OJK Circular No. 24/SEOJK.03/2025 on Business Plans for Rural Banks

To the Esteemed Board of Directors of Rural Banks, in place.

COPY
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY OF THE REPUBLIC OF INDONESIA NUMBER 24/SEOJK.03/2025 CONCERNING BUSINESS PLANS FOR RURAL BANKS

In connection with Financial Services Authority Regulation Number 15/POJK.03/2021 concerning Business Plans for Rural Banks and Sharia Rural Financing Banks (State Gazette of the Republic of Indonesia Year 2021 Number 190, Supplement to the State Gazette of the Republic of Indonesia Number 6712), hereinafter referred to as POJK on BPR and BPR Syariah Business Plans, and improvements have been made to provisions including allowing BPRs to conduct public offerings of securities through the capital market, BPR capital participation, and banking synergy as well as strengthening through consolidation policies and improvements to office types, it is necessary to replace the implementing provisions of the POJK on BPR and BPR Syariah Business Plans previously regulated in Financial Services Authority Circular Letter Number 28/SEOJK.03/2021 concerning Business Plans for Rural Banks, in the Financial Services Authority Circular Letter as follows:

I. GENERAL PROVISIONS

1. A Business Plan is a written document that describes the development plan and business activities of a BPR for a certain period and the strategy to realize that plan according to established targets and timelines.
2. In accordance with Article 2 and Article 19 of the POJK on BPR and BPR Syariah Business Plans, BPRs are obliged to prepare and submit a Business Plan.
3. In accordance with Article 2 paragraph (2) of the POJK on BPR and BPR Syariah Business Plans, the Business Plan must be prepared by the Board of Directors and approved by the Board of Commissioners.
4. The Business Plan must be prepared realistically, comprehensively, and consider potential risks so that it can be used as a basis for providing policy direction in carrying out business activities to achieve the BPR's vision and mission.
5. The Business Plan prepared by the BPR must reflect the direction and policy of the BPR's business development in the short term, medium term, and long term. The direction and policy of the BPR's business development in the long term include the BPR's vision and mission.
   Short term refers to a period of 1 (one) year.
   Medium term refers to a period of 3 (three) years.
   Long term refers to a period of 5 (five) years.
6. The projection and planning periods for several material scopes in the preparation of the BPR Business Plan are differentiated based on core capital, namely:
   a. BPRs with core capital of less than IDR 50,000,000,000.00 (fifty billion rupiah); and b. BPRs with core capital of at least IDR 50,000,000,000.00 (fifty billion rupiah).
7. In order to assist in the preparation of a realistic, comprehensive, and risk-considering Business Plan, BPRs may use professional services in preparing the Business Plan.
   The use of professional services in preparing the Business Plan is included in the use of professional services for specific projects with characteristics requiring special expertise as referred to in Article 27 paragraph (2) letter a of Financial Services Authority Regulation Number 9 Year 2024 concerning the Implementation of Governance for Rural Banks and Sharia Rural Financing Banks, hereinafter referred to as POJK on BPR and BPR Syariah Governance. In accordance with Article 27 paragraph (2) letters b and c of the POJK on BPR and BPR Syariah Governance, the use of professional services must:
   a. be based on a clear written agreement, which at least covers the scope of work, responsibilities, deliverables, and duration of work as well as costs; and The term responsibility includes prohibitions or limitations on the use of BPR data and information. b. be carried out by an independent party who is qualified to perform projects requiring special expertise. Special expertise in preparing a Business Plan includes expertise related to statistical data analysis, market analysis, financial planning, as well as recommendations or guidance on business concepts, marketing strategies, finance, operations, and/or resource management. An independent party is an independent party in accordance with the POJK on BPR and BPR Syariah Governance. The appointment of professional services in preparing the Business Plan must consider the recommendations of the Board of Commissioners. The Board of Commissioners shall periodically evaluate the use of professional services in preparing the Business Plan, including ensuring that such professional services are in accordance with needs, effective, efficient, and do not reduce the BPR's independence in preparing the Business Plan. In using professional services, BPRs must observe the provisions of the Financial Services Authority, namely:
   a. In accordance with Article 2 paragraph (2) of the POJK on BPR and BPR Syariah Business Plans, the preparation of the Business Plan is the obligation of the Board of Directors. The role of professional services is to provide recommendations and input for the preparation of the Business Plan. b. In accordance with Article 70 paragraph (1) of the POJK on BPR and BPR Syariah Governance, members of the Board of Directors, members of the Board of Commissioners, Executive Officials, and BPR employees must avoid all forms of conflict of interest in carrying out their duties of managing and supervising the BPR, including in the appointment of professional services.
   c. In accordance with Article 2 paragraph (1) of Financial Services Authority Regulation Number 44 Year 2024 concerning Bank Secrecy, BPRs and affiliated parties are obliged to keep confidential information regarding depositing customers and their deposits and/or investor customers and their investments. Affiliated parties include parties providing services to BPRs, including professional services in preparing the Business Plan.

