POJK on Financial Services without Branches in the Context of Inclusive Finance

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA

COPY

FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 19/POJK.03/2014
CONCERNING
BRANCHLESS FINANCIAL SERVICES IN THE CONTEXT OF INCLUSIVE FINANCE

BY THE GRACE OF GOD THE ALMIGHTY

THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that access to financial services is needed for members of the public who have not yet known, used, and/or received banking services and other financial services; b. that in order to expand access to financial services, the Financial Services Authority, the banking industry, and other financial service industries are committed to supporting the realization of inclusive finance, which is also in line with the National Strategy for Inclusive Finance launched by the government;
c. that one of the manifestations of the commitment of the financial service industry, which has been formulated as one of the programs of the National Strategy for Inclusive Finance, is the provision of branchless financial services;
d. that through branchless financial services, financial products are available that are accessible, simple, easy to understand, and appropriate to the needs of the public in order to support inclusive finance; e. that based on the considerations referred to in letters a, b, c, and d, it is necessary to establish a Financial Services Authority Regulation concerning Branchless Financial Services in the Context of Inclusive Finance;

Recalling:

1. 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 by Law Number 10 of 1998 (State Gazette of the Republic of Indonesia Year 1998 Number 182, Supplement to the State Gazette of the Republic of Indonesia Number 3790);
2. 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);
3. 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);
4. Law Number 40 of 2014 concerning Insurance (State Gazette of the Republic of Indonesia Year 2014 Number 337, Supplement to the State Gazette of the Republic of Indonesia Number 5618);

DECIDING:

To establish:
A FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING BRANCHLESS FINANCIAL SERVICES IN THE CONTEXT OF INCLUSIVE FINANCE.

CHAPTER I
GENERAL PROVISIONS
Article 1

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

1. Financial Services Institution is an institution that carries out activities in the banking, capital market, insurance, pension fund, financing institution, and other financial service sectors as referred to in the Law concerning the Financial Services Authority.
2. Bank is a Commercial Bank, Rural Bank, Sharia Commercial Bank, or Sharia Rural Bank, as referred to in the Law concerning Banking and the Law concerning Sharia Banking.
3. Branchless Financial Services in the Context of Inclusive Finance, hereinafter referred to as Laku Pandai, is the activity of providing banking services and/or other financial services not through a branch network, but through cooperation with other parties and supported by the use of information technology facilities.
4. Agent is a party that cooperates with the Laku Pandai organizing Bank, acting as the arm of the Bank to provide banking services to the public in the context of inclusive finance as agreed upon.
5. Inclusive Finance is a condition where all members of the public can easily access financial services and have a culture of optimizing the use of financial services.

Article 2

(1) Every Financial Services Institution is responsible for supporting the realization of Inclusive Finance.
(2) In order to support the realization of Inclusive Finance as referred to in paragraph (1), Financial Services Institutions may become organizers of Laku Pandai.

Article 3

(1) Every Financial Services Institution that becomes a Laku Pandai organizer as referred to in Article 2 paragraph (2) must obtain prior approval from the Financial Services Authority. (2) Financial Services Institutions that may submit an application to become a Laku Pandai organizer as referred to in paragraph (1) are:
a. Banks; b. Insurance companies or Sharia insurance companies;
c. Financial Services Institutions other than those referred to in letters a and b.
(3) Banks as referred to in paragraph (2) that have been approved to become Laku Pandai organizers must apply risk management and prudential principles in organizing Laku Pandai.

CHAPTER II
LAKU PANDAI PRODUCTS
Article 4

Products that may be provided by Financial Services Institutions organizing Laku Pandai include:
a. Savings; b. Credit or financing for micro customers;
c. Micro insurance; and/or
d. Other financial products based on approval from the Financial Services Authority.

