ability of the person concerned to act independently must undergo a waiting period of at least 6 (six) months before becoming Independent Commissioners in the relevant BPR and Sharia BPR.

Article 43
(1) Non-independent Commissioners may transition into Independent Commissioners in the relevant BPR and Sharia BPR by meeting the requirements as Independent Commissioners.

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(2) Non-independent Commissioners who will transition into Independent Commissioners in the relevant BPR and Sharia BPR as referred to in paragraph (1) are required to undergo a waiting period of at least 6 (six) months. (3) The transition from non-independent Commissioner to Independent Commissioner takes into account Financial Services Authority Regulations regarding the assessment of competence and propriety of financial service institutions.

Second Section
Duties, Responsibilities, and Authority of the Board of Commissioners

Article 44
(1) The Board of Commissioners is required to carry out duties, responsibilities, and authority for the benefit of BPR and Sharia BPR with good faith and with the principle of prudence in accordance with applicable legislation, articles of association, and/or AGMS decisions. (2) In carrying out supervision, the Board of Commissioners is required to direct, monitor, and evaluate the implementation of governance, risk management, and strategic policies of BPR and Sharia BPR. (3) In carrying out supervision, the Board of Commissioners is prohibited from participating in decision-making regarding operational activities of BPR and Sharia BPR, except related to:
a. the provision or disbursement of funds to related parties in accordance with Financial Services Authority Regulations regarding the maximum limit for credit provision by rural credit banks and the maximum limit for fund disbursement by sharia rural financing banks; and b. other matters established in applicable legislation. (4) Decision-making by the Board of Commissioners as referred to in paragraph (3) is part of the supervisory duty and therefore does not negate the responsibility of the Board of Directors for the implementation of management duties of BPR and Sharia BPR. (5) The Board of Commissioners is required to supervise the implementation of the duties of the Board of Directors and ensure that the Board of Directors follows up on the results of the Board of Commissioners' supervision. (6) The Board of Commissioners conducts supervision over:
a. the implementation of compliance functions in BPR and Sharia BPR; and b. the implementation of risk management in accordance with Financial Services Authority Regulations regarding the implementation of risk management for rural credit banks and Financial Services Authority Regulations regarding the implementation of risk management for sharia rural financing banks.

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Article 45
The Board of Commissioners is required to supervise the follow-up by the Board of Directors on:
a. audit or examination findings and recommendations from work units or officials carrying out the internal audit function of BPR and Sharia BPR, external auditors; and b. the results of supervision by the Board of Commissioners, the Financial Services Authority, and/or other authorities and institutions, as referred to in Article 21.

Article 46
(1) BPR and Sharia BPR establish in their articles of association regarding policies and procedures for determining remuneration and nominations for members of the Board of Directors, members of the Board of Commissioners, and members of the Sharia Supervisory Board in accordance with applicable legislation. (2) The Board of Commissioners is required to:
a. formulate remuneration policies for members of the Board of Directors, members of the Board of Commissioners, and members of the Sharia Supervisory Board as referred to in paragraph (1); and b. propose the establishment of the aforementioned policies to the AGMS. (3) Remuneration policies as referred to in paragraph (2) contain at least:
a. remuneration structure of at least:

remuneration scale based on level and position; and
remuneration components, and
b. methods and mechanisms for determining remuneration.
(4) The Board of Commissioners is required to:
a. formulate nomination policies for members of the Board of Directors, members of the Board of Commissioners, and members of the Sharia Supervisory Board as referred to in paragraph (1); and b. propose the establishment of the aforementioned policies to the AGMS. (5) Nomination policies as referred to in paragraph (4) contain at least:
a. systems and procedures for the selection and/or replacement of members of the Board of Directors, members of the Board of Commissioners, and members of the Sharia Supervisory Board for Sharia BPR; b. mechanisms for identifying and providing recommendations regarding candidates for members of the Board of Directors, candidates for members of the Board of Commissioners, and/or candidates for members of the Sharia Supervisory Board for Sharia BPR; and
c. mechanisms for identifying and providing recommendations regarding Independent Parties who will become committee members.
(6) For BPR and Sharia BPR that have a remuneration and nomination committee, the formulation of remuneration policies as referred to in paragraph (2) and nomination policies as referred to in paragraph (4) take into account recommendations from the remuneration and nomination committee.

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(7) The Board of Commissioners is required to periodically evaluate remuneration policies as referred to in paragraph (2) and nomination policies as referred to in paragraph (4).
(8) The Financial Services Authority has the authority to order BPR and Sharia BPR to conduct:
a. evaluation of remuneration policies of BPR and Sharia BPR under certain conditions; b. adjustment of policies and/or remuneration payments, including convening the AGMS again to adjust remuneration payments; and/or
c. evaluation of nomination policies of BPR and Sharia BPR.
(9) BPR and Sharia BPR are required to implement the orders of the Financial Services Authority as referred to in paragraph (8).

Article 47
(1) The Board of Commissioners is required to submit reports on:
a. violations of applicable legislation in the field of finance and banking; and/or b. conditions or estimated conditions that can endanger the continuity of the business of BPR and Sharia BPR, via online through the Financial Services Authority reporting system within a maximum of 10 (ten) working days since the discovery of the violation and/or the conditions or estimated conditions. (2) In the event that the online Financial Services Authority reporting system is not yet available, BPR and Sharia BPR are required to submit reports as referred to in paragraph (1) to the Financial Services Authority offline within the time limit as referred to in paragraph (1).

Article 48
(1) The Board of Commissioners is required to have guidelines and rules of procedure that are binding for each member of the Board of Commissioners.
(2) Guidelines and rules of procedure as referred to in paragraph (1) contain at least:
a. duties, responsibilities, and authority of the Board of Commissioners; and b. regulation of Board of Commissioners meetings.

Article 49
The Board of Commissioners is required to provide time to carry out duties and responsibilities optimally in accordance with guidelines and rules of procedure.

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Third Section
Board of Commissioners Meetings

Article 50
(1) The Board of Commissioners is required to hold Board of Commissioners meetings periodically at least 1 (one) time in 3 (three) months, attended by all members of the Board of Commissioners.
(2) The agenda of the meeting as referred to in paragraph (1) discusses at least:
a. the business plan of BPR and Sharia BPR; b. strategic issues of BPR and Sharia BPR;
c. evaluation or establishment of strategic policies; and/or
d. evaluation of the realization of the business plan of BPR and Sharia BPR.
(3) Board of Commissioners meetings as referred to in paragraph (1) are held with direct presence or conducted using teleconference technology, video conferencing, or other electronic media facilities that allow all AGMS participants to see and hear each other directly and participate in the meeting. (4) The Board of Commissioners is required to hold meetings with the agenda of establishing the business plan of BPR and Sharia BPR as referred to in paragraph (2) letter a at least 1 (one) time in 1 (one) year. (5) Board of Commissioners meetings as referred to in paragraph (4) must be held with direct presence.

Article 51
(1) Decision-making in Board of Commissioners meetings is first conducted through deliberation to reach consensus.
(2) In the event that deliberation to reach consensus as referred to in paragraph (1) does not occur, decision-making is conducted based on the majority vote.
(3) The Board of Commissioners is required to record the results of the Board of Commissioners meeting as referred to in paragraph (1) in the meeting minutes and document them in accordance with applicable legislation. (4) In the event that Board of Commissioners meetings are held for decision-making, the procedures for decision-making are implemented in accordance with the guidelines and rules of procedure of the Board of Commissioners.

Article 52
(1) In carrying out supervision, the Board of Commissioners may request the Board of Directors to provide explanations regarding problems, performance, operational policies of BPR and Sharia BPR, and/or other matters related to the supervision of the Board of Commissioners. (2) Requests for explanations as referred to in paragraph (1) can be conducted in meetings between the Board of Commissioners and the Board of Directors.

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(3) In the event that requests for explanations are conducted in the form of meetings as referred to in paragraph (2), meeting decisions must be recorded in the meeting minutes and documented in accordance with applicable legislation.

Fourth Section
Transparency Aspects of the Board of Commissioners

Article 53
In the implementation of Good Corporate Governance in BPR and Sharia BPR, members of the Board of Commissioners are required to disclose in the transparency report on the implementation of governance regarding:
a. their share ownership in the relevant BPR and Sharia BPR and other companies; b. financial and/or family relationships up to the second degree with other members of the Board of Commissioners, members of the Board of Directors, and/or controlling shareholders of BPR and Sharia BPR; and
c. remuneration and facilities established based on the decision of the AGMS.

Article 54
(1) Members of the Board of Commissioners are prohibited from utilizing BPR and Sharia BPR for personal, family, and/or third-party interests that can harm or reduce the profits of BPR and Sharia BPR.
(2) Members of the Board of Commissioners are prohibited from taking and/or receiving personal profits from BPR and Sharia BPR, other than remuneration and facilities established based on the decision of the AGMS.

Fifth Section
Administrative Sanctions

Article 55
(1) BPR and Sharia BPR that violate the provisions as referred to in Article 34 paragraph (1), paragraph (2), Article 37, Article 39, Article 40, Article 41, Article 42 paragraph (1), paragraph (4), paragraph (5), Article 43 paragraph (2), Article 44 paragraph (1), paragraph (2), paragraph (3), paragraph (5), Article 45, Article 46 paragraph (2), paragraph (4), paragraph (7), paragraph (9), Article 48 paragraph (1), Article 49, Article 50 paragraph (1), paragraph (4), paragraph (5), Article 51 paragraph (3), Article 52 paragraph (3), Article 53, and/or Article 54, are subject to administrative sanctions in the form of a written warning. (2) In the event that BPR and Sharia BPR have been subject to administrative sanctions as referred to in paragraph (1) and continue to violate the provisions as referred to in Article 34 paragraph (1), paragraph (2), Article 37, Article 39, Article 40, Article 41, Article 42 paragraph (1), paragraph (4), paragraph (5), Article 43 paragraph (2), Article 44 paragraph (1), paragraph (2), paragraph (3), paragraph (5), Article 45, Article 46 paragraph (2), paragraph (4), paragraph (7), paragraph (9), Article 48 paragraph (1), Article 49, Article 50 paragraph (1), paragraph (4), paragraph (5), Article 51 paragraph (3), Article 52 paragraph (3), Article 53, and/or Article 54, BPR and Sharia BPR are subject to administrative sanctions in the form of:

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a. reduction in health level; b. temporary suspension of some operational activities of BPR and Sharia BPR; and/or
c. prohibition on expanding business activities.
(3) In the event that BPR and Sharia BPR have been subject to administrative sanctions as referred to in paragraph (1) and/or paragraph (2), the principal parties of BPR and Sharia BPR may be subject to administrative sanctions in the form of prohibition as a principal party in accordance with Financial Services Authority Regulations regarding re-evaluation of principal parties of financial service institutions. (4) In addition to administrative sanctions as referred to in paragraph (1), paragraph (2), and/or paragraph (3), BPR, Sharia BPR, and/or controlling shareholders may be subject to administrative sanctions in the form of fines of at least IDR 10,000,000.00 (ten million rupiah) and at most IDR 100,000,000.00 (one hundred million rupiah) for each violation committed. (5) BPR and Sharia BPR that do not meet the provisions as referred to in Article 47 paragraph (1) are subject to administrative sanctions in accordance with Financial Services Authority Regulations regarding the reporting of rural credit banks and sharia rural financing banks through the Financial Services Authority reporting system. (6) BPR and Sharia BPR that are late in submitting reports as referred to in Article 47 paragraph (2) are subject to administrative sanctions in the form of fines of IDR 100,000.00 (one hundred thousand rupiah) per working day and at most IDR 5,000,000.00 (five million rupiah). (7) The imposition of administrative sanctions as referred to in paragraph (6) does not eliminate the obligation to submit reports for BPR or Sharia BPR that have not yet submitted the aforementioned reports.

CHAPTER VI
COMMITTEES

First Section
General

Article 56
To assist and support the implementation of duties and responsibilities of the Board of Directors, the Board of Directors forms Board of Directors committees.

Article 57
To assist and support the implementation of duties and responsibilities of the Board of Commissioners, the Board of Commissioners forms Board of Commissioners committees.

Second Section
Board of Directors Committees

Article 58
(1) The Board of Directors forms committees in accordance with applicable legislation.
(2) The Board of Directors may form other committees adjusted to the problems, business scale, and/or complexity of BPR and Sharia BPR.
(3) Committees formed by the Board of Directors as referred to in paragraph (1) and paragraph (2) are responsible to the Board of Directors.
(4) The Financial Services Authority has the authority to order BPR and Sharia BPR to form committees as referred to in paragraph (2).
(5) BPR and Sharia BPR are required to implement the orders of the Financial Services Authority as referred to in paragraph (4).

