OJK Regulation No. 42 of 2025 on Financial Reporting Integrity for Financing Institutions, Venture Capital Companies, Microfinance Institutions, and Other Financial Service Institutions

FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 42 OF 2025
CONCERNING
FINANCIAL REPORTING INTEGRITY
FOR FINANCING INSTITUTIONS, VENTURE CAPITAL COMPANIES, MICROFINANCE INSTITUTIONS, AND OTHER FINANCIAL SERVICE INSTITUTIONS BY THE GRACE OF GOD THE ALMIGHTY THE BOARD OF COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that financial information and financial reports of financing institutions, venture capital companies, microfinance institutions, and other financial service institutions are used in decision-making by regulators and stakeholders, thus requiring precision and accuracy in the preparation of financial information and financial reports with integrity through strengthening the implementation of governance and internal controls in the financial reporting process; b. that to support the strengthening of the implementation of governance and internal controls in the financial reporting process of financing institutions, venture capital companies, microfinance institutions, and other financial service institutions, regulations regarding the financial reporting integrity of financing institutions, venture capital companies, microfinance institutions, and other financial service institutions are needed;
c. that based on the considerations referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation concerning Financial Reporting Integrity for Financing Institutions, Venture Capital Companies, Microfinance Institutions, and Other Financial Service Institutions;

Recalling:

1. Law Number 2 of 2009 concerning the Indonesia Export Financing Institution (State Gazette of the Republic of Indonesia Year 2009 Number 2, Supplement to the State Gazette of the Republic of Indonesia Number 4957) 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);
2. 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);
3. Law Number 1 of 2013 concerning Microfinance Institutions (State Gazette of the Republic of Indonesia Year 2013 Number 12, Supplement to the State Gazette of the Republic of Indonesia Number 5394) 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);
4. 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);

DECIDING:

To Establish: A FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING FINANCIAL REPORTING INTEGRITY FOR FINANCING INSTITUTIONS, VENTURE CAPITAL COMPANIES, MICROFINANCE INSTITUTIONS, AND OTHER FINANCIAL SERVICE INSTITUTIONS.

CHAPTER I
GENERAL PROVISIONS

Article 1
In this Financial Services Authority Regulation, the following terms are defined as:

1. Financing Institutions, Venture Capital Companies, Microfinance Institutions, and Other Financial Service Institutions, hereinafter referred to as PVML, are financial service institutions comprising financing companies, infrastructure financing companies, venture capital companies, microfinance institutions, pawnshop companies, information technology-based joint financing service providers, Indonesia Export Financing Institution, secondary housing financing companies, PT Permodalan Nasional Madani, Badan Pengelola Tabungan Perumahan Rakyat, PT Sarana Multi Infrastruktur (Persero), and other financial service institutions.

2. Financing Company is a legal entity that conducts financing activities for goods and/or services to the public, including those conducting business activities based on Sharia principles.

3. Infrastructure Financing Company is a legal entity specifically established to conduct financing activities in the form of providing funds for infrastructure projects and/or carrying out other activities or facilities to support infrastructure financing, including conducting business activities based on Sharia principles.

4. Venture Capital Company is a business entity that conducts venture capital business activities, including those conducting business activities based on Sharia principles.

5. Microfinance Institution is a financial institution specifically established to provide business development services and community empowerment, either through loans or financing for micro-scale businesses to members and the public, managing savings, or providing business development consulting services, not solely for profit, including those conducting business activities based on Sharia principles.

6. Pawnshop Company is a legal entity that conducts business activities providing loans secured by movable assets, including those conducting business activities based on Sharia principles.

7. Information Technology-Based Joint Financing Service Provider, hereinafter referred to as Penyelenggara LPBBTI, is an Indonesian legal entity that provides, manages, and operates the provision of financial service services to connect fund providers with fund recipients in conducting financing, both conventionally and based on Sharia principles, directly through electronic systems using the internet.

8. Secondary Housing Financing Company, hereinafter abbreviated as PPSP, is a company established by the Government of the Republic of Indonesia to conduct secondary housing financing and other activities related to the development of the secondary housing financing market.

9. Indonesia Export Financing Institution, hereinafter abbreviated as LPEI, is the Indonesia Export Financing Institution as referred to in the Law concerning the Indonesia Export Financing Institution.

10. PT Permodalan Nasional Madani, hereinafter referred to as PT PNM, is a company established based on Government Regulation of the Republic of Indonesia Number 38 of 1999 concerning State Capital Participation for the Establishment of State-Owned Limited Liability Companies (Persero) in the context of Developing Cooperatives, Small and Medium Enterprises.

11. Badan Pengelola Tabungan Perumahan Rakyat, hereinafter referred to as BP Tapera, is a legal entity formed to manage people's housing savings.