Article 5

(1) Savings as referred to in Article 4 letter a are savings with Basic Saving Account (BSA) characteristics.
(2) The BSA characteristics as referred to in paragraph (1) are as follows:
a. can only be owned by individual Indonesian citizens; b. in Rupiah currency;
c. without minimum deposit limits;
d. without minimum account balance limits; e. the maximum account balance at any time is set at most IDR 20,000,000.00 (twenty million Rupiah); f. the maximum debit transaction limit for the account in the form of cash withdrawals, transfers, and/or outbound transfers cumulatively in 1 (one) month per account is at most IDR 5,000,000.00 (five million Rupiah); g. the maximum debit transaction limit for the account as referred to in letter f may be set higher than IDR 5,000,000.00 (five million Rupiah) in 1 (one) month, but must not exceed IDR 60,000,000.00 (sixty million Rupiah) cumulatively in 1 (one) year, in the event that the customer is also a Bank debtor; h. exempt from charges for:

1. monthly administration,
2. account opening,
3. cash deposit transactions,
4. inbound transfer transactions,
5. transfer transactions, and
6. account closure;
   i. charges for cash withdrawal transactions, outbound transfers, payments via savings accounts, and other charges are set by the Bank and must be less than charges for similar transactions for regular savings accounts;
   j. earn interest or profit sharing starting from an account balance of IDR 1.00 (one Rupiah); and k. not permitted for joint accounts with "and/or" status.
   (3) Savings with BSA characteristics can only be provided to customers who do not have other savings accounts.
   (4) Banks are given freedom to set:
   a. the name of the savings product with BSA characteristics; and b. the form of proof of savings account ownership.
   (5) In the event that the nominal transaction amount in 1 (one) month exceeds the maximum limit as referred to in paragraph (2) letter f and/or the balance exceeds the maximum account balance limit as referred to in paragraph (2) letter e, and the customer still wishes to conduct transactions and/or increase the account balance, the Bank may change the status of the savings with BSA characteristics to regular savings after:
   a. the Bank first requests confirmation of approval from the owner of the savings with BSA characteristics; or b. the Bank grants approval for the request of the owner of the savings with BSA characteristics to change the status of the savings with BSA characteristics to regular savings. (6) In the event that the BSA balance is zero and/or there are no transactions for 6 (six) consecutive months, the status of the savings with BSA characteristics may be changed to a dormant account. (7) Banks may only issue Automated Teller Machine (ATM) cards or debit cards to customers with savings with BSA characteristics based on a request from the customer. (8) In the event that the Bank requires cooperation with a payment system organizing company in issuing ATM cards or debit cards as referred to in paragraph (7), the cooperation must be conducted with a company that has Indonesian legal entity status and has transaction processing locations and data center placement in Indonesia. (9) Banks that have been approved as Laku Pandai organizers must provide savings with BSA characteristics at every Bank branch network.

Article 6

(1) Credit or financing for micro customers as referred to in Article 4 letter b is provided by the Bank to customers owning savings with BSA characteristics, in the event that:
a. the prospective debtor has been a customer for at least 6 (six) months; or b. the prospective debtor has been a customer for less than 6 (six) months, but the Bank has confidence in the viability of the prospective debtor and/or their financial capability; and
c. the credit or financing is intended to finance productive business activities and/or other activities in order to support the realization of Inclusive Finance.
(2) Credit or financing for micro customers as referred to in paragraph (1) has at least the following characteristics:
a. credit or financing term of up to 1 (one) year; or b. credit or financing term may be longer than 1 (one) year as long as it is in accordance with the debtor's business cycle; and
c. the maximum nominal limit of credit or financing is set at most IDR 20,000,000.00 (twenty million Rupiah).

Article 7

(1) Applications for credit or financing for micro customers may be submitted through the Bank's branch network or Agents.
(2) Feasibility analysis and approval of credit or financing applications as referred to in paragraph (1) must still be conducted by the Bank.
(3) Disbursement of credit or financing for micro customers may be conducted through:
a. the debtor's savings account with BSA characteristics; or b. the account of the provider of the debtor's business needs.

Article 8

Banks must channel productive credit or financing to micro customers as referred to in Article 6 paragraph (1) by at least 70% (seventy percent) of the total portfolio of credit or financing for micro customers in the context of Laku Pandai.

Article 9

Micro insurance as referred to in Article 4 letter c is an insurance product intended for low-income members of the public.