Third Section
Board of Commissioners Committees

Paragraph 1
General

Article 59
(1) The Board of Commissioners in BPR and Sharia BPR that have core capital of at least IDR 50,000,000,000.00 (fifty billion rupiah) are required to form at least:
a. an audit committee; b. a risk monitoring committee; and
c. a remuneration and nomination committee.
(2) Committees formed by the Board of Commissioners are responsible to the Board of Commissioners.
(3) The appointment and dismissal of members of the Board of Commissioners committees are conducted by the Board of Directors based on the decision of the Board of Commissioners meeting.
(4) The Board of Commissioners is required to evaluate the implementation of committee duties as referred to in paragraph (1).
(5) The Financial Services Authority has the authority to determine different policies regarding the formation of audit committees, risk monitoring committees, and/or remuneration and nomination committees as referred to in paragraph (1).

Paragraph 2
Audit Committee

Article 60
(1) Members of the audit committee as referred to in Article 59 paragraph (1) letter a are at least:
a. 1 (one) Independent Commissioner; b. 1 (one) Independent Party who has competence and/or experience in the financial or accounting fields; and
c. 1 (one) Independent Party who has competence and/or experience in the legal, banking, or sharia banking fields.
(2) The audit committee as referred to in paragraph (1) is chaired by an Independent Commissioner who also serves as a member.

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(3) Members of the Board of Directors are prohibited from serving as members of the Audit Committee as referred to in paragraph (1).

(4) The majority of members of the Audit Committee as referred to in paragraph (1) shall consist of Independent Commissioners and Independent Parties.

(5) Members of the Audit Committee as referred to in paragraph (1) letters b and c must have good integrity and maintain their reputation.

(6) For Sharia BPRs, 1 (one) member of the Sharia Supervisory Board may serve as a member of the Audit Committee.

Paragraph 3
Risk Monitoring Committee

Article 61

(1) Members of the Risk Monitoring Committee as referred to in Article 59 paragraph (1) letter b, at minimum:
a. 1 (one) Independent Commissioner; b. 1 (one) Independent Party who has competence and/or experience in the field of finance or Sharia finance; and
c. 1 (one) Independent Party who has competence and/or experience in the field of risk management.

(2) The Risk Monitoring Committee as referred to in paragraph (1) shall be chaired by an Independent Commissioner who also serves as a member.

(3) Members of the Board of Directors are prohibited from serving as members of the Risk Monitoring Committee as referred to in paragraph (1).

(4) The majority of members of the Risk Monitoring Committee as referred to in paragraph (1) shall consist of Independent Commissioners and Independent Parties.

(5) Members of the Risk Monitoring Committee as referred to in paragraph (1) letters b and c must have good integrity and maintain their reputation.

(6) For Sharia BPRs, 1 (one) member of the Sharia Supervisory Board may serve as a member of the Risk Monitoring Committee.

Paragraph 4
Remuneration and Nomination Committee

Article 62

(1) Members of the Remuneration and Nomination Committee as referred to in Article 59 paragraph (1) letter c, at minimum:
a. 1 (one) Independent Commissioner; b. 1 (one) member of the Board of Commissioners of the BPR and Sharia BPR other than as referred to in letter a or a party from outside the BPR and Sharia BPR who has relevant competence and/or experience; and
c. 1 (one) official below the Board of Directors who handles Human Resources (HR).

(2) The Remuneration and Nomination Committee as referred to in paragraph (1) shall be chaired by an Independent Commissioner who also serves as a member.

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(3) Members of the Board of Directors are prohibited from serving as members of the Remuneration and Nomination Committee as referred to in paragraph (1).

(4) For Sharia BPRs, 1 (one) member of the Sharia Supervisory Board may serve as a member of the Remuneration and Nomination Committee.

Paragraph 5
Concurrent Position of Chairman of the Board of Commissioners Committee

Article 63
The Chairman of the Board of Commissioners Committee as referred to in Article 59 is prohibited from holding concurrent positions as chairman of more than 1 (one) other committee.

Paragraph 6
Duties and Responsibilities of the Board of Commissioners Committee

Article 64

(1) The Audit Committee has the duty and responsibility to monitor and evaluate:
a. the planning and implementation of audits; and b. the monitoring of follow-up on audit results.

(2) To carry out the duties and responsibilities as referred to in paragraph (1), the Audit Committee monitors and evaluates at least:
a. the implementation of duties by the internal audit work unit or official executing internal audit functions; b. the conformity of financial reports with financial accounting standards; and
c. the follow-up implementation by the Board of Directors on the findings of the internal audit work unit or official executing internal audit functions of the BPR and Sharia BPR, external auditors, results of supervision by the Board of Commissioners, the Financial Services Authority (OJK), and/or other authorities and institutions.

(3) The results of monitoring and evaluation as referred to in paragraph (2) are used to provide recommendations to the Board of Commissioners.

(4) In addition to carrying out the duties and responsibilities as referred to in paragraph (1), the Audit Committee carries out duties and responsibilities in accordance with Financial Services Authority Regulations regarding the use of public accountant services and public accounting firms in financial service activities.

Article 65

(1) The Risk Monitoring Committee has the duty and responsibility to carry out at least:
a. the evaluation of conformity between risk management policies and the implementation of BPR and Sharia BPR policies; and b. the monitoring and evaluation of the implementation of duties by the risk management committee and risk management work unit.

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(2) The results of evaluation as well as monitoring and evaluation as referred to in paragraph (1) are used to provide recommendations to the Board of Commissioners.

Article 66

(1) The Remuneration and Nomination Committee has the duty and responsibility:
a. remuneration policy at minimum:

conducting periodic evaluations of remuneration policies based on financial performance and reserve fulfillment in accordance with statutory regulations, performance achievement, fairness with peer groups, and consideration of long-term strategic objectives; and
providing recommendations to the Board of Commissioners regarding remuneration policies.
b. nomination policy at minimum:
formulating and providing recommendations to the Board of Commissioners regarding the system and procedures for the selection and/or replacement of Board of Directors members, Board of Commissioners members, and Sharia Supervisory Board members for Sharia BPRs;
identifying and providing recommendations to the Board of Commissioners regarding candidates for Board of Directors members, candidates for Board of Commissioners members, and/or candidates for Sharia Supervisory Board members for Sharia BPRs; and
identifying and providing recommendations to the Board of Commissioners regarding Independent Parties who will serve as members of the Audit Committee as referred to in Article 60 paragraph (1) letters b and c, and members of the Risk Monitoring Committee as referred to in Article 61 paragraph (1) letters b and c.

(2) Members of the Remuneration and Nomination Committee who have a conflict of interest with the proposed appointment and/or replacement recommended must disclose this in the recommended proposal.

Fourth Part
Guidelines and Working Procedures of Committees

Article 67

(1) BPRs and Sharia BPRs must have guidelines and working procedures for committees.

(2) The guidelines and working procedures of committees as referred to in paragraph (1) contain at minimum:
a. the duties, responsibilities, and authority of the committee; b. the regulation of committee meetings; and
c. the period for periodic review of committee guidelines and working procedures.

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Fifth Part
Committee Meetings

Article 68

(1) Committee meetings are held in accordance with the established guidelines and working procedures.

(2) Meetings of the Audit Committee or Risk Monitoring Committee must be attended by the majority of committee members, including 1 (one) Independent Commissioner and 1 (one) Independent Party.

(3) Meetings of the Remuneration and Nomination Committee must be attended by the majority of the Remuneration and Nomination Committee members, including 1 (one) Independent Commissioner and 1 (one) official below the Board of Directors who handles human resources.

(4) The procedure for decision-making in committee meetings is carried out in accordance with the committee's guidelines and working procedures.

(5) Committees must document the results of meetings in meeting minutes and document them in accordance with statutory regulations.

Sixth Part
Administrative Sanctions

Article 69

(1) BPRs and Sharia BPRs that violate provisions as referred to in Article 58 paragraph (5), Article 59 paragraph (1), paragraph (4), Article 60 paragraph (3), Article 61 paragraph (3), Article 62 paragraph (3), Article 63, Article 66 paragraph (2), Article 67 paragraph (1), and/or Article 68 paragraph (5), shall be subject to administrative sanctions in the form of written warnings.

(2) In the event that BPRs and Sharia BPRs have been subject to administrative sanctions as referred to in paragraph (1) and continue to violate provisions as referred to in Article 58 paragraph (5), Article 59 paragraph (1), paragraph (4), Article 60 paragraph (3), Article 61 paragraph (3), Article 62 paragraph (3), Article 63, Article 66 paragraph (2), Article 67 paragraph (1), and/or Article 68 paragraph (5), BPRs and Sharia BPRs shall be subject to administrative sanctions in the form of:
a. reduction of health rating; b. temporary suspension of part of the operational activities of BPRs and Sharia BPRs; and/or
c. prohibition on expanding business activities.

(3) In the event that BPRs and Sharia BPRs have been subject to administrative sanctions as referred to in paragraph (1) and/or paragraph (2), the principal parties of BPRs and Sharia BPRs may be subject to administrative sanctions in the form of prohibition from acting as principal parties in accordance with Financial Services Authority Regulations regarding the re-evaluation of principal parties of financial service institutions.

(4) In addition to administrative sanctions as referred to in paragraph (1), paragraph (2), and/or paragraph (3), BPRs, Sharia BPRs, and/or controlling shareholders may be subject to administrative sanctions in the form of fines of at least IDR 10,000,000.00 (ten million rupiah) and at most IDR 100,000,000.00 (one hundred million rupiah) for each violation committed.

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CHAPTER VII
CONFLICT OF INTEREST

Article 70

(1) Members of the Board of Directors, members of the Board of Commissioners, members of the Sharia Supervisory Board, Executive Officers, and employees of BPRs and Sharia BPRs must avoid all forms of conflict of interest in the implementation of management and supervision duties for BPRs and Sharia BPRs.

(2) In the event of a conflict of interest, members of the Board of Directors, members of the Board of Commissioners, members of the Sharia Supervisory Board, Executive Officers, and employees of BPRs and Sharia BPRs must disclose the conflict of interest in every decision that meets the conditions of having a conflict of interest.

(3) In addition to disclosing conflicts of interest as referred to in paragraph (2), members of the Board of Directors, members of the Board of Commissioners, members of the Sharia Supervisory Board, Executive Officers, and employees of BPRs and Sharia BPRs are prohibited from taking actions that have the potential to harm BPRs and Sharia BPRs or reduce the profits of BPRs and Sharia BPRs.

(4) BPRs and Sharia BPRs must have a conflict of interest policy aimed at establishing rules, identifying, and reducing potential conflicts of interest that may arise in BPRs and Sharia BPRs due to the implementation of business activities of BPRs and Sharia BPRs.

Article 71

(1) BPRs and Sharia BPRs that violate provisions as referred to in Article 70 paragraph (2), paragraph (3), and/or paragraph (4), shall be subject to administrative sanctions in the form of written warnings.

(2) In the event that BPRs and Sharia BPRs have been subject to administrative sanctions as referred to in paragraph (1) and continue to violate provisions as referred to in Article 70 paragraph (2), paragraph (3), and/or paragraph (4), BPRs and Sharia BPRs shall be subject to administrative sanctions in the form of:
a. reduction of health rating; b. temporary suspension of part of the operational activities of BPRs and Sharia BPRs; and/or
c. prohibition on expanding business activities.

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IDR 100,000,000.00 (one hundred million rupiah) for each violation committed.

CHAPTER VIII
COMPLIANCE FUNCTION

First Part
General

Article 72

(1) BPRs and Sharia BPRs must ensure compliance with Financial Services Authority regulations and statutory regulations.

(2) To ensure compliance as referred to in paragraph (1), BPRs and Sharia BPRs must have a Board of Directors member who oversees the compliance function.

(3) BPRs and Sharia BPRs with core capital of at least IDR 50,000,000,000.00 (fifty billion rupiah) must form an independent compliance work unit (compliance unit) separate from operational work units.

(4) BPRs and Sharia BPRs with core capital of less than IDR 50,000,000,000.00 (fifty billion rupiah) must assign an Executive Officer to execute the compliance function.

(5) The compliance work unit as referred to in paragraph (3) and the Executive Officer as referred to in paragraph (4) are directly responsible to the Board of Directors member who oversees the compliance function as referred to in paragraph (2).

(6) The compliance work unit as referred to in paragraph (3) and the Executive Officer as referred to in paragraph (4) must formulate and/or implement guidelines, systems, and procedures for compliance.

(7) For Sharia BPRs, the Board of Directors member overseeing the compliance function, the compliance work unit as referred to in paragraph (3), and the Executive Officer as referred to in paragraph (4) must coordinate with the Sharia Supervisory Board regarding the implementation of the compliance function concerning Sharia principles.