12. PT Sarana Multi Infrastruktur (Persero), hereinafter referred to as PT SMI (Persero), is a state-owned business entity established based on Government Regulation Number 66 of 2007 concerning State Capital Participation for the Establishment of State-Owned Limited Liability Companies (Persero) in the Field of Infrastructure Financing as last amended by Government Regulation Number 53 of 2020 concerning the Second Amendment to Government Regulation Number 66 of 2007 concerning State Capital Participation for the Establishment of State-Owned Limited Liability Companies (Persero) in the Field of Infrastructure Financing.

13. Controlling Shareholder, hereinafter abbreviated as PSP, is a legal entity, individual, and/or business group that directly or indirectly owns shares or shares equivalent to shares in PVML and/or has the ability to exercise control over the aforementioned PVML.

14. Board of Directors is the organ of PVML that has the authority and full responsibility for the management of PVML for the interests of PVML, in accordance with the purpose and objectives of PVML and represents PVML, both in and out of court, in accordance with the articles of association for PVML in the form of a limited liability company, or equivalent to the Board of Directors for PVML in the form of a cooperative legal entity, LPEI, or BP Tapera.

15. Board of Commissioners is the organ of PVML tasked with conducting general and/or specific supervision in accordance with the articles of association and providing advice to the Board of Directors for PVML in the form of a limited liability company legal entity, or equivalent to the Board of Commissioners for PVML in the form of a cooperative legal entity, LPEI, or BP Tapera.

16. Sharia Supervisory Board is a party that has the task and function of supervising the implementation of PVML activities to ensure compliance with Sharia principles.

17. Executive Official is a PVML official who reports directly to the members of the Board of Directors or has significant influence over the policies and/or operations of PVML.

18. Financial Report is a report regarding financial position and financial performance prepared by PVML, either in the form of a complete financial report or a summary.

19. Financial Information is information in the form of numbers and financial ratios regulated in legislation in the financial services sector.

CHAPTER II
PREPARATION OF FINANCIAL INFORMATION AND REPORTS OF PVML

Article 2
(1) PVML is required to have an integrated financial reporting process to ensure the truthfulness, accuracy, and transparency of the Financial Information and Financial Reports produced.
(2) The preparation of Financial Information is carried out in accordance with the provisions of legislation in the financial services sector.
(3) The preparation of Financial Reports is carried out in accordance with the Financial Services Authority Regulation concerning financial reporting.

Article 3
(1) The Board of Directors, Board of Commissioners, Sharia Supervisory Board, PSP, Executive Officials, and/or employees of PVML are prohibited from manipulating the Financial Information and/or Financial Reports of PVML so that they do not reflect the actual conditions. (2) The Board of Directors, Board of Commissioners, Sharia Supervisory Board, PSP, Executive Officials, and/or employees of PVML are not permitted to perform acts that cause the Financial Information and/or Financial Reports of PVML to be inconsistent with the Financial Services Authority Regulation concerning financial reporting.

Article 4
(1) PVML is required to formulate and establish internal control policies and procedures in the PVML financial reporting process to:
a. ensure the truthfulness, accuracy, and transparency of Financial Information and Financial Reports; b. increase efficiency and effectiveness in the financial reporting process;
c. ensure compliance with legislative provisions in the financial reporting process; and
d. ensure that Financial Reports are prepared in accordance with the Financial Services Authority Regulation concerning financial reporting.
(2) The policies and procedures referred to in paragraph (1) must at least contain:
a. a prohibition for all Board of Directors, Board of Commissioners, Sharia Supervisory Board, PSP, Executive Officials, and employees of PVML to perform activities that can cause Financial Information and Financial Reports to not reflect actual conditions; b. procedures for recording financial transactions so that Financial Reports are prepared in accordance with the Financial Services Authority Regulation concerning financial reporting;
c. procedures for maintaining records of financial transactions so that records reflect fair and accurate financial transactions;
d. procedures to ensure that financial transactions have been carried out and approved by authorized parties; and e. procedures to prevent or detect unauthorized transactions in a timely manner that have the potential to cause material impact in the PVML Financial Reports. (3) The internal control policies and procedures in the PVML financial reporting process are established by the Board of Directors after obtaining approval from the Board of Commissioners. (4) The internal control policies and procedures in the PVML financial reporting process are established by the Board of Directors after obtaining approval from the Board of Commissioners and have been evaluated by the Sharia Supervisory Board for PVML conducting business activities based on Sharia principles. (5) PVML is required to implement internal control policies and procedures in the PVML financial reporting process. (6) In implementing the policies and procedures referred to in paragraph (5), PVML is required to provide information systems that support financial reporting in accordance with the Financial Services Authority Regulation concerning financial reporting. (7) The information system supporting financial reporting referred to in paragraph (6) is adjusted to the complexity of the business and the size of PVML. (8) The provisions referred to in paragraph (5) are exempted for Microfinance Institutions of small business scale.