CHAPTER III
LAKU PANDAI ORGANIZING BANKS
Article 10

(1) Banks that will submit an application for approval to become Laku Pandai organizers as referred to in Article 3 must meet the following requirements:
a. have Indonesian legal entity status; b. have risk profile, operational risk, and compliance risk ratings of 1, 2, or 3;
c. have a branch network in Eastern Indonesia and/or East Nusa Tenggara province; and
d. have supporting infrastructure to provide electronic transaction services for Bank customers in the form of:

1. Short Message Service (SMS) banking or mobile banking, and
2. internet banking or host to host.
   (2) The Financial Services Authority may conduct periodic evaluations regarding the branch network area requirements for Banks as referred to in paragraph (1) letter c.

Article 11

The requirements as referred to in Article 10 paragraph (1) letter c are exempted for:
a. Banks owned by Regional Governments; or b. Banks headquartered outside of DKI Jakarta province.

Article 12

The requirements as referred to in Article 10 paragraph (1) letter b for Rural Banks (BPR) or Sharia Rural Banks (BPRS) are as follows:
a. have core capital of more than IDR 100,000,000,000.00 (one hundred billion Rupiah); b. have a healthy health rating during the assessment period in the last 1 (one) year;
c. have Non Performing Loan (NPL) or Non Performing Financing (NPF) of at most 5% (five percent) during the assessment period in the last 6 (six) months;
d. have a Minimum Capital Adequacy Ratio (KPMM) of at least 12% (twelve percent); e. have not been in a loss position in the last 1 (one) year; and f. have no violations of specific BPR or BPRS regulations.

Article 13

(1) Commercial Banks based on business activities (BUKU) 1 and BPRs or BPRSs that have met the requirements to become organizing Banks as referred to in Article 10 paragraph (1) letters a, b, and c may submit an application to organize internet banking in order to obtain approval to become Laku Pandai organizing Banks. (2) Applications to organize internet banking as referred to in paragraph (1) may only be approved if the Bank is also approved to become a Laku Pandai organizing Bank.

Article 14

(1) Banks that will organize Laku Pandai must include the Laku Pandai organization plan in the Bank's Business Plan (RBB) for the current year.
(2) Banks must submit an application for approval to organize Laku Pandai at least 60 (sixty) days before the target time for Laku Pandai organization, accompanied by supporting documents. (3) The Financial Services Authority grants approval for the Laku Pandai organization application as referred to in paragraph (2) after considering the completeness of documents and suitability with the Bank's capabilities, fulfillment of requirements, and suitability with the characteristics of the Laku Pandai organization to be conducted by the Bank. (4) Banks that have been approved to organize Laku Pandai must start activities no later than 6 (six) months from the date of approval. (5) In the event that the Bank does not organize Laku Pandai within the time period as referred to in paragraph (4), the approval granted is void and declared invalid.

CHAPTER IV
COOPERATION OF LAKU PANDAI ORGANIZING BANKS WITH AGENTS First Section Agent Requirements
Article 16

(1) Laku Pandai organizing Banks cooperate with Agents to provide Bank products to members of the public who are not served by the Bank's branch network.
(2) Agents as referred to in paragraph (1) may be:
a. Individual Agents; and/or b. Legal Entity Agents.

Article 17

Individuals who can become Agents must meet at least the following requirements:
a. reside in the location where Laku Pandai is organized; b. have good capability, reputation, credibility, and integrity;
c. have a main source of income derived from business activities and/or other fixed activities for at least 2 (two) years;
d. not be an Agent for another Laku Pandai organizing Bank with similar business activities; and e. pass the due diligence process by the Laku Pandai organizing Bank.

Article 18

Legal entities that can become Agents must meet at least the following requirements:
a. have Indonesian legal entity status that:

1. is supervised by regulatory and supervisory authorities and is permitted to conduct activities in the financial sector; or
2. is a trading company with a retail outlet network;
   b. have good reputation, credibility, and performance;
   c. have a fixed business at one location that has been ongoing for at least 2 (two) years;
   d. be able to conduct liquidity management as required by the Laku Pandai organizing Bank; e. be able to provide human resources with technical capabilities to support the organization of Laku Pandai; f. have adequate information technology to support the organization of Laku Pandai; and g. pass the due diligence process by the Laku Pandai organizing Bank.