Article 73

(1) The Board of Directors member overseeing the compliance function in BPRs and Sharia BPRs with core capital of at least IDR 50,000,000,000.00 (fifty billion rupiah) must be independent and have competence related to the execution of compliance duties.

(2) The Board of Directors member overseeing the compliance function in BPRs and Sharia BPRs with core capital of less than IDR 50,000,000,000.00 (fifty billion rupiah) must:
a. not be involved in operational decision-making regarding fund disbursement, fund collection, procurement of goods and services, and other operational activities; and b. have competence related to the execution of compliance duties.

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Article 74

(1) The procedures for the appointment, replacement, dismissal, and/or resignation of the Board of Directors member overseeing the compliance function are carried out in accordance with Financial Services Authority Regulations regarding BPRs and Sharia BPRs.

(2) In the event that the Board of Directors member overseeing the compliance function is permanently unable to serve, resigns, or has completed their term, BPRs and Sharia BPRs must appoint a replacement for the Board of Directors member overseeing the compliance function.

Second Part
Duties and Responsibilities of the Board of Directors Member Overseeing the Compliance Function

Article 75

(1) The Board of Directors member overseeing the compliance function has the duty and responsibility at minimum:
a. formulating strategies to foster a compliance culture; b. ensuring that the business activities of BPRs and Sharia BPRs meet all statutory regulations; and
c. other duties related to the execution of the compliance function.

(2) In the event that the Board of Directors member overseeing the compliance function is proven to have:
a. taken necessary steps by implementing optimal prevention; and/or b. followed up on deviations in accordance with their duties, yet deviations still occur, the responsibility of the Board of Directors member overseeing the compliance function is limited to the authority of the Board of Directors member overseeing the compliance function.

Third Part
Reporting by the Board of Directors Member Overseeing the Compliance Function

Article 76

(1) BPRs and Sharia BPRs must formulate and submit reports on the implementation of the compliance function, consisting of:
a. the main report on the execution of duties by the Board of Directors member overseeing the compliance function, which is part of the corporate governance implementation report; and b. special reports regarding policies and/or Board of Directors decisions that, in the opinion of the Board of Directors member overseeing the compliance function, have deviated from Financial Services Authority regulations and/or statutory regulations and endanger the continuity of business

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for BPRs and Sharia BPRs, submitted online through the Financial Services Authority reporting system at the latest 10 (ten) working days since the deviation was discovered.

(2) The report as referred to in paragraph (1) letter b must be signed by the Board of Directors member overseeing the compliance function.

(3) In the event that the online Financial Services Authority reporting system is not yet available, BPRs and Sharia BPRs must submit the report as referred to in paragraph (1) letter b to the Financial Services Authority offline within the time limit as referred to in paragraph (1) letter b.

Fourth Part
Fulfillment of Sharia Principles

Article 77
The fulfillment of Sharia principles in the activities of Sharia BPRs is in accordance with applicable Financial Services Authority regulations for Sharia BPRs and statutory regulations related to Sharia principles.

Fifth Part
Administrative Sanctions

Article 78

(1) BPRs and Sharia BPRs that violate provisions as referred to in Article 72 paragraph (1), paragraph (2), paragraph (3), paragraph (4), paragraph (6), Article 73, and/or Article 74 paragraph (2), shall be subject to administrative sanctions in the form of written warnings.

(2) In the event that BPRs and Sharia BPRs have been subject to administrative sanctions as referred to in paragraph (1) and continue to violate provisions as referred to in Article 72 paragraph (1), paragraph (2), paragraph (3), paragraph (4), paragraph (6), Article 73, and/or Article 74 paragraph (2), BPRs and Sharia BPRs shall be subject to administrative sanctions in the form of:
a. reduction of health rating; b. temporary suspension of part of the operational activities of BPRs and Sharia BPRs; and/or
c. prohibition on expanding business activities.

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(5) BPRs or Sharia BPRs that do not meet the provisions as referred to in Article 76 paragraph (1) shall be subject to administrative sanctions in accordance with Financial Services Authority Regulations regarding the reporting of People's Economy Banks and Sharia People's Economy Banks through the Financial Services Authority reporting system.

(6) BPRs or Sharia BPRs that are late in submitting reports as referred to in Article 76 paragraph (3) shall be subject to administrative sanctions in the form of fines of IDR 100,000.00 (one hundred thousand rupiah) per working day and at most IDR 5,000,000.00 (five million rupiah).

(7) The imposition of administrative sanctions as referred to in paragraph (6) does not eliminate the obligation to submit reports for BPRs or Sharia BPRs that have not yet submitted the aforementioned reports.

CHAPTER IX
INTERNAL AUDIT FUNCTION

Article 79

(1) BPRs and Sharia BPRs must effectively implement the internal audit function.

(2) BPRs and Sharia BPRs with core capital of at least IDR 50,000,000,000.00 (fifty billion rupiah) must form an independent internal audit work unit separate from operational functions.

(3) BPRs and Sharia BPRs with core capital of less than IDR 50,000,000,000.00 (fifty billion rupiah) must appoint 1 (one) Executive Officer to execute the internal audit function, who is independent of operational functions.

Article 80

(1) The internal audit work unit or Executive Officer executing the internal audit function has the duty and responsibility at minimum:
a. formulating and implementing the annual audit program plan; b. assisting the President Director and Board of Commissioners in supervising the operational activities of BPRs and Sharia BPRs, particularly in monitoring audit results;
c. conducting analyses and assessments in the fields of finance, accounting, operations, and other activities; and
d. providing improvement suggestions and objective information about inspected activities at all management levels.

(2) The Financial Services Authority may request BPRs and Sharia BPRs to present the annual audit program plan and implementation as referred to in paragraph (1) letter a.

Article 81
BPRs and Sharia BPRs must have internal audit guidelines and working procedures containing at minimum:
a. duties, responsibilities, and authority;

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b. requirements and code of ethics for internal auditors; and
c. coordination mechanisms and accountability for internal audit results.

Article 82

(1) The internal audit work unit or Executive Officer executing the internal audit function is directly responsible to the President Director.

(2) The Head of the internal audit work unit or Executive Officer executing the internal audit function is appointed and dismissed by the President Director, considering the opinion of the Board of Commissioners.

(3) For Sharia BPRs, the internal audit work unit and Executive Officer executing the internal audit function must consider input from the Sharia Supervisory Board regarding the implementation of the fulfillment of Sharia principles.

Article 83

(1) BPRs and Sharia BPRs must submit reports on the appointment or dismissal of the Head of the internal audit work unit or Executive Officer executing the internal audit function, following procedures in accordance with Financial Services Authority Regulations regarding BPRs and Sharia BPRs.

(2) BPRs and Sharia BPRs must formulate and submit reports on the implementation of the internal audit function, consisting of:
a. reports on the implementation and main results of internal audits, which are part of the corporate governance implementation report; and b. special reports regarding any internal audit findings estimated to endanger the continuity of business for BPRs and Sharia BPRs, submitted online through the Financial Services Authority reporting system at the latest 10 (ten) working days since the audit finding was known.

(3) The report as referred to in paragraph (2) letter b must be signed by the President Director and the Main Commissioner.

(4) In the event that the online Financial Services Authority reporting system is not yet available, BPRs and Sharia BPRs must submit the report as referred to in paragraph (2) letter b to the Financial Services Authority offline within the time limit as referred to in paragraph (2) letter b.

Article 84

(1) BPRs and Sharia BPRs with core capital of at least IDR 50,000,000,000.00 (fifty billion rupiah) must formulate reports on external review results containing opinions on the work results of the internal audit work unit and its compliance with the standards for implementing the internal audit function of BPRs and Sharia BPRs, as well as improvements that can be made, at least 1 (one) time within 3 (three) years after the external review results are received by the BPR and Sharia BPR.

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(2) The report referred to in paragraph (1) must be submitted online through the Financial Services Authority's reporting system no later than 1 (one) month after the results of the external review are received by the BPR and Sharia BPR. (3) In the event that the Financial Services Authority's online reporting system is not yet available, BPRs and Sharia BPRs must submit the report referred to in paragraph (1) to the Financial Services Authority offline within the time limit referred to in paragraph (2).

Article 85
(1) BPRs and Sharia BPRs that violate the provisions as referred to in Article 79, Article 81, and/or Article 84 paragraph (1) shall be subject to administrative sanctions in the form of a written warning.
(2) In the event that BPRs and Sharia BPRs have been subject to administrative sanctions as referred to in paragraph (1) and continue to violate the provisions as referred to in Article 79, Article 81, and/or Article 84 paragraph (1), BPRs and Sharia BPRs shall be subject to administrative sanctions in the form of:
a. a downgrade in health level; b. temporary suspension of part of the BPR and Sharia BPR's operational activities; and/or
c. a prohibition on expanding business activities.
(3) In the event that BPRs and Sharia BPRs have been subject to administrative sanctions as referred to in paragraph (1) and/or paragraph (2), the principal parties of BPRs and Sharia BPRs may be subject to administrative sanctions in the form of a prohibition from acting as principal parties in accordance with the Financial Services Authority Regulation regarding the re-evaluation of principal parties of financial service institutions. (4) BPRs or Sharia BPRs that do not meet the provisions as referred to in Article 83 paragraph (1) shall be subject to administrative sanctions in accordance with the Financial Services Authority Regulation regarding BPRs and Sharia BPRs. (5) In addition to the administrative sanctions as referred to in paragraph (1), paragraph (2), paragraph (3), and/or paragraph (4), BPRs, Sharia BPRs, and/or controlling shareholders may be subject to administrative sanctions in the form of fines of at least IDR 10,000,000.00 (ten million rupiah) and at most IDR 100,000,000.00 (one hundred million rupiah) for each violation committed. (6) BPRs or Sharia BPRs that do not meet the provisions as referred to in Article 83 paragraph (2) and/or Article 84 paragraph (2) shall be subject to administrative sanctions in accordance with the Financial Services Authority Regulation regarding the reporting of rural credit banks and Sharia rural financing banks through the Financial Services Authority's reporting system. (7) BPRs or Sharia BPRs that are late in submitting reports as referred to in Article 83 paragraph (4) and/or Article 84 paragraph (3) shall be subject to administrative sanctions in the form of a fine of IDR 100,000.00 (one hundred thousand rupiah) per working day and at most IDR 5,000,000.00 (five million rupiah). https://jdih.ojk.go.id/

(8) The imposition of administrative sanctions as referred to in paragraph (7) does not eliminate the obligation to submit reports for BPRs or Sharia BPRs that have not yet submitted the aforementioned reports.

CHAPTER X
EXTERNAL AUDIT FUNCTIONS

Article 86
(1) In providing transparent and quality financial information, BPRs and Sharia BPRs utilize the services of external audits by public accountants and/or public accounting firms.
(2) The use and appointment of public accountants and/or public accounting firms in BPRs and Sharia BPRs as referred to in paragraph (1) must meet the provisions of the Financial Services Authority Regulation regarding the use of public accountants and public accounting firms in financial service activities. (3) Violations of the provisions as referred to in paragraph (2) shall be subject to administrative sanctions in accordance with the Financial Services Authority Regulation regarding the use of public accountants and public accounting firms in financial service activities. (4) In addition to the administrative sanctions as referred to in paragraph (3), BPRs, Sharia BPRs, and/or controlling shareholders may be subject to administrative sanctions in the form of fines of at least IDR 10,000,000.00 (ten million rupiah) and at most IDR 100,000,000.00 (one hundred million rupiah) for each violation committed.

CHAPTER XI
IMPLEMENTATION OF RISK MANAGEMENT AND ANTI-FRAUD STRATEGY

First Section
Implementation of Risk Management

Article 87
BPRs and Sharia BPRs must implement risk management effectively, adjusted to the objectives, business policies, size, and complexity of the business, as well as the capabilities of BPRs and Sharia BPRs, guided by the requirements and procedures in accordance with the Financial Services Authority Regulation regarding the implementation of risk management for rural credit banks and the Financial Services Authority Regulation regarding the implementation of risk management for Sharia rural financing banks.

Article 88
BPRs and Sharia BPRs implement integrated governance, risk management, and compliance supported by necessary policies or procedures. https://jdih.ojk.go.id/

Article 89
(1) BPRs and Sharia BPRs must implement anti-money laundering, counter-terrorist financing, and counter-proliferation financing of weapons of mass destruction programs in carrying out business activities, in accordance with the Financial Services Authority Regulation regarding the implementation of anti-money laundering, counter-terrorist financing, and counter-proliferation financing of weapons of mass destruction programs in the financial service sector. (2) The implementation of anti-money laundering, counter-terrorist financing, and counter-proliferation financing of weapons of mass destruction programs as referred to in paragraph (1) includes prevention and handling to ensure that the business activities of BPRs and Sharia BPRs are not utilized in activities related to criminal offenses in accordance with the provisions of laws and regulations regarding the prevention and eradication of money laundering criminal offenses.