Article 5
(1) PVML is required to:
a. form a working unit; or b. appoint an Executive Official, who is responsible for preventing fraud and manipulation in the recording of Financial Information and Financial Reports of PVML.
(2) The formation of a working unit or appointment of an Executive Official considers the scale and complexity of PVML's business activities.
(3) The working unit referred to in paragraph (1) letter a can be held concurrently by a working unit handling the risk management function, compliance function, or anti-fraud function.
(4) The Executive Official referred to in paragraph (1) letter b can be held concurrently by an Executive Official handling the risk management function, compliance function, or anti-fraud function.

Article 6
(1) PVML that violates the provisions as referred to in Article 2 paragraph (1), Article 4 paragraph (1), paragraph (2), paragraph (5), paragraph (6), and/or Article 5 paragraph (1) shall be subject to administrative sanctions in the form of:
a. written warning; b. suspension of part or all business activities;
c. restriction of certain business activities;
d. reduction of risk level assessment results; e. cancellation of approval; f. administrative fine; and/or g. revocation of the Sharia business unit license.
(2) The administrative sanctions referred to in paragraph (1) letters b through f can be imposed with or without prior imposition of an administrative sanction in the form of a written warning as referred to in paragraph (1) letter a. (3) The Board of Directors, Board of Commissioners, Sharia Supervisory Board, PSP, Executive Officials, and/or employees of PVML who violate the provisions as referred to in Article 3 paragraph (1) shall be subject to administrative sanctions in the form of:
a. written warning; and/or b. prohibition from becoming a member of the Board of Directors, Board of Commissioners, Sharia Supervisory Board, and/or PSP.
(4) The administrative sanction referred to in paragraph (3) letter b can be imposed with or without prior imposition of an administrative sanction in the form of a written warning as referred to in paragraph (3) letter a. (5) Administrative sanctions in the form of:
a. suspension of part or all business activities as referred to in paragraph (1) letter b; b. restriction of certain business activities as referred to in paragraph (1) letter c;
c. cancellation of approval as referred to in paragraph (1) letter e,
are exempted for LPEI, BP Tapera, PT PNM, PPSP, and PT SMI (Persero).
(6) The administrative sanction in the form of an administrative fine as referred to in paragraph (1) letter f is imposed at most IDR 50,000,000.00 (fifty million rupiah).
(7) In the event that PVML has fulfilled the provisions as referred to in paragraph (1), the Financial Services Authority may revoke the administrative sanction.
(8) In the event that a violation of the provisions as referred to in paragraph (1) occurs and the violation has been rectified, the Financial Services Authority provides an administrative sanction in the form of a written warning that ends automatically.

Article 7
The Financial Services Authority has the authority to conduct supervision over parties who have been subject to administrative sanctions, in the form of actions:
a. reducing the health level assessment results; b. re-evaluating the main parties that caused PVML to violate the provisions as referred to in Article 6 paragraph (1) and paragraph (3); and/or
c. recording the track record of parties related to PVML that caused PVML to violate the provisions as referred to in Article 6 paragraph (1) and paragraph (3) in the Financial Services Authority's electronic system.

CHAPTER III
TASKS AND RESPONSIBILITIES OF THE BOARD OF DIRECTORS, BOARD OF COMMISSIONERS, AND AUDIT COMMITTEE IN THE FINANCIAL REPORTING PROCESS

Article 8
(1) The Board of Directors is responsible for:
a. the preparation and presentation of Financial Information and Financial Reports; b. the compliance of the preparation and presentation of Financial Reports with the Financial Services Authority Regulation concerning financial reporting;
c. the completeness and truthfulness of the content of Financial Reports; and
d. the implementation of internal controls in the PVML financial reporting process.
(2) The commitment of responsibility as referred to in paragraph (1) is embodied in a stamped statement letter signed by the Board of Directors on a separate page in the Financial Report.
(3) The statement letter as referred to in paragraph (2) is prepared in accordance with the format contained in the Appendix which is an integral part of this Financial Services Authority Regulation. (4) The statement letter as referred to in paragraph (2) is submitted simultaneously with the submission of the Financial Report through the Financial Services Authority's data communication network system in accordance with the Financial Services Authority Regulation concerning the submission of Financial Reports for each PVML. (5) In the event that the statement letter cannot be submitted through the Financial Services Authority's data communication network system as referred to in paragraph (4), the statement letter is submitted in the form of an electronic document through the email address designated by the Financial Services Authority.