Second Section
Service Activities by Agents
Article 19

(1) Agents serve customers and/or prospective customers according to the scope of services stated in the cooperation agreement.
(2) The scope of services as referred to in paragraph (1) consists of:
a. transactions related to savings with BSA characteristics, including account opening, cash deposits and withdrawals, transfers, bill payments, fund transfers, balance checks, and/or account closure; b. transactions related to credit or financing to micro customers, including receipt of application documents, disbursement, collection, or receipt of installment payments and/or principal repayment;
c. transactions related to savings other than savings with BSA characteristics, including cash deposits and withdrawals, transfers, payments, and/or fund transfers;
d. transactions related to other financial services or products in accordance with applicable regulations.

(3) Certain Agents may conduct more than one service as referred to in paragraph (2) based on Agent classification.
(4) Agent classification according to scope of services is established as follows:
a. Classification A is an Agent that can serve customers for transactions as referred to in paragraph (2) letter a; b. Classification B is an Agent that can serve customers for transactions as referred to in paragraph (2) letters a and b;
c. Classification C is an Agent that can serve customers for transactions as referred to in paragraph (2) letters a and c;
d. Classification D is an Agent that can serve customers for transactions as referred to in paragraph (2) letters a, b, and c; e. Classification E is an Agent that can serve customers for transactions as referred to in paragraph (2) letters a, b, c, and d; f. Classification F is an Agent that can serve customers for transactions as referred to in paragraph (2) letters a, b, c, and d; g. Classification G is an Agent that can serve customers for transactions as referred to in paragraph (2) letters a, b, c, and d. (5) Agents who are cooperating with a Laku Pandai organizing Bank for the first time must start from Classification A, and transfer to other classifications is established according to Bank policy. (6) Banks must have policies regulating requirements and mechanisms for Agents as referred to in paragraph (2) and the establishment of Agent classifications as referred to in paragraph (4). (7) Banks must set nominal service limits to customers for transactions as referred to in paragraph (2) letter c per day per customer, considering specific conditions of the Agent. (8) Banks set the nominal service limits as referred to in paragraph (7) to Agents at most IDR 5,000,000.00 (five million Rupiah) per day per customer.

Article 20

(1) Agents may only serve customers and/or prospective customers in the area surrounding the Agent's domicile, covering villages or equivalents and/or other surrounding areas. (2) The establishment of other surrounding areas as referred to in paragraph (1) is adjusted to reasonable distance and travel time, travel costs to the Agent's location, and/or regional topological conditions.

Article 21

(1) Agents of Laku Pandai organizing Banks as referred to in Article 16 may act as marketers of micro insurance based on cooperation agreements between the Agent and insurance companies and/or Sharia insurance companies that issue micro insurance products, by first reporting to the Laku Pandai organizing Bank. (2) Agents of Laku Pandai organizing Banks may market other financial products and/or services as long as:
a. they meet applicable regulations regarding the products and financial services marketed; b. they notify the Laku Pandai organizing Bank that has cooperated with the Agent; and
c. they remain able to provide good service to customers of the Laku Pandai organizing Bank that has cooperated with the Agent first.

Third Section
Procedure for Cooperation Relationship between Laku Pandai Organizing Banks and Agents
Article 22

