Internal Liquidity Adequacy Assessment Process for Commercial Banks

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Internal Liquidity Adequacy Assessment Process (Internal Liquidity Adequacy Assessment Process) for Commercial Banks

Sector:
Banking

Sub-Sector:
Commercial Banks

Regulation Type: OJK Circular Letter

Regulation Number: 26/SEOJK.03/2025

Effective Date: 11/19/2025

Appendix 1
SEOJK 26-SEOJK03-2025 Internal Liquidity Adequacy Assessment Process for Commercial Banks.pdf Abstract SEOJK 26-SEOJK03-2025 Internal Liquidity Adequacy Assessment Process for Commercial Banks.pdf FAQ OJK Circular Letter No. 26-SEOJK.03-2025 Internal Liquidity Adequacy Assessment Process for Commercial Banks.pdf

Page Content
Circular Letter of the Financial Services Authority Number 26/SEOJK.03/2025 regarding the Internal Liquidity Adequacy Assessment Process (Internal Liquidity Adequacy Assessment Process) for Commercial Banks

Abstract:
The drafting of the Circular Letter of the Financial Services Authority (SEOJK) regarding the Internal Liquidity Adequacy Assessment Process (Internal Liquidity Adequacy Assessment Process / ILAAP) is driven by the need for regulations governing the application of ILAAP for Banks (Conventional Commercial Banks, Islamic Commercial Banks, and Islamic Business Units). Banks are required to conduct ILAAP adjusted to the size, characteristics, and complexity of the Bank's business. The legal basis for this SEOJK is: POJK No. 42/POJK.03/2015 as amended by POJK No. 19 of 2024; and POJK No. 20 of 2025. Note:
This SEOJK takes effect on the date of establishment.
This SEOJK was established on November 19, 2025.
In the application of ILAAP, Banks must ensure that the Bank's liquidity management is in line with the risk level (risk appetite) and risk tolerance (risk tolerance) established by the Bank, while considering the impact of liquidity risk on the Bank's condition. Banks periodically submit ILAAP reports to the Financial Services Authority, which will serve as consideration material in the risk profile assessment for liquidity risk in accordance with the Financial Services Authority Regulation regarding the application of risk management for Banks, and the self-assessment of the Bank's health level in accordance with the Financial Services Authority regulations regarding the assessment of the Bank's health level. ILAAP reports consist of the ILAAP Implementation Report, Intraday Liquidity Report, LCR Report in Significant Foreign Currencies, Funding Profile Report, Survival Period Monitoring (SPM) Report, as well as Displaced Commercial Risk (DCR) Customer Report and Profit Sharing Smoothing Strategy (for Islamic Commercial Banks and Islamic Business Units). The period for submitting the first report and the implementation of the pilot program is based on the grouping of Banks as KBMI 1, KBMI 2, KBMI 3, KBMI 4, and/or Foreign Banks as of December 31, 2025. The Financial Services Authority conducts a Liquidity Supervisory Review And Evaluation Process (LSREP), which is the Financial Services Authority's evaluation process of the Bank's ILAAP results. In the event that, based on ILAAP and LSREP, the Bank is assessed to have a high level of liquidity risk, the Bank takes steps including but not limited to strengthening liquidity conditions and strengthening ILAAP risk management.