II. SCOPE OF THE BUSINESS PLAN

1. The Business Plan must contain at least:
   a. Executive Summary
   This section must contain at least the BPR's vision and mission prepared for a period of 5 (five) years, the plans and strategic steps to be taken by the BPR explained for the short-term and medium-term periods, key financial indicators, and short-term and medium-term targets. b. Business Strategy and Policy This section must contain at least:
   1) short-term plans regarding the analysis of the BPR's position in business competition based on assets and/or location, the BPR's policy direction, BPR risk management and governance policies, fund mobilization and credit disbursement strategies, and strategies for resolving strategic issues and/or fulfilling BPR provisions; and
   2) short-term and medium-term plans regarding the BPR's policy direction, including business development strategies in the digital era, plans for mergers, consolidations, acquisitions, public offerings of securities, and banking synergies.
   c. Projected Financial Statements
   This section must contain at least projected statements of financial position (balance sheet), projected profit and loss, and projected administrative accounts, as well as reasons or considerations for setting targets in preparing the projections. BPRs with core capital of less than IDR 50,000,000,000.00 (fifty billion rupiah) must submit projections for up to 1 (one) year ahead, while BPRs with core capital of at least IDR 50,000,000,000.00 (fifty billion rupiah) must submit projections for up to 3 (three) years ahead. d. Target Ratios and Financial Positions This section must contain at least target key financial ratios and target ratios for certain other positions, as well as reasons or considerations for setting targets in preparing the projections. BPRs with core capital of less than IDR 50,000,000,000.00 (fifty billion rupiah) must submit targets for up to 1 (one) year ahead, while BPRs with core capital of at least IDR 50,000,000,000.00 (fifty billion rupiah) must submit targets for up to 3 (three) years ahead. e. Fund Mobilization Plan This section must contain at least short-term plans regarding third-party fund mobilization plans and other fund mobilization plans. f. Fund Disbursement Plan This section must contain at least short-term plans regarding credit disbursement plans based on the largest economic sector in credit disbursement, credit disbursement plans based on type of use, and credit disbursement plans based on type of business. g. Capital Plan This section must contain at least short-term and medium-term plans regarding changes or additions to capital consisting of core capital and supplementary capital. h. Information Technology Development and Procurement Plan and Human Resources Quality Development Plan This section must contain at least short-term plans regarding fundamental information technology development and procurement plans and human resources quality development plans, which at least include human resources recruitment plans, human resources quality development plans, and outsourcing utilization plans.
   i. New Business Activities Implementation Plan
   This section must contain at least short-term plans regarding the implementation of business activities categorized as new products in accordance with the Financial Services Authority Regulation concerning the operation of products for rural banks and sharia rural financing banks, hereinafter referred to as POJK on BPR and BPR Syariah Products, as well as capital participation activity plans and divestment plans at the BPR's initiative for said capital participation in accordance with the Financial Services Authority Regulation concerning the expansion of banking business activities, hereinafter referred to as POJK on Banking Business Activity Expansion. j. Office Network Development and/or Change Plan
   1) This section must contain at least short-term plans regarding:
   a) plans for relocating the address of the head office, regional office, branch office, special financial center, and/or cash office; b) plans for opening and/or closing regional offices, branch offices, special financial centers, and/or cash offices; and c) plans for changing the status of the office network, in accordance with the Financial Services Authority Regulation concerning rural banks and sharia rural financing banks, hereinafter referred to as POJK on BPR and BPR Syariah.
   2) The procedures for licensing or reporting regarding the development and/or changes to the office network that have been included in the Business Plan as referred to in point 1) shall continue to follow the provisions regulated in the POJK on BPR and BPR Syariah.
   k. Other Information
   This section must contain at least other information that is estimated to be able to influence and have a material impact on the BPR's business activities, financial performance, or risk profile, which at least includes:
   1) sustainable finance action plans in accordance with the Financial Services Authority Regulation concerning the implementation of sustainable finance for financial services institutions, issuers, and public companies;
   2) plans for discontinuing business activities, products, or activities in accordance with the POJK on BPR and BPR Syariah Products;
   3) plans for public offerings of securities in accordance with the POJK on BPR and BPR Syariah;
   4) data update plan reports as regulated in the Financial Services Authority Regulation concerning reporting through the Financial Services Authority reporting system for BPRs and BPR Syariah, hereinafter referred to as POJK on BPR and BPR Syariah Reporting; and
   5) other information that is required by statutory regulations to be included in the Business Plan.
2. The scope of the Business Plan stipulated by the Financial Services Authority as referred to in point 1 is minimum, so BPRs may expand this scope according to their needs while still observing point 1 above.
3. The preparation of the Business Plan refers to the guidelines as listed in the Appendix, which is an inseparable part of this Financial Services Authority Circular Letter.