Article 9
(1) The Board of Directors is required to submit an internal control report as referred to in Article 8 paragraph (1) letter d to the Financial Services Authority.
(2) PVML that has the obligation to submit annual Financial Reports audited by a public accountant shall submit the internal control report as referred to in paragraph (1) simultaneously with the submission of the annual Financial Reports audited by a public accountant in accordance with the Financial Services Authority Regulation concerning the submission of annual Financial Reports audited by a public accountant for each PVML. (3) PVML that does not yet have the obligation to submit annual Financial Reports audited by a public accountant shall submit the internal control report as referred to in paragraph (1) to the working unit overseeing the supervision function for each PVML no later than April 30 of the following year. (4) The internal control report in the PVML financial reporting process as referred to in paragraph (1) must at least contain:
a. a statement by the Board of Directors regarding the Board of Directors' responsibility for the implementation of internal controls in the PVML financial reporting process; and b. the results of the Board of Directors' assessment of the effectiveness of internal controls in the PVML financial reporting process.

Article 10
(1) The Board of Commissioners is required to supervise the implementation of internal control policies and procedures in the PVML financial reporting process.
(2) The Board of Commissioners is required to carry out tasks and responsibilities with good faith and the principle of prudence.
(3) The results of the supervision by the Board of Commissioners as referred to in paragraph (1) must be embodied in a supervision report of the business plan in accordance with the Financial Services Authority Regulation concerning the business plan of non-bank financial service institutions.

Article 11
(1) For PVML required to form an audit committee, the audit committee is required to carry out tasks and responsibilities to monitor and evaluate:
a. the implementation of internal control policies and procedures in the preparation and submission of Financial Reports; and b. the compliance of the preparation and presentation of Financial Reports with the Financial Services Authority Regulation concerning financial reporting. (2) The results of monitoring and evaluation as referred to in paragraph (1) are used to provide recommendations to the Board of Commissioners to ensure the integrity of the PVML Financial Report reporting process. (3) In the event that PVML is not required to have an audit committee, the tasks and responsibilities of the audit committee as referred to in paragraph (1) must be carried out by the Board of Commissioners.

Article 12
(1) PVML that violates the provisions as referred to in Article 11 paragraph (1) shall be subject to administrative sanctions in the form of:
a. written warning; b. suspension of part or all business activities;
c. restriction of certain business activities;
d. reduction of risk level assessment results; e. cancellation of approval; f. administrative fine; and/or g. revocation of the Sharia business unit license.
(2) The administrative sanctions referred to in paragraph (1) letters b through f can be imposed with or without prior imposition of an administrative sanction in the form of a written warning as referred to in paragraph (1) letter a. (3) The Board of Directors, Board of Commissioners, Sharia Supervisory Board, and/or PSP who violate the provisions as referred to in Article 9 paragraph (1), paragraph (4), Article 10, and/or Article 11 paragraph (3) shall be subject to administrative sanctions in the form of:
a. written warning; and/or b. prohibition from becoming a member of the Board of Directors, Board of Commissioners, Sharia Supervisory Board, and/or PSP.
(4) The administrative sanction referred to in paragraph (3) letter b can be imposed with or without prior imposition of an administrative sanction in the form of a written warning as referred to in paragraph (3) letter a. (5) Administrative sanctions in the form of:
a. suspension of part or all business activities as referred to in paragraph (1) letter b; b. restriction of certain business activities as referred to in paragraph (1) letter c;
c. cancellation of approval as referred to in paragraph (1) letter e,
are exempted for LPEI, BP Tapera, PT PNM, PPSP, and PT SMI (Persero).
(6) The administrative sanction in the form of an administrative fine as referred to in paragraph (1) letter f is imposed at most IDR 50,000,000.00 (fifty million rupiah).
(7) In the event that PVML has fulfilled the provisions as referred to in paragraph (1), the Financial Services Authority may revoke the administrative sanction.
(8) In the event that a violation of the provisions as referred to in paragraph (1) occurs and the violation has been rectified, the Financial Services Authority provides an administrative sanction in the form of a written warning that ends automatically.

Article 13
The Financial Services Authority is authorized to conduct supervisory actions against parties that have been subjected to administrative sanctions, in the form of actions:
a. lowering the results of the health level assessment; b. conducting a re-evaluation of the principal parties that caused the PVML to violate the provisions as referred to in Article 12 paragraph (1) and paragraph (3); and/or
c. recording a track record of parties related to the PVML that caused the PVML to violate the provisions as referred to in Article 12 paragraph (1) and paragraph (3) in the Financial Services Authority's electronic system.