Second Section
Anti-Fraud Strategy

Article 90
(1) BPRs and Sharia BPRs implement effective anti-fraud strategies covering prevention, detection, investigation, reporting, and sanctions, as well as monitoring, evaluation, and follow-up, guided by the Financial Services Authority Regulation regarding the implementation of anti-fraud strategies applicable to BPRs and Sharia BPRs. (2) Work units or functions implementing anti-fraud strategies carry out tasks and responsibilities in the implementation of anti-fraud strategies. (3) In the implementation of anti-fraud strategies, members of the Board of Directors and/or members of the Board of Commissioners ensure the implementation of anti-fraud strategies and conduct periodic evaluations of anti-fraud strategy policies. (4) BPRs and Sharia BPRs prepare and submit reports on the implementation of anti-fraud strategies and reports on significant fraud incidents.

Third Section
Administrative Sanctions

Article 91
(1) BPRs or Sharia BPRs that do not meet the provisions as referred to in Article 87 shall be subject to administrative sanctions in accordance with the Financial Services Authority Regulation regarding the implementation of risk management for rural credit banks and the Financial Services Authority Regulation regarding the implementation of risk management for Sharia rural financing banks. (2) BPRs or Sharia BPRs that do not meet the provisions as referred to in Article 89 paragraph (1) shall be subject to administrative sanctions in accordance with the Financial Services Authority Regulation regarding the implementation of anti-money laundering, counter-terrorist financing, and counter-proliferation financing of weapons of mass destruction programs in the financial service sector. https://jdih.ojk.go.id/

(3) Violations of the provisions on the implementation of anti-fraud strategies as referred to in Article 90 shall be subject to administrative sanctions in accordance with the Financial Services Authority Regulation regarding the implementation of anti-fraud strategies applicable to BPRs and Sharia BPRs. (4) In addition to the administrative sanctions as referred to in paragraph (1), paragraph (2), and/or paragraph (3), BPRs, Sharia BPRs, and/or controlling shareholders may be subject to administrative sanctions in the form of fines of at least IDR 10,000,000.00 (ten million rupiah) and at most IDR 100,000,000.00 (one hundred million rupiah) for each violation committed.

CHAPTER XII
MAXIMUM CREDIT LIMITS AND MAXIMUM FUND DISBURSEMENT LIMITS

Article 92
(1) BPRs and Sharia BPRs must apply prudent principles in providing funds, guided by the Financial Services Authority Regulation regarding maximum credit limits for rural credit banks and maximum fund disbursement limits for Sharia rural financing banks. (2) BPRs or Sharia BPRs that do not meet the provisions as referred to in paragraph (1) shall be subject to administrative sanctions in accordance with the Financial Services Authority Regulation regarding maximum credit limits for rural credit banks and maximum fund disbursement limits for Sharia rural financing banks. (3) In addition to the administrative sanctions as referred to in paragraph (2), BPRs, Sharia BPRs, and/or controlling shareholders may be subject to administrative sanctions in the form of fines of at least IDR 10,000,000.00 (ten million rupiah) and at most IDR 100,000,000.00 (one hundred million rupiah) for each violation committed.

CHAPTER XIII
REPORTING INTEGRITY AND INFORMATION TECHNOLOGY SYSTEMS

Article 93
(1) BPRs and Sharia BPRs must implement transparency of financial and non-financial conditions to stakeholders by preparing and presenting reports with procedures, types, and scope in accordance with the Financial Services Authority Regulation regarding the transparency of financial conditions of rural credit banks and the Financial Services Authority Regulation regarding the transparency of financial conditions of Sharia rural financing banks. (2) BPRs and Sharia BPRs must implement transparency of information regarding products and the use of consumer and/or customer data of BPRs and Sharia BPRs, guided by:
a. the Financial Services Authority Regulation regarding the provision of rural credit bank and Sharia rural financing bank products; and b. the Financial Services Authority Regulation regarding consumer and community protection in the financial service sector. (3) BPRs and Sharia BPRs must prepare and submit reports that meet the principles of completeness, accuracy, timeliness, and integrity, with reporting procedures in accordance with the Financial Services Authority Regulation regarding the reporting of rural credit banks and Sharia rural financing banks through the Financial Services Authority's reporting system.

Article 94
BPRs and Sharia BPRs must prepare and publish sustainability reports adequately in accordance with the Financial Services Authority Regulation regarding the implementation of sustainable finance for financial service institutions, issuers, and public companies.

Article 95
BPRs and Sharia BPRs must ensure the availability and adequacy of internal reporting supported by adequate management information systems to improve the quality of decision-making processes by the Board of Directors and the quality of supervision processes by the Board of Commissioners.

Article 96
BPRs and Sharia BPRs are prohibited from taking actions intended to exploit loopholes in provisions or business ethics that are not in accordance with the principles of healthy BPR and Sharia BPR management, which can increase risks for BPRs and Sharia BPRs, and/or provide unfair benefits.

Article 97
(1) In the use and utilization of information technology, BPRs and Sharia BPRs consider the principles of governance and risk management implementation.
(2) Provisions regarding the use and utilization of information technology by BPRs and Sharia BPRs are established by the Financial Services Authority.

Article 98
(1) BPRs or Sharia BPRs that do not meet the provisions as referred to in Article 93 paragraph (1) shall be subject to administrative sanctions in accordance with the Financial Services Authority Regulation regarding the transparency of financial conditions of rural credit banks and the Financial Services Authority Regulation regarding the transparency of financial conditions of Sharia rural financing banks. (2) BPRs or Sharia BPRs that do not meet the provisions as referred to in Article 93 paragraph (2) shall be subject to administrative sanctions in accordance with the Financial Services Authority Regulation regarding the provision of rural credit bank and Sharia rural financing bank products and/or the Financial Services Authority Regulation regarding consumer and community protection in the financial service sector. https://jdih.ojk.go.id/

(3) BPRs or Sharia BPRs that do not meet the provisions as referred to in Article 93 paragraph (3) shall be subject to administrative sanctions in accordance with the Financial Services Authority Regulation regarding the reporting of rural credit banks and Sharia rural financing banks through the Financial Services Authority's reporting system. (4) BPRs or Sharia BPRs that do not meet the provisions as referred to in Article 94 shall be subject to administrative sanctions in accordance with the Financial Services Authority Regulation regarding the implementation of sustainable finance for financial service institutions, issuers, and public companies. (5) BPRs and Sharia BPRs that violate the provisions as referred to in Article 95 and/or Article 96 shall be subject to administrative sanctions in the form of a written warning. (6) In the event that BPRs and Sharia BPRs have been subject to administrative sanctions as referred to in paragraph (5) and continue to violate the provisions as referred to in Article 95 and/or Article 96, BPRs and Sharia BPRs shall be subject to administrative sanctions in the form of:
a. a downgrade in health level; b. temporary suspension of part of the BPR and Sharia BPR's operational activities; and/or
c. a prohibition on expanding business activities.
(7) In the event that BPRs and Sharia BPRs have been subject to administrative sanctions as referred to in paragraph (5) and/or paragraph (6), the principal parties of BPRs and Sharia BPRs may be subject to administrative sanctions in the form of a prohibition from acting as principal parties in accordance with the Financial Services Authority Regulation regarding the re-evaluation of principal parties of financial service institutions. (8) In addition to the administrative sanctions as referred to in paragraph (1), paragraph (2), paragraph (3), paragraph (4), paragraph (5), paragraph (6), and/or paragraph (7), BPRs, Sharia BPRs, and/or controlling shareholders may be subject to administrative sanctions in the form of fines of at least IDR 10,000,000.00 (ten million rupiah) and at most IDR 100,000,000.00 (one hundred million rupiah) for each violation committed.

CHAPTER XIV
BUSINESS PLANS

Article 99
(1) BPRs and Sharia BPRs must prepare business plans with procedures and scope in accordance with the Financial Services Authority Regulation regarding business plans for rural credit banks and Sharia rural financing banks. https://jdih.ojk.go.id/

(2) BPRs and Sharia BPRs prepare strategic plans to support the continuity of BPR and Sharia BPR business activities in the business plans of BPRs and Sharia BPRs.

Article 100
(1) BPRs and Sharia BPRs must implement sustainable finance and prepare sustainable finance action plans in accordance with the Financial Services Authority Regulation regarding the implementation of sustainable finance for financial service institutions, issuers, and public companies. (2) BPRs and Sharia BPRs implement business practices by applying environmental, social, and governance values to support a sustainable business ecosystem, product development, and managing financial risks resulting from climate risks.

Article 101
(1) BPRs or Sharia BPRs that do not meet the provisions as referred to in Article 99 paragraph (1) shall be subject to administrative sanctions in accordance with the Financial Services Authority Regulation regarding business plans for rural credit banks and Sharia rural financing banks. (2) BPRs or Sharia BPRs that do not meet the provisions as referred to in Article 100 paragraph (1) shall be subject to administrative sanctions in accordance with the Financial Services Authority Regulation regarding the implementation of sustainable finance for financial service institutions, issuers, and public companies. (3) In addition to the administrative sanctions as referred to in paragraph (1) and/or paragraph (2), BPRs, Sharia BPRs, and/or controlling shareholders may be subject to administrative sanctions in the form of fines of at least IDR 10,000,000.00 (ten million rupiah) and at most IDR 100,000,000.00 (one hundred million rupiah) for each violation committed.

CHAPTER XV
TRANSPARENCY OF GOVERNANCE IMPLEMENTATION REPORTS AND ASSESSMENT OF GOVERNANCE IMPLEMENTATION

First Section
Transparency of Governance Implementation Reports

Article 102
(1) BPRs and Sharia BPRs must prepare transparency of governance implementation reports at the end of each fiscal year containing at least:
a. a summary of the results of self-assessments on the implementation of BPR and Sharia BPR governance; b. share ownership, financial relationships, and/or family relationships of Board of Directors members as referred to in Article 31 letter a and letter b;
c. share ownership, financial relationships, and/or family relationships of Board of Commissioners members as referred to in Article 53 letter a and letter b;
d. remuneration packages or policies and facilities for the Board of Directors and Board of Commissioners as referred to in Article 31 letter c and Article 53 letter c; e. the ratio of the highest salary to the lowest salary; f. the frequency of Board of Commissioners meetings as referred to in Article 50 paragraph (1); g. the number of internal deviations that occurred and the resolution efforts by BPRs and Sharia BPRs; h. the number of legal issues and the resolution efforts by BPRs and Sharia BPRs;
i. transactions containing conflicts of interest; and
j. the provision of funds for social activities and other activities, both nominal amounts and fund recipients.
(2) Remuneration packages or policies and facilities for the Board of Directors and Board of Commissioners as referred to in paragraph (1) letter d disclose at least the number of Board of Directors members, the number of Board of Commissioners members, and the total amount of salaries, allowances, bonuses, stock-based compensation, other forms of remuneration, and facilities determined based on the General Meeting of Shareholders decision. (3) The reports as referred to in paragraph (1) must be submitted to at least:
a. the Financial Services Authority online through the Financial Services Authority's reporting system; b. controlling shareholders;
c. BPR associations for BPRs or Sharia BPR associations for Sharia BPRs in Indonesia; and
d. stakeholders through the websites of BPRs and Sharia BPRs, no later than April 30 for reports with a position date of December 31.
(4) In the event that the Financial Services Authority's online reporting system is not yet available, BPRs and Sharia BPRs must submit the reports as referred to in paragraph (1) to the Financial Services Authority offline within the time limit as referred to in paragraph (3).