III. ADJUSTMENTS AND CHANGES TO THE BUSINESS PLAN

1. The Financial Services Authority may request BPRs to make adjustments at any time to the submitted Business Plan, among others, based on considerations:
   a. The Business Plan is prepared immeasurably and/or not in accordance with the BPR's resource capabilities; b. The Business Plan does not yet contain strategic matters stipulated related to banking regulatory policies, government policies or programs, or other strategic matters; and/or
   c. deteriorating financial conditions resulting in issues with soundness level, liquidity, and capital in accordance with Article 8 paragraph (3) of Financial Services Authority Regulation Number 28 Year 2023 concerning the Determination of Status and Follow-up Supervision of Rural Banks and Sharia Rural Financing Banks.
2. BPRs may make changes to the Business Plan if there are external and internal factors that significantly affect operational activities and/or affect the BPR's performance, as follows:
   a. external factors include economic conditions, government policies, competition with other financial services institutions or entities, and information technology developments. For example:
   1) A decrease in regional economic growth causing a decline in credit demand in the trade sector, which is a priority for BPR credit disbursement, thus affecting the debtor's ability to pay in that sector. Based on these conditions, the BPR may change its credit disbursement priorities to other sectors.
   2) There are government regulations or programs related to credit disbursement policies through BPRs.
   3) There are natural, non-natural, or social disasters that affect economic conditions, thereby influencing the assumptions used in preparing financial projections.
   b. internal factors include financial conditions, management and human resources, and other infrastructure capabilities including information technology. For example:
   1) The BPR experiences a deterioration in financial performance resulting in capital issues.
   2) There is a change in the management and/or control of the BPR causing a change in the BPR's business strategy.
   3) There is a plan to implement new information technology-based products but it has not been included in the Business Plan submitted by the BPR.
   c. external and internal factors as referred to in letters a and b are deemed by the BPR to have a material impact on operational activities and/or financial conditions, which are reflected, among others, in the BPR's financial statements or in cases where they affect the BPR's financial performance.
3. In the event that external and internal factors as referred to in point 2 letters a and b affect operational activities and/or affect the BPR's performance and there is a potential increase in risk, the BPR may submit a request for Business Plan adjustment other than in the context of Business Plan changes in accordance with Article 21 paragraph (3) of the POJK on BPR and BPR Syariah Business Plans. Based on the Financial Services Authority's approval of the adjustment request, the Financial Services Authority requests the BPR to make Business Plan adjustments in accordance with Article 20 of the POJK on BPR and BPR Syariah Business Plans.
4. In order to grant approval as referred to in point 3, the Financial Services Authority requests an explanation from the BPR in a discussion meeting conducted offline or online.

IV. BUSINESS PLAN IMPLEMENTATION AND SUPERVISION REPORT

1. In accordance with Article 22 of the POJK on BPR and BPR Syariah Business Plans, BPRs are obliged to submit a semi-annual Business Plan Implementation and Supervision Report containing at least:
   a. Business Plan achievements in the form of a comparison between plans and realization; b. explanations regarding the causes and obstacles of differences between plans and Business Plan realization;
   c. follow-up efforts that have been and will be taken to improve Business Plan realization achievements;
   d. results of analysis or identification and the opinion of the Board of Commissioners on the supervision of the implementation of the Business Plan by the Board of Directors; and e. supervision steps that have been and will be taken by the Board of Commissioners in the Business Plan supervision process.
2. In accordance with Article 50 of the POJK on BPR and BPR Syariah Reporting, the data update realization report is part of the BPR and BPR Syariah Business Plan Implementation and Supervision Report.
3. The preparation of the Business Plan Implementation and Supervision Report refers to the guidelines as listed in the Appendix, which is an inseparable part of this Financial Services Authority Circular Letter.

V. REPORTING

1. The procedures for submitting the Business Plan, and the Business Plan Implementation and Supervision Report shall be carried out in accordance with the PO

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