CHAPTER IV
THE ROLE OF CONTROLLING SHAREHOLDERS AND AFFILIATED PARTIES IN THE FINANCIAL REPORTING PROCESS

Article 14
(1) Controlling Shareholders must support the process of high-quality and reliable financial reporting by the PVML.
(2) Controlling Shareholders are prohibited from taking interventionist actions that have the potential to cause misstatement in the Financial Information and/or Financial Statements of the PVML and/or significant weaknesses in the PVML's financial reporting process.

Article 15
Affiliated parties are prohibited from intervening with the Board of Directors, Board of Commissioners, Sharia Supervisory Board, Controlling Shareholders, and/or Executive Officials, in the PVML's financial reporting process.

Article 16
(1) Controlling Shareholders who violate the provisions as referred to in Article 14 paragraph (2) shall be subjected to administrative sanctions in the form of:
a. written warnings; b. prohibition from becoming members of the Board of Directors, Board of Commissioners, Sharia Supervisory Board, and/or Controlling Shareholders; and/or
c. administrative fines.
(2) The administrative sanctions as referred to in paragraph (1) letter b and letter c may be imposed with or without being preceded by the imposition of administrative sanctions in the form of written warnings as referred to in paragraph (1) letter a. (3) Affiliated parties who violate the provisions as referred to in Article 15 shall be subjected to administrative sanctions in the form of written warnings. (4) The administrative sanction of prohibition from becoming a Controlling Shareholder as referred to in paragraph (1) letter b is excluded for State-Owned Enterprises (LPEI), Tapera Management Agency (BP Tapera), PT PNM, PPSP, and PT SMI (Persero). (5) The administrative fine sanction as referred to in paragraph (1) letter c is imposed at most Rp50,000,000.00 (fifty million rupiah). (6) In the event that Controlling Shareholders and/or affiliated parties have fulfilled the provisions as referred to in paragraph (1) and/or paragraph (3), the Financial Services Authority may revoke the administrative sanctions. (7) In the event that violations of the provisions as referred to in paragraph (1) occur and the violations have been corrected, the Financial Services Authority provides administrative sanctions in the form of written warnings that expire automatically.

Article 17
The Financial Services Authority is authorized to conduct supervisory actions against parties that have been subjected to administrative sanctions, in the form of actions:
a. lowering the results of the health level assessment; b. conducting a re-evaluation of the principal parties that caused the PVML to violate the provisions as referred to in Article 16 paragraph (1); and/or
c. recording a track record of parties related to the PVML that caused the PVML to violate the provisions as referred to in Article 16 paragraph (1) in the Financial Services Authority's electronic system.

CHAPTER V
SUBMISSION OF INFORMATION AND REPORTS TO THE FINANCIAL SERVICES AUTHORITY

Article 18
In the event that weaknesses or conditions that have the potential to endanger the continuity of the PVML's business are known in the PVML's financial reporting process, the Board of Directors, Board of Commissioners, Sharia Supervisory Board, Controlling Shareholders, Executive Officials, employees, and/or other parties must provide information to the Financial Services Authority.

Article 19
Information regarding weaknesses or conditions that have the potential to endanger the continuity of the PVML's business in the PVML's financial reporting process as referred to in Article 18 is submitted online or offline to the Financial Services Authority and is addressed to the work unit at the Financial Services Authority that oversees the supervisory function according to the region where the PVML's headquarters is located.

CHAPTER VI
OTHER PROVISIONS

Article 20
The Financial Services Authority is authorized to order:
a. the Board of Directors, Board of Commissioners, Sharia Supervisory Board, Controlling Shareholders, Executive Officials, and/or employees of the PVML who commit violations of the provisions as referred to in Article 3 paragraph (1); b. Controlling Shareholders who commit violations of Article 14 paragraph (2); and/or
c. affiliated parties who commit violations of Article 15,
to return the profits obtained to the PVML.

Article 21
The Financial Services Authority may grant approval or policies that differ from this Financial Services Authority Regulation based on certain considerations.

CHAPTER VII
TRANSITIONAL PROVISIONS

Article 22
For PVML that have obtained business licenses before this Financial Services Authority Regulation is promulgated, the provisions regarding:
a. the formulation and determination of internal control policies and procedures as referred to in Article 4 paragraph (1); b. the implementation of internal control policies and procedures in the PVML's financial reporting process as referred to in Article 4 paragraph (5); and
c. the formation of work units as referred to in Article 5 paragraph (1) letter a or the appointment of Executive Officials as referred to in Article 5 paragraph (1) letter b,
shall begin to apply at the latest 1 (one) year calculated from the date this Financial Services Authority Regulation is promulgated.