Second Section
Governance Implementation Reports

Article 103
(1) BPRs and Sharia BPRs must prepare governance implementation reports containing at least:
a. the results of self-assessments on the implementation of BPR and Sharia BPR governance, including the scope as referred to in Article 2 paragraph (3); b. the main tasks of Board of Directors members who oversee the compliance function as referred to in Article 76 paragraph (1) letter a; and
c. the implementation and main results of internal audits as referred to in Article 83 paragraph (2) letter a.
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(2) The reports as referred to in paragraph (1) must be submitted semi-annually no later than January 31 for reports with a position date of December 31 and July 31 for reports with a position date of June 30, online through the Financial Services Authority's reporting system. (3) In the event that the Financial Services Authority's online reporting system is not yet available, BPRs and Sharia BPRs must submit the reports as referred to in paragraph (1) to the Financial Services Authority offline within the time limit as referred to in paragraph (2). (4) Provisions regarding self-assessments on the implementation of governance as referred to in paragraph (1) letter a are established by the Financial Services Authority. (5) The reports as referred to in paragraph (1) are signed by the President Director and the President Commissioner. (6) In the event that there are no President Directors and President Commissioners as referred to in paragraph (5), the reports are signed by one member of the Board of Directors and one member of the Board of Commissioners of BPRs and Sharia BPRs. (7) The main tasks of Board of Directors members who oversee the compliance function as referred to in paragraph (1) letter b are prepared and signed by the Board of Directors member overseeing the compliance function. (8) In the event that there is no Board of Directors member overseeing the compliance function, the main tasks of Board of Directors members who oversee the compliance function as referred to in paragraph (1) letter b are prepared and signed by one member of the Board of Directors of BPRs and Sharia BPRs.

Third Section
Assessment of Governance Implementation

Article 104
(1) In assessing the implementation of Good Governance in BPRs and Sharia BPRs, the Financial Services Authority conducts assessments or evaluations of the results of self-assessments by BPRs and Sharia BPRs on the implementation of governance as referred to in Article 103 paragraph (1) letter a. (2) Based on the assessments or evaluations by the Financial Services Authority as referred to in paragraph (1), the Financial Services Authority may request BPRs and Sharia BPRs to submit action plans containing improvement steps that must be implemented by BPRs and Sharia BPRs, accompanied by specific time targets. (3) In necessary cases, the Financial Services Authority may:
a. request BPRs and Sharia BPRs to adjust the action plans as referred to in paragraph (2); and/or b. conduct special examinations of the governance implementation improvements already carried out by BPRs and Sharia BPRs. (4) BPRs and Sharia BPRs must follow up on requests for adjustment of action plans as referred to in paragraph (3) letter a and the results of special examinations regarding BPR and Sharia BPR improvements that still require improvement as referred to in paragraph (3) letter b.

Fourth Section
Administrative Sanctions

Article 105
(1) BPRs and Sharia BPRs that violate the provisions as referred to in Article 102 paragraph (1), Article 103 paragraph (1), and/or Article 104 paragraph (4) shall be subject to administrative sanctions in the form of a written warning. (2) In the event that BPRs and Sharia BPRs have been subject to administrative sanctions as referred to in paragraph (1) and continue to violate the provisions as referred to in Article 102 paragraph (1), Article 103 paragraph (1), and/or Article 104 paragraph (4), BPRs and Sharia BPRs shall be subject to administrative sanctions in the form of:
a. a downgrade in health level; b. temporary suspension of part of the BPR and Sharia BPR's operational activities; and/or
c. a prohibition on expanding business activities.
(3) In the event that BPRs and Sharia BPRs have been subject to administrative sanctions as referred to in paragraph (1) and/or paragraph (2), the principal parties of BPRs and Sharia BPRs may be subject to administrative sanctions in the form of a prohibition from acting as principal parties in accordance with the Financial Services Authority Regulation regarding the re-evaluation of principal parties of financial service institutions. (4) In addition to the administrative sanctions as referred to in paragraph (1), paragraph (2), and/or paragraph (3), BPRs, Sharia BPRs, and/or controlling shareholders may be subject to administrative sanctions in the form of fines of at least IDR 10,000,000.00 (ten million rupiah) and at most IDR 100,000,000.00 (one hundred million rupiah) for each violation committed. (5) BPRs or Sharia BPRs that are late in submitting reports as referred to in Article 102 paragraph (4) and/or Article 103 paragraph (3) shall be subject to administrative sanctions in the form of a fine of IDR 100,000.00 (one hundred thousand rupiah) per working day and at most IDR 5,000,000.00 (five million rupiah). (6) The imposition of administrative sanctions as referred to in paragraph (5) does not eliminate the obligation to submit reports for BPRs or Sharia BPRs that have not yet submitted the aforementioned reports. (7) BPRs or Sharia BPRs that violate the provisions as referred to in Article 102 paragraph (3) and/or Article 103 paragraph (2) shall be subject to administrative sanctions in accordance with the Financial Services Authority Regulation regarding the reporting of rural credit banks and Sharia rural financing banks through the Financial Services Authority's reporting system. https://jdih.ojk.go.id/

CHAPTER XVI
ADJUSTMENT OF GOVERNANCE IMPLEMENTATION
Article 106
(1) BPR and Sharia BPR that, based on monthly reports, experience an increase in core capital to at least IDR 50,000,000,000.00 (fifty billion rupiah) are required to comply with the provisions based on the new core capital as referred to in Article 10 paragraph (1), Article 22 paragraph (1) letter a, Article 34 paragraph (1), Article 42 paragraph (1), Article 59 paragraph (1), Article 72 paragraph (3), Article 73 paragraph (1), Article 79 paragraph (2), and/or Article 84 paragraph (1), at the latest 1 (one) year after the BPR and Sharia BPR meet the new core capital requirements. (2) BPR and Sharia BPR that, based on monthly reports, experience a decrease in core capital resulting in a change in compliance with the provisions of this Financial Services Authority Regulation shall continue to comply with the provisions based on the core capital prior to the occurrence of the core capital decrease as referred to in this Financial Services Authority Regulation. (3) The Financial Services Authority has the authority to establish different timeframes from the regulations as referred to in paragraph (1). (4) Members of the Board of Commissioners on BPR and Sharia BPR that experience an increase in core capital to at least IDR 50,000,000,000.00 (fifty billion rupiah) who are proposed as Independent Commissioners on the same BPR and Sharia BPR are not required to undergo a waiting period and competency and propriety assessment, provided they meet the requirements as Independent Commissioners.

Article 107
(1) BPR and Sharia BPR that violate the provisions as referred to in Article 106 paragraph (1) shall be subject to administrative sanctions in the form of a written reprimand.
(2) In the event that BPR and Sharia BPR have been subject to administrative sanctions as referred to in paragraph (1) and continue to violate the provisions as referred to in Article 106 paragraph (1), BPR and Sharia BPR shall be subject to administrative sanctions in the form of:
a. downgrade of health level; b. temporary suspension of some operational activities of BPR and Sharia BPR; and/or
c. prohibition on expanding business activities.
(3) In the event that BPR and Sharia BPR have been subject to administrative sanctions as referred to in paragraph (1) and/or paragraph (2), the principal parties of BPR and Sharia BPR may be subject to administrative sanctions in the form of prohibition as principal parties in accordance with the Financial Services Authority Regulation regarding re-evaluation of principal parties of financial service institutions. (4) In addition to the administrative sanctions as referred to in paragraph (1), paragraph (2), and/or paragraph (3), BPR, Sharia BPR, and/or controlling shareholders may be subject to administrative sanctions in the form of fines of at least IDR 10,000,000.00 (ten million rupiah) and at most IDR 100,000,000.00 (one hundred million rupiah) for each violation committed. https://jdih.ojk.go.id/

CHAPTER XVII
OTHER PROVISIONS
Article 108
(1) The appointment of members of the Board of Directors and/or members of the Board of Commissioners who come from employees or officials at institutions that perform regulatory and/or supervisory functions for BPR and Sharia BPR and/or other financial service institutions is conducted after the respective individual has effectively ceased to be an employee or official and has undergone a waiting period of at least 6 (six) months. (2) In the event there is a conflict of interest or potential conflict of interest from employees or officials who are candidates for members of the Board of Directors and/or members of the Board of Commissioners as referred to in paragraph (1) in connection with the candidacy of the respective individual at BPR and Sharia BPR, the respective candidate must disclose the conflict of interest in the competency and propriety assessment process. (3) In the event that, based on the assessment of the Financial Services Authority, there is a conflict of interest or potential conflict of interest from employees or officials who are candidates for members of the Board of Directors and/or candidates for members of the Board of Commissioners as referred to in paragraph (1) in connection with the candidacy of the respective individual at BPR and Sharia BPR, the Financial Services Authority has the authority to establish necessary supervisory actions.

Article 109
The Financial Services Authority has the authority to establish written orders against parties who violate the implementation of governance and cause financial losses to BPR and Sharia BPR to return the losses to BPR and Sharia BPR.

CHAPTER XVIII
TRANSITIONAL PROVISIONS
Article 110
At the time this Financial Services Authority Regulation takes effect, BPR and Sharia BPR that have not yet met the provisions of Article 7 paragraph (1), paragraph (2), Article 11 paragraph (1), Article 23 paragraph (1), Article 35 paragraph (1), Article 42 paragraph (1), Article 46 paragraph (1), paragraph (2), paragraph (4), and/or Article 59 paragraph (1) are given a timeframe to meet the provisions at the latest by December 31, 2025.

Article 111
BPR and Sharia BPR that, at the time this Financial Services Authority Regulation takes effect, have core capital of at least IDR 50,000,000,000.00 (fifty billion rupiah) may propose Members of the Board of Commissioners other than Independent Commissioners as Independent Commissioners on the same BPR and Sharia BPR to meet the provisions as referred to in Article 42 paragraph (1), without undergoing a waiting period and competency and propriety assessment, provided they meet the requirements as Independent Commissioners based on the consideration of the Financial Services Authority. https://jdih.ojk.go.id/

Article 112
Requirements regarding Independent Commissioners in accordance with this Financial Services Authority Regulation are exempted from the competency and propriety assessment for candidates for Independent Commissioners who have been submitted to the Financial Services Authority prior to the effectiveness of this Financial Services Authority Regulation.

Article 113
The report on the implementation of governance as referred to in Article 103 paragraph (1) is submitted for the first time for the end of month position in December 2024.

CHAPTER XIX
CLOSING PROVISIONS
Article 114
At the time this Financial Services Authority Regulation takes effect:
a. Financial Services Authority Regulation Number 24/POJK.03/2018 regarding the Implementation of Governance for Sharia Financing Banks (State Gazette of the Republic of Indonesia Year 2018 Number 228, Supplement to the State Gazette of the Republic of Indonesia Number 6266); b. implementation provisions of Financial Services Authority Regulation Number 4/POJK.03/2015 regarding the Implementation of Governance for Rural Banks (State Gazette of the Republic of Indonesia Year 2015 Number 72, Supplement to the State Gazette of the Republic of Indonesia Number 5685); and
c. implementation provisions of Financial Services Authority Regulation Number 24/POJK.03/2018 regarding the Implementation of Governance for Sharia Financing Banks (State Gazette of the Republic of Indonesia Year 2018 Number 228, Supplement to the State Gazette of the Republic of Indonesia Number 6266),
are declared to remain in effect insofar as they do not conflict with the provisions in this Financial Services Authority Regulation.

Article 115
At the time this Financial Services Authority Regulation takes effect:
a. Financial Services Authority Regulation Number 4/POJK.03/2015 regarding the Implementation of Governance for Rural Banks (State Gazette of the Republic of Indonesia Year 2015 Number 72, Supplement to the State Gazette of the Republic of Indonesia Number 5685); and b. Article 12 of Financial Services Authority Regulation Number 3/POJK.03/2022 regarding the Assessment of Health Levels of Rural Banks and Sharia Financing Banks (State Gazette of the Republic of Indonesia Year 2022 Number 58, Supplement to the State Gazette of the Republic of Indonesia Number 6773), are repealed and declared invalid.

Article 116
This Financial Services Authority Regulation takes effect on the date of its promulgation. https://jdih.ojk.go.id/

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

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

Established in Jakarta on June 14, 2024
CHAIRMAN OF THE COMMISSIONERS BOARD
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA,
MAHENDRA SIREGAR

Promulgated in Jakarta on July 1, 2024
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA,
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2024 NUMBER 13/OJK ttd https://jdih.ojk.go.id/

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 9 OF 2024
REGARDING
THE IMPLEMENTATION OF GOVERNANCE FOR RURAL BANKS AND SHARIA RURAL BANKS

I. GENERAL
The strengthening of governance implementation is important for BPR and Sharia BPR to face various internal and external challenges that are increasingly complex in order to improve the competitiveness of BPR and Sharia BPR. Good Corporate Governance on BPR and Sharia BPR will have a positive impact on the performance of BPR and Sharia BPR, so that the strengthening of the implementation of Good Corporate Governance on BPR and Sharia BPR can drive the stable and sustainable growth of BPR and Sharia BPR. The strengthening of governance implementation on BPR and Sharia BPR is also necessary in line with the development of product innovations and information technology that increase risks on BPR and Sharia BPR. Experience shows that failures in the implementation of Good Corporate Governance on BPR and Sharia BPR are often one of the main causes of the failure of BPR and Sharia BPR to survive in business competition, which ultimately can impact the sustainability of the business of BPR and Sharia BPR and lead to the revocation of business licenses. Thus, the implementation of Good Corporate Governance on BPR and Sharia BPR in the conduct of business activities at all levels or organizational tiers is important for BPR and Sharia BPR to pay attention to. This is manifested in aspects such as shareholders, the implementation of duties by the Board of Directors, Board of Commissioners and committees, the implementation of compliance functions, internal audit functions, external audit functions, and risk management and anti-fraud, handling conflicts of interest, integrity of reporting and information technology systems, and the business plans of BPR and Sharia BPR. In relation to this and to implement the provisions of Article 20B of Law Number 7 of 1992 concerning Banking as amended several times, lastly with Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector and Article 34 of Law Number 21 of 2008 concerning Sharia Banking as amended with Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector, it is necessary to update regulations regarding the Implementation of Governance for BPR and Sharia BPR.