Article 23
Violations of the financial reporting process committed by the Board of Directors, Board of Commissioners, Sharia Supervisory Board, Controlling Shareholders, Executive Officials, affiliated parties, and/or employees of the PVML that occurred before this Financial Services Authority Regulation comes into force and which violations continue to exist and are discovered by the Financial Services Authority and/or based on reports from other parties after this Financial Services Authority Regulation comes into force, shall be subjected to administrative sanctions in accordance with this Financial Services Authority Regulation.

CHAPTER VIII
CLOSING PROVISIONS

Article 24
This Financial Services Authority Regulation shall come into force on the date of its promulgation.

In order that everyone knows it, it is ordered to promulgate this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Determined in Jakarta on December 22, 2025

THE CHAIRMAN OF THE BOARD OF COMMISSIONERS
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA,

MAHENDRA SIREGAR

Promulgated in Jakarta on [Date]

THE MINISTER OF LAW OF THE REPUBLIC OF INDONESIA,

SUPRATMAN ANDI AGTAS

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2025 NUMBER [Number]

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 42 OF 2025
CONCERNING
FINANCIAL REPORTING INTEGRITY
OF FINANCING INSTITUTIONS, VENTURE CAPITAL COMPANIES, MICROFINANCE INSTITUTIONS, AND OTHER FINANCIAL SERVICE INSTITUTIONS

I. GENERAL
The Financial Services Authority, as the regulator and supervisor of financing institutions, venture capital companies, microfinance institutions, and other financial service institutions (PVML), processes Financial Information and Financial Statements regularly submitted by PVML for the purpose of direct and indirect supervision. The PVML supervision pillar will run well if the Financial Information and Financial Statements prepared by PVML are of high quality. In addition to being used by regulators, the Financial Information and Financial Statements published by PVML regularly are also used by other stakeholders, including investors, depositors, and the public, in making economic decisions. In preparing Financial Statements, PVML refers to financial accounting standards and presents Financial Information that is relevant and accurately represents the condition of the PVML. The integrity of Financial Information and Financial Statements is one of the main things that must be believed to maintain the trust of regulators and the public in the PVML industry and to support decision-making by market players and the public. To achieve Financial Information and Financial Statements with integrity, it is necessary to strengthen the implementation of governance and internal controls in the PVML's financial reporting process. The internal controls mentioned are expected to become a solid foundation to maintain the reliability, accuracy, and consistency of PVML's Financial Information and Financial Statements, while reducing the risk of errors or misuse in the financial reporting process. The role of various parties is needed to support the implementation of good governance and internal controls in the financial reporting process, including the role of the Board of Directors, Board of Commissioners, Sharia Supervisory Board, Controlling Shareholders, Executive Officials, affiliated parties, and/or employees of the PVML. This is also strengthened in Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector, which regulates prohibitions for members of the board of commissioners, supervisory members, board of directors members, management members, managers, employees, and/or affiliated parties of Financing Business Organizers, including making false records in bookkeeping or financial statements and/or without being supported by valid documents, eliminating or not including correct information in business activity reports and financial statements, and changing, obscuring, hiding, deleting, and/or eliminating a record in bookkeeping or in financial statements, and in documents or business activity reports. In relation to this, to support the strengthening of PVML's financial reporting integrity, it is necessary to regulate PVML's financial reporting integrity.

II. ARTICLE BY ARTICLE

Article 1
It is clear enough.

Article 2
Paragraph (1)
What is meant by "truthfulness" is Financial Information and Financial Statements as they are and there are no material misstatements.
What is meant by "accuracy" is Financial Information and Financial Statements representing neutral or bias-free information.
What is meant by "transparency" is Financial Information and Financial Statements that can be seen by various parties needing Financial Information and Financial Statements and have included all relevant information.

Paragraph (2)
Financial Information, among others, the ratio of core capital to paid-up capital in accordance with Financial Services Authority Regulations concerning the development and strengthening of Financing Companies, Infrastructure Financing Companies, and Venture Capital Companies.

Paragraph (3)
What is meant by "Financial Services Authority Regulations concerning financial reporting" includes, among others, Financial Services Authority provisions regulating monthly reports.

Article 3
Paragraph (1)
What is meant by "manipulating" includes, among others, in the form of:
a. false recording, or changing accounting records or supporting documentation used as the basis for preparing PVML's Financial Information or Financial Statements; b. eliminating or causing the non-recording of a transaction or information in bookkeeping, documents, or PVML's Financial Statements;
c. incorrectly applying accounting principles related to recognition, measurement, presentation, or disclosure in PVML's Financial Statements;
d. obscuring, hiding, deleting, or damaging the recording of a transaction or information in bookkeeping, documents, or PVML's Financial Statements; and/or e. engaging in other activities such as allowing the occurrence of manipulation of Financial Information and/or Financial Statements of PVML's subsidiaries, with the aim of providing benefits to the relevant party or other parties.

Example: Manipulation of PVML's Financial Information and/or Financial Statements by Executive Officials, Board of Directors, Board of Commissioners, Sharia Supervisory Board, or Controlling Shareholders includes, among others:
a. The Board of Directors intentionally hides or orders PVML employees to hide significant bills or costs that should have been charged in the current year in accordance with financial accounting standards and/or Financial Services Authority regulations concerning the recording of financial transactions, so that PVML's profit becomes significantly higher and affects the Board of Directors' bonus amount to be received. b. Executive Officials intentionally recognize fictitious income to achieve division performance targets and obtain bonuses.
c. Controlling Shareholders intentionally request the Board of Directors to improve the credit quality or financing from business groups that are related parties of the PVML, so that the PVML's impairment loss reserves (CKPN) are smaller, nonperforming loans (NPL) are smaller, and PVML's profit is larger, thereby affecting the earnings per share ratio which will raise the PVML's stock value so that the PVML can meet good rating criteria.

Paragraph (2)
It is clear enough.

Article 4
Paragraph (1)
Internal control policies and procedures established by the Board of Directors are carried out based on the division of authority of the Board of Directors regulated in the respective PVML's articles of association.

Paragraph (2)
It is clear enough.

Paragraph (3)
It is clear enough.

Paragraph (4)
It is clear enough.

Paragraph (5)
It is clear enough.

Paragraph (6)
It is clear enough.

Paragraph (7)
It is clear enough.

Paragraph (8)
It is clear enough.

Article 5
Paragraph (1)
What is meant by "forming a work unit" is the PVML's action to:
a. establish a new work unit specifically; or b. add new functions to an existing work unit, which is responsible for preventing fraud and manipulation in the recording of PVML's Financial Information and Financial Statements.

Paragraph (2)
The complexity of the PVML's business activities is reflected, among others, in:
a. diversity in business activities, products, and/or services; b. branch office network;
c. distribution channels; and/or
d. supporting technology used.

Paragraph (3)
It is clear enough.

Paragraph (4)
It is clear enough.

Article 6
Paragraph (1)
The imposition of administrative sanctions is carried out by considering, among others:
a. the impact of the violation of provisions on consumer losses, the condition of the PVML, and the financial services sector; b. the complexity of the violation of provisions;
c. the financial condition of the PVML; and/or
d. repeated violations of provisions.

Paragraph (2)
It is clear enough.

Paragraph (3)
It is clear enough.

Paragraph (4)
It is clear enough.

Paragraph (5)
It is clear enough.

Paragraph (6)
It is clear enough.

Paragraph (7)
It is clear enough.

Paragraph (8)
It is clear enough.

Article 7
Letter a
It is clear enough.

Letter b
What is meant by "principal party" is the Board of Directors, Board of Commissioners, Sharia Supervisory Board, and/or Controlling Shareholders.

Letter c
What is meant by "related party" includes, among others, the Board of Directors, Board of Commissioners, Sharia Supervisory Board, Controlling Shareholders, Executive Officials, affiliated parties, PVML employees, and/or other parties working for the benefit of the PVML.

Article 8
Paragraph (1)
Letter a
It is clear enough.

Letter b
It is clear enough.

Letter c
It is clear enough.

Letter d
What is meant by "internal control in the financial reporting process" is control designed to provide assurance over the reliability of the financial reporting process and the preparation of Financial Statements in accordance with financial accounting standards and/or Financial Services Authority Regulations concerning monthly reports.

Paragraph (2)
It is clear enough.

Paragraph (3)
It is clear enough.

Paragraph (4)
What is meant by "Financial Services Authority Regulations concerning the submission of Financial Statements" includes, among others, Financial Services Authority provisions regulating the method of submission through the Financial Services Authority's data communication network system and the deadline for submitting Financial Statements.

Paragraph (5)
The submission of the statement of declaration in the form of an electronic document is carried out through the Financial Services Authority's mailing room service and is addressed to:
Financial Services Authority u.p. Head of the Department of PVML Supervision related to the copy to the Head of the Department of Data and Statistics Management.

Article 9
It is clear enough.

Article 10
It is clear enough.

Article 11
It is clear enough.

Article 12
See Explanation of Article 6.

Article 13
See Explanation of Article 7.

Article 14
Paragraph (1)
What is meant by "high-quality and reliable PVML financial reporting process" includes, among others:
a. financial statements are prepared in accordance with Financial Services Authority regulations; b. reports are submitted completely and on time; and
c. internal control systems and transaction recording procedures are adequate to prevent errors or manipulation.