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

Article 2
Paragraph (1)
What is meant by "business activities" is business activities as referred to in the Law regarding the development and strengthening of the financial sector.
In conducting business activities, BPR and Sharia BPR pay attention to, among others, Financial Services Authority Regulations regarding the conduct of BPR and Sharia BPR products and Financial Services Authority Regulations regarding consumer and community protection in the financial service sector.

Paragraph (2)
Letter a
Transparency covers openness in the decision-making process as well as openness in the disclosure and provision of relevant and easily accessible information to stakeholders.

Letter b
Accountability covers clarity of functions and the implementation of accountability.

Letter c
Responsibility covers the suitability of management with regulatory provisions and ethical values as well as standards, principles, and practices.

Letter d
Independency covers a state managed independently and professionally and free from conflicts of interest and influence or pressure from any party that is not in accordance with regulatory provisions and ethical values as well as standards, principles, and practices.

Letter e
Fairness covers equality, balance, and justice in fulfilling the rights of stakeholders arising from agreements, regulatory provisions, and ethical values as well as standards, principles, and practices.

Paragraph (3)
Letter a
It is clear enough.

Letter b
The implementation of duties, responsibilities, and authorities of the Board of Directors is in accordance with, among others, the Articles of Association of BPR and Sharia BPR and regulatory provisions.

Letter c
The implementation of duties, responsibilities, and authorities of the Board of Commissioners is in accordance with, among others, the Articles of Association of BPR and Sharia BPR and regulatory provisions.

Letter d
The implementation of committee duties is, among others, intended to facilitate the smooth implementation of duties by the Board of Directors and/or Board of Commissioners. For BPR and Sharia BPR that are not required to form committees, the committee functions are carried out by members of the Board of Directors and/or members of the Board of Commissioners.

Letter e
What is meant by "conflict of interest" is the difference between the economic interests of BPR and Sharia BPR and the personal economic interests of shareholders, members of the Board of Directors, members of the Board of Commissioners, members of the Sharia Supervisory Board, Executive Officials, employees of BPR and Sharia BPR, and/or related parties to BPR and Sharia BPR.

Letter f
It is clear enough.

Letter g
It is clear enough.

Letter h
It is clear enough.

Letter i
It is clear enough.

Letter j
It is clear enough.

Letter k
It is clear enough.

Letter l
It is clear enough.

Paragraph (4)
It is clear enough.

Article 3
Internal procedures of BPR and Sharia BPR include, among others, decrees, manuals, policies or bank guidelines (standard operating procedure), corporate charters, other operational documents of BPR and Sharia BPR, which are prepared in accordance with regulatory provisions and in accordance with business processes and approval mechanisms at BPR and Sharia BPR.

Article 4
It is clear enough.

Article 5
It is clear enough.

Article 6
Letter a
Communication of vision and mission includes, among others, through meetings, General Meeting of Shareholders (GMS), and/or other forms.

Letter b
Support for the development of other BPR and Sharia BPR includes, among others, in the form of business synergy between BPR and Sharia BPR with other companies owned by shareholders and strengthening capital through mergers.

Letter c
What is meant by "avoiding conflicts of interest and/or intervention" is anticipating or taking a proactive stance to prevent the occurrence of transactions or cooperation that ignore the principles or basic values of governance implementation for BPR and Sharia BPR, including transactions or cooperation related to the provision of credit facilities, implementation of write-offs, procurement of goods and services, and the use of social and environmental responsibility funds (if any).

Example:

The controlling shareholder of PT BPR XYZ instructs the Board of Directors of the respective BPR to approve a credit facility application for a company owned by a sibling of the controlling shareholder who is engaged in the production of alcoholic beverages, even though it was known from the beginning that the business field is not a field of expertise owned by the BPR and has been listed in the written credit policy as a business field of prospective debtors that must be avoided.
The shareholder of PT BPR PQR refers his sibling to obtain a special rate for the planned placement of customer deposits at PT BPR PQR. The President Director of PT BPR PQR approves the special rate application even though it is known that it does not meet the requirements and deposit mobilization policy of PT BPR PQR.

Article 7
Paragraph (1)
It is clear enough.

Paragraph (2)
Procedures regarding the method of using profits and dividend distribution aim to ensure that the management of shareholder rights in the implementation of dividend distribution is in accordance with Good Corporate Governance on BPR and Sharia BPR and in accordance with regulatory provisions, while still paying attention to the interests of BPR and Sharia BPR.

Letter a
Regulatory provisions include, among others, laws regarding limited liability companies.

Letter b
Regulatory provisions include, among others, Financial Services Authority Regulations regarding the obligation to provide minimum capital and meet minimum core capital for rural banks and Financial Services Authority Regulations regarding the obligation to provide minimum capital and meet minimum core capital for Sharia financing banks.

Letter c
External considerations include, among others, fairness with peers and compliance with regulatory provisions such as tax provisions. Internal considerations include, among others, business growth plans, financial conditions and health levels, and capital needs including for meeting the minimum core capital of BPR and Sharia BPR. The amount of dividends given includes the dividend payout ratio.

Paragraph (3)
What is meant by "capital needs" includes meeting the minimum core capital.
What is meant by "evaluating the use of profits and dividend distribution" is evaluating decisions on the use of profits and dividend distribution, including, among others, postponing, canceling, and/or withdrawing the distribution of dividends, tantiems, and bonuses that impact the profits of BPR and Sharia BPR.

Paragraph (4)
It is clear enough.

Paragraph (5)
It is clear enough.

Article 8
Shareholder rights include, among others, obtaining:
a. reports on the financial condition of BPR and Sharia BPR in a timely manner; b. resolution if shareholders disagree with the activities and corporate actions of BPR and Sharia BPR; and
c. dividends based on GMS decisions in accordance with regulatory provisions.

Article 9
It is clear enough.

Article 10
Paragraph (1)
What is meant by "core capital" is core capital in accordance with Financial Services Authority Regulations regarding the obligation to provide minimum capital and meet minimum core capital for rural banks and Financial Services Authority Regulations regarding the obligation to provide minimum capital and meet minimum core capital for Sharia financing banks.

Paragraph (2)
It is clear enough.

Paragraph (3)
The authority of the Financial Services Authority to establish a larger number of Board of Directors members includes, among others, considering problems, business scale, and/or the complexity of BPR and Sharia BPR.

Article 11
Paragraph (1)
Regulatory provisions include, among others, laws regarding limited liability companies.

Paragraph (2)
It is clear enough.

Paragraph (3)
It is clear enough.

Article 12
Paragraph (1)
The dismissal of Board of Directors members includes the temporary dismissal of Board of Directors members.
The restriction of authority of temporarily dismissed Board of Directors members is implemented in accordance with regulatory provisions.

Paragraph (2)
Letter a
It is clear enough.

Letter b
Objective assessments regarding the management of BPR and Sharia BPR include, among others, aspects of performance, integrity, financial reputation, and/or competence.

Letter c
It is clear enough.

Letter d
It is clear enough.

Paragraph (3)
It is clear enough.

Paragraph (4)
It is clear enough.

Article 13
Paragraph (1)
It is clear enough.

Paragraph (2)
Evaluations are conducted to assess whether the resignation is voluntary, involves elements of coercion, or is intended to release responsibility as a Board of Directors member in handling problems of BPR and Sharia BPR. The authority of the Financial Services Authority to conduct evaluations and order BPR and Sharia BPR to take corrective actions includes, among others, in conditions:

Board of Directors members are dismissed before the end of their term of office objectively; and
The dismissal of Board of Directors members results in the number of Board of Directors members not being in accordance with the minimum number regulated in this Financial Services Authority Regulation.

Article 14
It is clear enough.

Article 15
The principle of the regulation regarding residence is so that Board of Directors members reside close to the location of the BPR or Sharia BPR headquarters so that Board of Directors members can carry out their duties and responsibilities effectively. Residence is proven by an identity card or a residence certificate from the head of the neighborhood association, village head, sub-district head, or district head. What is meant by "directly bordering" is bordering in land territory. The Province of Special Capital Region of Jakarta, Bogor Regency, Bogor City, Depok City, Tangerang Regency, Tangerang City, South Tangerang City, Bekasi Regency, Bekasi City, and Karawang Regency are included in 1 (one) province area.

Article 16
It is clear enough.

Article 17
Paragraph (1)
What is meant by "majority" is more than 50% (fifty percent) of the total number of Board of Directors members.
What is meant by "family relationship up to the second degree" is both vertical and horizontal relationships, including:
a. biological/step/adoptive parents; b. biological/step/adoptive siblings including their spouses;
c. biological/step/adoptive children;
d. biological/step/adoptive grandparents; e. biological/step/adoptive grandchildren; f. biological/step/adoptive siblings of parents including their spouses; g. spouses; h. in-laws;
i. siblings-in-law;
j. spouses of biological/step/adoptive children; k. grandparents of spouses;
l. spouses of biological/step/adoptive grandchildren; or
m. biological/step/adoptive siblings of spouses including their spouses.

Paragraph (2)
It is clear enough.

Article 18
Other institutions include, among others, political parties and/or community organizations.

Article 19
It is clear enough.

Article 20
It is clear enough.

Article 21
Letter a
It is clear enough.

Letter b
Authorities and other institutions include payment system supervisory authorities, deposit insurance and resolution authorities, and other authorities and institutions authorized to conduct audits of BPR and Sharia BPR.

Article 22
Paragraph (1)
Letter a
Number 1
The internal audit work unit is directly responsible to the President Director and must be independent from other work units.
Number 2
The risk management work unit is directly responsible to one of the Board of Directors members.
Number 3
What is meant by "compliance work unit" is a work unit tasked with assisting the implementation of the functions of the Board of Directors member who oversees the compliance function and is directly responsible to the Board of Directors member who oversees the compliance function.

Letter b
Number 1
Officials appointed to carry out internal audit functions cannot hold other tasks concurrently and must be independent from other work units, and are directly responsible to the President Director of BPR and Sharia BPR. Number 2 Officials tasked to carry out risk management functions are directly responsible to one of the Board of Directors members of BPR and Sharia BPR who is responsible for the risk management function. Number 3 Officials tasked to carry out compliance functions are directly responsible to one of the Board of Directors members of BPR and Sharia BPR who is responsible for the compliance function.

Paragraph (2)
Merging into 1 (one) work unit is conducted if BPR and Sharia BPR can ensure the effectiveness of the implementation of risk management and compliance duties and responsibilities.

Paragraph (3)
It is clear enough.

Paragraph (4)
It is clear enough.

Paragraph (5)
It is clear enough.

Paragraph (6)
It is clear enough.

Article 23
Paragraph (1)
What is meant by "remuneration" is compensation established and given to Executive Officials and/or employees in cash or non-cash forms in accordance with duties, responsibilities, and authorities, including, among others, basic salary, facilities, allowances, pensions, bonuses, or tantiems. What is meant by "employees" is permanent employees and non-permanent employees.

Paragraph (2)
It is clear enough.

Article 24
It is clear enough.

Article 25
Strategic policies of BPR and Sharia BPR that can affect employee rights and obligations include, among others, merger, consolidation, and takeover plans. https://jdih.ojk.go.id/

Article 26
The obligation to provide data and information mentioned also extends to the Board of Commissioners.

Article 27
Paragraph (1)
Sufficiently clear.

Paragraph (2)
Letter a
Included in the category of specific projects with characteristics requiring special expertise, including but not limited to information technology projects with specific criteria such as having specific time targets.

Letter b
Sufficiently clear.

Letter c
Special expertise includes, among others, competence and/or experience in accordance with the assigned project.

Article 28
Paragraph (1)
Guidelines and working procedures of the Board of Directors are also known as the Board of Directors Charter.

Paragraph (2)
Letter a
The duties, responsibilities, and authority of the Board of Directors are formulated in accordance with the Articles of Association and applicable statutory regulations.
The content of guidelines and working procedures regarding the duties, responsibilities, and authority of the Board of Directors includes, among others, work ethics, performance evaluation, and coordination with the Board of Commissioners in the implementation of their duties.

Letter b
The division of tasks for the Board of Directors includes the mechanism for substitute directors.

Letter c
Decision-making procedures include, among others, meeting regulations governing meeting agendas, quorum requirements, decision-making, the rights of Board of Directors members in the event of differing opinions in decision-making (dissenting opinion), and meeting minutes which include, among other things, the reasons for differing opinions in decision-making.

Article 29
Sufficiently clear.

Article 30
Paragraph (1)
What is meant by "strategic policies and decisions" are decisions of the BPR and Sharia BPR that can significantly affect the finances of the BPR and Sharia BPR and/or have a continuous impact on budgets, human resources, organizational structures, and/or third parties. https://jdih.ojk.go.id/

Paragraph (2)
Sufficiently clear.

Paragraph (3)
Sufficiently clear.

Paragraph (4)
Sufficiently clear.

Article 31
Letter a
What is meant by "other companies" are financial service institutions or non-financial service institutions within or outside the country, including controlling shareholders and/or ultimate controlling shareholders of the BPR and Sharia BPR.

Letter b
What is meant by "family relations up to the second degree" see the explanation of Article 17 paragraph (1).

Letter c
Sufficiently clear.

Article 32
Paragraph (1)
Sufficiently clear.

Paragraph (2)
Private gains include, among others, unreasonable asset rental income and commissions or remuneration in the context of fund mobilization and/or fund distribution.
Not included in the definition of private gains include, among others, if Board of Directors members as customers of the BPR and Sharia BPR receive reasonable returns or interest.

Article 33
Sufficiently clear.

Article 34
Paragraph (1)
See the explanation of Article 10 paragraph (1).

Paragraph (2)
Sufficiently clear.

Paragraph (3)
The authority of the Financial Services Authority (OJK) to determine a larger number of Board of Commissioners members includes considering issues, business scale, and/or the complexity of the BPR and Sharia BPR.

Article 35
Sufficiently clear.

Article 36
Sufficiently clear.

Article 37
What is meant by "residence" see the explanation of Article 15.
What is meant by "directly adjacent" see the explanation of Article 15. https://jdih.ojk.go.id/

The Province of Special Capital Region of Jakarta, Bogor Regency, Bogor City, Depok City, Tangerang Regency, Tangerang City, South Tangerang City, Bekasi Regency, Bekasi City, and Karawang Regency are included in region 1 (one) province.

Article 38
Sufficiently clear.

Article 39
What is meant by "majority" is more than 50% (fifty percent) of the total number of Board of Commissioners members.
What is meant by "family relations up to the second degree" see the explanation of Article 17 paragraph (1).

Article 40
Paragraph (1)
Board of Commissioners members can serve as Board of Commissioners members for a maximum of 3 (three) BPRs or Sharia BPRs.

Paragraph (2)
Sufficiently clear.

Article 41
Sufficiently clear.

Article 42
Paragraph (1)
The existence of Independent Commissioners is intended to encourage the creation of a more objective work climate and environment and place fairness and equality among various interests, including the interests of minority shareholders and other stakeholders.

Paragraph (2)
The authority of the Financial Services Authority (OJK) to determine different policies includes considering issues, business scale, and/or the complexity of the BPR and Sharia BPR.

Paragraph (3)
Sufficiently clear.

Paragraph (4)
What is meant by "public official" is a person appointed and given the task to hold a specific position or job in a public body.
What is meant by "public body" is an executive, legislative, judicial, and other bodies whose main function and duties are related to state administration, which are partially or wholly funded by state revenue and expenditure budgets and/or regional revenue and expenditure budgets.

Paragraph (5)
What is meant by "cooling off period" (cooling off) is the time interval between the effective end of the respective position as a member of the Board of Directors or Executive Officer or other relationship with the BPR and Sharia BPR, with the appointment of the respective person in the General Meeting of Shareholders (GMS) as an Independent Commissioner. https://jdih.ojk.go.id/

Article 43
Paragraph (1)
Sufficiently clear.

Paragraph (2)
What is meant by "cooling off period" (cooling off) is the time interval between the effective end of the respective position as a non-independent commissioner with the appointment of the respective person in the GMS as an Independent Commissioner.

Paragraph (3)
Sufficiently clear.

Article 44
Paragraph (1)
Sufficiently clear.

Paragraph (2)
Sufficiently clear.

Paragraph (3)
What is meant by "operational activities" is all operational activities of the BPR and Sharia BPR.

Paragraph (4)
Sufficiently clear.

Paragraph (5)
Sufficiently clear.

Paragraph (6)
Sufficiently clear.

Article 45
See the explanation of Article 21.

Article 46
Paragraph (1)
Sufficiently clear.

Paragraph (2)
See the explanation of Article 23 paragraph (1).

Paragraph (3)
Letter a
Sufficiently clear.

Letter b
Methods and mechanisms for determining remuneration include, among others, bonuses, tantiems, malus, and clawback.
What is meant by "malus" is a policy that allows the BPR and Sharia BPR, based on specific criteria, to defer payment of part or all of the remuneration related to performance and risk that is deferred.
What is meant by "clawback" is an agreement between the BPR and Sharia BPR with members of the Board of Directors, members of the Board of Commissioners, or members of the Sharia Supervisory Board, whereby members of the Board of Directors, members of the Board of Commissioners, or members of the Sharia Supervisory Board, agree to return remuneration related to performance and risk that is deferred received as long as it meets certain criteria as determined by the BPR and Sharia BPR. Examples of remuneration related to performance and risk: bonuses, facilities, tantiems, or other forms.

Paragraph (4)
Sufficiently clear.

Paragraph (5)
Sufficiently clear.

Paragraph (6)
Sufficiently clear.

Paragraph (7)
Sufficiently clear.

Paragraph (8)
Letter a
Specific conditions include, among others, the BPR and Sharia BPR experiencing current year losses, the BPR and Sharia BPR being in a rehabilitation status, and/or the Financial Services Authority (OJK) assessing the presence of unfairness in the provision of remuneration. Evaluation of remuneration policies includes, among others, evaluation of remuneration payments and/or amounts that are not in accordance with fairness. Examples: provision of remuneration that is disproportionate, unfair, and potentially fraudulent.

Letter b
Sufficiently clear.

Letter c
Sufficiently clear.

Paragraph (9)
Sufficiently clear.

Article 47
Paragraph (1)
What is meant by "Financial Services Authority (OJK) reporting system" is the Financial Services Authority (OJK) reporting system in accordance with Financial Services Authority (OJK) Regulations regarding reporting by rural credit banks and sharia rural financing banks through the Financial Services Authority (OJK) reporting system.

Letter a
Sufficiently clear.

Letter b
What is meant by "conditions or estimated conditions that can endanger the sustainability of the business of the BPR and Sharia BPR" are conditions or estimated conditions that can cause the BPR and Sharia BPR to be determined to be in rehabilitation or resolution.

Paragraph (2)
Sufficiently clear.

Article 48
Paragraph (1)
Guidelines and working procedures of the Board of Commissioners are also known as the Board of Commissioners Charter. https://jdih.ojk.go.id/

Paragraph (2)
Letter a
The duties, responsibilities, and authority of the Board of Commissioners are formulated in accordance with the Articles of Association and applicable statutory regulations.
The content of guidelines and working procedures regarding the duties, responsibilities, and authority of the Board of Commissioners includes, among others, work ethics, performance evaluation, and reporting coordination to shareholders.

Letter b
Regulation of Board of Commissioners meetings includes, among others, meeting agendas, quorum requirements, and meeting minutes.

Article 49
Sufficiently clear.

Article 50
Paragraph (1)
Board of Commissioners meetings are evidenced by meeting minutes and are intended as supervision over the implementation of the duties and responsibilities of the Board of Directors.

Paragraph (2)
Sufficiently clear.

Paragraph (3)
What is meant by "teleconference technology" is remote conversation using video and audio technology that can be proven with recording evidence.

Paragraph (4)
Sufficiently clear.

Paragraph (5)
Sufficiently clear.

Article 51
Paragraph (1)
Sufficiently clear.

Paragraph (2)
Sufficiently clear.

Paragraph (3)
Meeting minutes clearly contain the issues discussed and the agreements reached, including performance, strategic policies of the BPR and Sharia BPR, and decisions taken.

Paragraph (4)
Sufficiently clear.

Article 52
Paragraph (1)
Other matters related to Board of Commissioners supervision include, among others, follow-up on examination results, information on violations or suspected violations, and/or handling of strategic issues.

Paragraph (2)
Sufficiently clear.

Paragraph (3)
Meeting minutes clearly contain the issues discussed, conclusions, and meeting decisions. https://jdih.ojk.go.id/

Article 53
Letter a
See the explanation of Article 31 letter a.

Letter b
What is meant by "family relations up to the second degree" see the explanation of Article 17 paragraph (1).

Letter c
What is meant by "remuneration" see the explanation of Article 23.

Article 54
Paragraph (1)
Sufficiently clear.

Paragraph (2)
Private gains include, among others, unreasonable asset rental income and commissions or remuneration in the context of fund mobilization and/or fund distribution.
Not included in the definition of private gains include, among others, if Board of Commissioners members as customers of the BPR and Sharia BPR receive reasonable returns or interest.

Article 55
Sufficiently clear.

Article 56
Sufficiently clear.

Article 57
Sufficiently clear.

Article 58
Paragraph (1)
Committees in accordance with applicable statutory regulations include, among others:

risk management committee in accordance with Financial Services Authority (OJK) Regulations regarding the implementation of risk management for rural credit banks and Financial Services Authority (OJK) Regulations regarding the implementation of risk management for sharia rural financing banks; and
credit or financing committee in accordance with Financial Services Authority (OJK) Regulations regarding the quality of assets of rural economic banks and Financial Services Authority (OJK) Regulations regarding the quality of productive assets and the formation of provisions for the write-off of productive assets of sharia rural financing banks.

Paragraph (2)
Other committees include, among others, information technology steering committee, goods and services procurement committee, product committee, and/or human resources committee.

Paragraph (3)
Sufficiently clear.

Paragraph (4)
Sufficiently clear.

Paragraph (5)
Sufficiently clear. https://jdih.ojk.go.id/

Article 59
Paragraph (1)
The implementation of the functions of the audit committee, risk monitoring committee, and/or remuneration and nomination committee is carried out by the Board of Commissioners, for BPRs and Sharia BPRs that are not required to have such committees.

Letter a
What is meant by "audit committee" is a committee that assists in the implementation of duties and responsibilities of the Board of Commissioners related to internal and external audits.

Letter b
What is meant by "risk monitoring committee" is a committee that assists in the implementation of duties and responsibilities of the Board of Commissioners related to the implementation of risk management.

Letter c
What is meant by "remuneration and nomination committee" is a committee that assists in the implementation of duties and responsibilities of the Board of Commissioners related to remuneration and nomination.

Paragraph (2)
Sufficiently clear.

Paragraph (3)
Sufficiently clear.

Paragraph (4)
Sufficiently clear.

Paragraph (5)
See the explanation of Article 42 paragraph (2).

Article 60
Paragraph (1)
Letter a
Sufficiently clear.

Letter b
Competence is evidenced, among others, by professional credentials, work history and/or education and training, as well as relevant and supportive work competence certifications.

Letter c
See the explanation of letter b.

Paragraph (2)
Sufficiently clear.

Paragraph (3)
Sufficiently clear.

Paragraph (4)
What is meant by "majority" is more than 50% (fifty percent) of the total number of committee members.

Paragraph (5)
What is meant by "having integrity" includes, among others, not being included as a party prohibited from being a principal party, not listed in the failed list, and not having non-performing loans or financing, supported by a personal statement letter. https://jdih.ojk.go.id/

What is meant by "maintaining reputation" is participating in maintaining the reputation of the BPR and Sharia BPR and maintaining personal reputation.

Paragraph (6)
Sufficiently clear.

Article 61
Paragraph (1)
Letter a
Sufficiently clear.

Letter b
See the explanation of Article 60 paragraph (1) letter b.

Letter c
See the explanation of Article 60 paragraph (1) letter b.

Paragraph (2)
Sufficiently clear.

Paragraph (3)
Sufficiently clear.

Paragraph (4)
See the explanation of Article 60 paragraph (4).

Paragraph (5)
See the explanation of Article 60 paragraph (5).

Paragraph (6)
Sufficiently clear.

Article 62
Sufficiently clear.

Article 63
The chairman of the Board of Committees can serve as the chairman of committees for a maximum of 2 (two) committees.

Article 64
Sufficiently clear.