Paragraph (2)
Examples of significant weaknesses include, among others:
a. no segregation of duties, making it vulnerable to manipulation; b. accounting systems that do not record transactions consistently; and
c. no review or verification of reports before submission.

Article 15
What is meant by "affiliated" is:
a. family relationships due to marriage or descent up to the second degree, both horizontally and vertically, with employees, Board of Directors members, Board of Commissioners members, Sharia Supervisory Board members, and/or PVML shareholders; b. relationships with PVML due to the existence of one or more members of the Board of Directors or Board of Commissioners;
c. control relationships with PVML, both directly and indirectly;
d. share ownership relationships in PVML of 20% (twenty percent) or more; and/or e. relationships between 2 (two) companies controlled, directly or indirectly, by the same party.

What is meant by "interventionist actions" includes, among others, actions that:
a. harm or have the potential to harm the PVML; and b. cause the PVML to be non-compliant with regulatory provisions in the process of preparing and submitting Financial Statements.

Article 16
See Explanation of Article 6.

Article 17
See Explanation of Article 7.

Article 18
Weaknesses in the PVML's financial reporting process can occur even if the PVML's Financial Statements are not materially misstated.

Example:
a. no segregation of duties between the party recording and the party approving a financial transaction; b. no tiered review procedures for significant financial transactions; and/or
c. no periodic updating and/or review of the use of information technology in PVML's financial reporting, thereby impacting financial reporting that does not comply with financial accounting standards and/or Financial Services Authority regulations concerning the recording of financial transactions.

Conditions that have the potential to endanger the continuity of the PVML's business in the financial reporting process include, among others, efforts to defer costs so that the PVML's capital ratio can be maintained in accordance with minimum capital ratio regulations.

Information submitted to the Financial Services Authority includes, among others:
a. the identity of the party submitting the information; and b. details of significant weaknesses or conditions that can endanger the continuity of the PVML's business, such as the date of the event, the form of the weakness, and the impact of the weakness or the impact of the condition in question.

Article 19
Examples of online submission of information include submission through the Financial Services Authority's data communication network system.
Examples of offline submission of information include submission via letter or electronic mail.

Article 20
It is clear enough.

Article 21
The granting of approval or different policies is intended, among others, to:
a. support national policy; b. maintain public interest;
c. maintain industry growth; and/or
d. maintain healthy business competition.

Examples of conditions requiring certain considerations are extraordinary events, hereinafter abbreviated as KLB, which can cause a large increase in morbidity and mortality, which also impacts the economy and society, thus requiring attention and handling by all relevant parties and regulated in other provisions based on considerations in facing possible KLB.

Article 22
It is clear enough.

Article 23
What is meant by "based on reports from other parties" is information received and verified by the Financial Services Authority from entities or individuals submitting data or findings related to the PVML.

Examples of violations subject to sanctions in accordance with this Financial Services Authority Regulation:
The Board of Directors of a PVML manipulates Financial Statements by recording fictitious assets, namely land worth Rp100,000,000,000.00 (one hundred billion rupiah) on December 31, 2025. The fictitious asset is still recorded and discovered by the Financial Services Authority during the examination of the Financial Statements as of March 31, 2026. The Board of Directors' error in manipulating Financial Statements discovered during the March 31, 2026 examination is subject to sanctions in accordance with this Financial Services Authority Regulation.

Article 24
It is clear enough.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER [Number]

APPENDIX
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 42 OF 2025
CONCERNING
FINANCIAL REPORTING INTEGRITY
OF FINANCING INSTITUTIONS, VENTURE CAPITAL
COMPANIES, MICROFINANCE INSTITUTIONS, AND OTHER FINANCIAL SERVICE INSTITUTIONS

BOARD OF DIRECTORS STATEMENT LETTER*

The undersigned:
Name : …...................................................
Place and Date of Birth : …...................................................
ID Card/Passport Number : …...................................................
Position : …...................................................
PVML Name : …...................................................

Hereby declares that I am responsible for:
a. the preparation and presentation of Financial Information and Financial Statements; b. the compliance of the preparation and presentation of Financial Statements with Financial Services Authority Regulations concerning financial reporting;
c. the completeness and truthfulness of the content of the Financial Statements; and
d. the implementation of internal controls in the PVML's financial reporting process.

This statement letter is made truthfully. If the above statement is proven to be untrue, I am willing to be held responsible in accordance with the provisions of applicable laws and regulations.

Sincerely,
(City), (date, month, year)
Stamp
..............................................
(Full Name)

*The format of the Board of Directors statement letter can be adjusted to the needs of the PVML as long as it still meets the substance of the statement as regulated in this Financial Services Authority Regulation.

THE CHAIRMAN OF THE BOARD OF COMMISSIONERS
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA,

signed.

MAHENDRA SIREGAR