Article 65
Sufficiently clear.

Article 66
Paragraph (1)
Letter a
Number 1
What is meant by "reserves" is reserves in accordance with the Law on Limited Liability Companies.
Performance achievement includes the achievement of performance of Board of Directors members and Board of Commissioners members of the BPR and Sharia BPR. Remuneration linked to performance achievement is intended to achieve equality between individual work results and the remuneration received by the respective individual. What is meant by "peer group" is the equality of positions within the BPR and Sharia BPR and among several BPRs and Sharia BPRs or financial service institutions of the same type, including in terms of assets and characteristics.

Number 2
Recommendations regarding remuneration policies for Board of Directors members and Board of Commissioners members are submitted to the GMS, while recommendations regarding remuneration policies for Executive Officers and employees as a whole are submitted to the Board of Directors.

Letter b
Number 1
Sufficiently clear.

Number 2
What is meant by "including in identifying" is analyzing needs and formulating criteria for candidates for Board of Directors members, Board of Commissioners members, and members of the Sharia Supervisory Board for Sharia BPRs.

Number 3
What is meant by "including in identifying" is analyzing needs and formulating criteria for Independent Parties.

Paragraph (2)
Sufficiently clear.

Article 67
Paragraph (1)
Guidelines and working procedures of committees are also known as committee charters.
What is meant by "committee" is committees under the Board of Directors and committees under the Board of Commissioners.

Paragraph (2)
Letter a
Included in the duties, responsibilities, and authority of committees include, among others, performance evaluation mechanisms and the purpose of forming committees.

Letter b
Regulation of committee meetings includes, among others, meeting agendas, committee membership attendance, quorum requirements, and meeting minutes.

Letter c
Sufficiently clear.

Article 68
Paragraph (1)
Sufficiently clear.

Paragraph (2)
What is meant by "majority" see the explanation of Article 60 paragraph (4).

Paragraph (3)
What is meant by "majority" see the explanation of Article 60 paragraph (4).

Paragraph (4)
Sufficiently clear.

Paragraph (5)
Sufficiently clear. https://jdih.ojk.go.id/

Article 69
Sufficiently clear.

Article 70
Paragraph (1)
What is meant by "conflict of interest" see the explanation of Article 2 paragraph (3) letter e.
These conflict of interest provisions are essentially intended so that Board of Directors members, Board of Commissioners members, members of the Sharia Supervisory Board, Executive Officers, and employees of the BPR and Sharia BPR who have conflicts of interest do not make decisions in situations and conditions where conflicts of interest exist. However, when decisions must still be made, the respective parties must prioritize the economic interests of the BPR and Sharia BPR and avoid the BPR and Sharia BPR from losses that may arise or the possibility of reduced profits of the BPR and Sharia BPR, and disclose the conflict of interest conditions in every decision.

Paragraph (2)
Sufficiently clear.

Paragraph (3)
Conflicts of interest that have the potential to harm the BPR and Sharia BPR or reduce the profits of the BPR and Sharia BPR include, among others, providing special treatment to certain parties outside procedures and regulations and providing interest rates that do not comply with procedures and regulations that benefit the Directors and harm the BPR and Sharia BPR.

Paragraph (4)
Sufficiently clear.

Article 71
Sufficiently clear.

Article 72
Paragraph (1)
Sufficiently clear.

Paragraph (2)
Sufficiently clear.

Paragraph (3)
What is meant by "operational work unit" is a work unit that carries out fund distribution activities, fund mobilization, goods and services procurement, and other operational activities.

Paragraph (4)
BPRs and Sharia BPRs are not required to form a compliance unit.
Executive Officers who carry out compliance functions are not involved in operational decision-making regarding fund distribution, fund mobilization, goods and services procurement, and other operational activities.

Paragraph (5)
Sufficiently clear. https://jdih.ojk.go.id/

Paragraph (6)
Sufficiently clear.

Paragraph (7)
Sufficiently clear.

Article 73
Paragraph (1)
What is meant by "independent" is not handling fund distribution activities, fund mobilization, goods and services procurement, and other operational activities.
What is meant by "having competence related to the implementation of compliance duties" includes, among others, understanding Financial Services Authority (OJK) Regulations and statutory regulations related to banking.

Paragraph (2)
Letter a
Example:
The Board of Directors of PT BPR XYZ consists of 1 (one) managing director and 1 (one) Board of Directors member who oversees the compliance function. The Board of Directors member who oversees the compliance function can specialize in the administrative and legal credit division, while credit decision-making is carried out by the managing director who specializes in the credit division. The implementation of duties by the Board of Directors member overseeing the compliance function in administrative and legal credit activities must be carried out as part of control over the fulfillment of credit disbursement requirements.

Letter b
Sufficiently clear.

Article 74
Paragraph (1)
Sufficiently clear.

Paragraph (2)
Permanent absence includes, among others:
a. death; and/or b. mental disability or other conditions, which do not allow the respective person to perform duties well.

Article 75
Paragraph (1)
Letter a
What is meant by "compliance culture" is values, behavior, and actions that support the creation of compliance with Financial Services Authority (OJK) regulations and statutory regulations, including Sharia principles for Sharia BPRs. Strategies to encourage the creation of a compliance culture are carried out through, among others:

the formulation of compliance policies oriented towards the vision, mission, and values of the company;
the formulation of compliance and work culture policies by considering appropriate rewards (reward) and discipline (punishment); and
the improvement of ongoing compliance competence.

Letter b
Steps taken to ensure that the business activities of the BPR and Sharia BPR meet all statutory regulations include, among others:

establishing compliance systems and procedures and establishing or evaluating internal regulations and guidelines of the BPR and Sharia BPR;
adjusting internal policies and guidelines of the BPR and Sharia BPR to changes in statutory regulations;
preventing the Board of Directors from establishing policies or decisions that deviate from Financial Services Authority (OJK) regulations and statutory regulations;
reviewing the procedures or methods of decision-making by management;
following up on deviations made by Board of Directors members by reporting to Board of Directors members, Board of Commissioners members, and/or the Financial Services Authority (OJK); and
ensuring the completion of commitments by the Board of Directors and relevant work units or operational units.

Letter c
Other duties include, among others:

conducting socialization of internal regulations and statutory regulations; and
following up on data or information requests by authorities.

Paragraph (2)
Follow-up on deviations includes, among others, issuing warnings or guidance to Board of Directors members of the BPR and Sharia BPR who have deviated, as well as reporting to Board of Directors members, Board of Commissioners, and/or the Financial Services Authority (OJK).

Article 76
What is meant by "Financial Services Authority (OJK) reporting system" see the explanation of Article 47 paragraph (1).

Article 77
Sufficiently clear.

Article 78
Sufficiently clear.

Article 79
Paragraph (1)
Sufficiently clear. https://jdih.ojk.go.id/

Paragraph (2)
What is meant by "operational functions" is functions related to fund distribution, fund mobilization, goods and services procurement, bookkeeping, information technology management, and other operational activities.

Paragraph (3)
Sufficiently clear.

Article 80
Paragraph (1)
Letter a
Audit is also known as examination.
What is meant by "examination" is general and/or special examinations, including those originating from the initiative of the BPR and Sharia BPR or requests from the Financial Services Authority (OJK).

Letter b
Sufficiently clear.

Letter c
In making analyses and assessments, the internal audit work unit or Internal Audit Executive Officer, among others, identifies all possibilities to improve and increase the efficiency of resource and fund utilization.

Letter d
Sufficiently clear.

Paragraph (2)
To support the annual audit program plan, the BPR and Sharia BPR present the annual audit program plan, including, among others, potentially risky areas, follow-up monitoring, significant findings and audit recommendations for the current year, and the annual audit plan.

Article 81
Guidelines and working procedures for internal audit are also known as the internal audit charter.

Article 82
Sufficiently clear.

Article 83
Paragraph (1)
Sufficiently clear.

Paragraph (2)
Letter a
What is meant by "internal audit results" includes confidential audit information.

Letter b
Sufficiently clear.

Paragraph (3)
Sufficiently clear.

Paragraph (4)
What is meant by "Financial Services Authority (OJK) reporting system" see the explanation of Article 47 paragraph (1). https://jdih.ojk.go.id/

Article 84
Paragraph (1)
What is meant by "external parties" are parties who have the competence to conduct audits, which is evidenced, among others, by certification. Examples: audit consulting firms, public accountants, and/or public accounting firms.

Paragraph (2)
Sufficiently clear.

Paragraph (3)
Sufficiently clear.

Article 85
Sufficiently clear.

Article 86
Sufficiently clear.

Article 87
Sufficiently clear.

Article 88
Policies or procedures regarding the implementation of corporate governance, risk management, and compliance integratedly must at least contain coordination mechanisms to support the effectiveness of the implementation of integrated corporate governance, risk management, and compliance.

Article 89
Sufficiently clear.

Article 90
Sufficiently clear.

Article 91
Sufficiently clear.

Article 92
Sufficiently clear.

Article 93
Paragraph (1)
Transparency includes aspects of disclosure (disclosure) of qualitative and quantitative information of the BPR to stakeholders.
What is meant by "non-financial conditions" includes, among others, management, ownership, development of the business of the BPR and BPR group, management strategies and policies, and management reports.
What is meant by "stakeholders" is all parties who have direct or indirect interests in the business activities of the BPR and Sharia BPR.

Paragraph (2)
Sufficiently clear.

Paragraph (3)
Sufficiently clear. https://jdih.ojk.go.id/

Article 94
Quite clear.

Article 95
What is meant by “adequate management information system” is an information system capable of providing complete, accurate, current, and integrated data and information for decision-making.

Article 96
Prohibited actions include:

exploiting existing or unregulated loopholes that may imply an overall increase in the risk of Rural Economic Banks (BPR) and Sharia Rural Economic Banks (BPR Syariah); and
mass recruitment of employees by BPR and BPR Syariah from other BPR and BPR Syariah, thereby disrupting the operational continuity of the aforementioned BPR and BPR Syariah.

Article 97
Quite clear.

Article 98
Quite clear.

Article 99
Paragraph (1)
Quite clear.

Paragraph (2)
Strategic plans include, among others, strengthening capital, developing information technology and digitalization, and handling issues concerning BPR and BPR Syariah.

Article 100
Quite clear.

Article 101
Quite clear.

Article 102
Paragraph (1)
Letter a
Self-assessment results are also known as self assessment.

Letter b
Quite clear.

Letter c
Quite clear.

Letter d
The disclosure of remuneration packages or policies serves as a benchmark for stakeholders in assessing the suitability of remuneration with the performance results of BPR and BPR Syariah managed by the Board of Directors and Board of Commissioners of BPR and BPR Syariah.

What is meant by “facilities” is facilities received not in financial form, including:
https://jdih.ojk.go.id/

housing facilities, transportation facilities, and health insurance facilities.

Letter e
Quite clear.

Letter f
Quite clear.

Letter g
Internal deviations in these regulations are limited to deviations related to the operations of BPR and BPR Syariah that significantly affect the financial condition of BPR and BPR Syariah.

Letter h
Legal issues include, among others, civil and criminal legal issues.

Letter i
Quite clear.

Letter j
Quite clear.

Paragraph (2)
Quite clear.

Paragraph (3)
Quite clear.

Paragraph (4)
Quite clear.

Article 103
Quite clear.

Article 104
Quite clear.

Article 105
Quite clear.

Article 106
Paragraph (1)
Quite clear.

Paragraph (2)
Quite clear.

Paragraph (3)
The authority of the Financial Services Authority (Otoritas Jasa Keuangan) to determine different timeframes considers, among others, efforts to fulfill and/or the licensing process currently being undertaken by BPR and BPR Syariah.

Paragraph (4)
Quite clear.

Article 107
Quite clear.

Article 108
Paragraph (1)
Quite clear.

Paragraph (2)
Quite clear.

https://jdih.ojk.go.id/

Paragraph (3)
Supervisory measures established by the Financial Services Authority include:

determining a waiting period longer than 6 (six) months; and/or
not approving or canceling the appointment as members of the Board of Directors and/or members of the Board of Commissioners for prospective members of the Board of Directors and/or members of the Board of Commissioners who do not disclose conflicts of interest or potential conflicts of interest in the assessment of competence and propriety process.

Article 109
The procedure for determining written orders is in accordance with Financial Services Authority Regulations regarding written orders.

Article 110
Quite clear.

Article 111
Quite clear.

Article 112
Quite clear.

Article 113
Quite clear.

Article 114
Quite clear.

Article 115
Quite clear.

Article 116
Quite clear.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 81/OJK https://jdih.ojk.go.id/

Implementation of Good Corporate Governance for Rural Economic Banks and Sharia Rural Economic Banks

Lineage: In force