(1) In conducting cooperation with Agents, organizing Banks must:
a. examine the fulfillment of requirements and the due diligence process for Agents; b. have a written cooperation agreement with Agents;
c. instruct Agents to place and maintain a deposit with a minimum amount set by the Bank based on specific considerations;
d. ensure and believe that the Agent's funds in fulfilling the obligations as referred to in letter c do not come from the proceeds of money laundering and/or terrorism financing; e. ensure that Agents have a special unit or appoint employees responsible for Laku Pandai activities, in the event that the Agent is a legal entity; f. be responsible for the acts and actions of Agents that fall within the scope of Agent services as stated in the cooperation agreement; g. monitor and supervise Agent activities directly, both periodically and incidentally; h. provide guidance and/or impose sanctions for violations committed by Agents;
i. conduct optimal education and training for Agents;
j. conduct optimal education and literacy for the public around the Agent's location regarding the products offered; and k. ensure the responsibility for the continuity of Laku Pandai organization in the event of specific conditions that cause Agents to be unable to operate. (2) The cooperation agreement as referred to in paragraph (1) letter b must contain at least:
a. rights and obligations of the Laku Pandai organizing Bank and Agents; b. the scope of services that Agents can provide;
c. the establishment of Agent operational work areas;
d. the establishment of Agent classifications; e. the duration of cooperation and its renewal mechanism; f. the mechanism and working relationship between the Bank and Agents; g. conditions and procedures for changing the cooperation agreement; h. the establishment of sanctions and the mechanism for imposing sanctions;
i. conditions and procedures for terminating the cooperation agreement; and
j. procedures for dispute resolution.

Article 23

(1) Laku Pandai organizing Banks may only cooperate with Individual Agents who have not cooperated with other Banks with similar business activities.
(2) Laku Pandai organizing Banks may cooperate with Legal Entity Agents who have cooperated with other Banks as long as the organizing Bank's analysis results show that the Agent can still provide good service. (3) Organizing Banks as referred to in paragraph (2) must obtain prior approval from other Banks that have cooperated with the aforementioned Legal Entity Agents. (4) Organizing Banks as referred to in paragraph (3) must first report, accompanied by supporting documents, to the Financial Services Authority if other Banks with similar business activities are involved. (5) Legal Entity Agents cooperating with more than 1 (one) organizing Bank may only provide products from 1 (one) conventional bank and/or 1 (one) Sharia bank at each office or retail outlet they own.

Fourth Section
Status of Agents
Article 24

(1) Agents of Laku Pandai organizing Banks may be located throughout the territory of Indonesia until December 31, 2016.
(2) Cooperation conducted after December 31, 2016, between Laku Pandai Organizing Banks and Agents located in the Capital City, Provincial Capital, Regency/City Capital, must be followed by cooperation with Agents located outside the Capital City, Provincial Capital, Regency/City Capital in a certain amount. (3) The obligation for Laku Pandai cooperation with Agents in a certain amount outside the Capital City, Provincial Capital, Regency/City Capital as referred to in paragraph (2) is further regulated in a Circular Letter from the Financial Services Authority.

Article 25

(1) Laku Pandai Organizing Banks may only cooperate with Agents located in the same city or regency as the Bank's office network location.
(2) In the event that the Laku Pandai Organizing Bank's office network is not available in the city or regency where the prospective Agent is located, the Bank may cooperate with the prospective Agent provided that:
a. there is a Laku Pandai Organizing Bank office network in a city or regency bordering the prospective Agent's location; or b. there is a Laku Pandai Organizing Bank office network in another city or regency different from the prospective Agent's location, and employees from that Bank office can still carry out direct monitoring and supervision; and
c. adequate financial services are not yet available at the location of the prospective Agent.
(3) The types of Bank office networks as referred to in paragraph (1) and paragraph (2) are determined at least as follows:
a. cash offices in the event that Agents can serve transactions as referred to in Article 19 paragraph (2) letter a, letter c, and/or letter d; and/or b. sub-branch offices in the event that Agents can serve all transactions as referred to in Article 19 paragraph (2).

Part Five
Supporting Devices for Services
Article 26

(1) In carrying out Laku Pandai, Banks may determine the use of different electronic devices among Agents based on certain considerations.
(2) The application systems used in electronic devices at Agent locations for the implementation of Laku Pandai must originate from the Organizing Bank.

Article 27

(1) Transactions conducted by customers of the Laku Pandai Organizing Bank must be recorded in the customer's account in the core banking system owned by the Bank at the same time (real time). (2) The recording of transactions as referred to in paragraph (1) is accompanied by the delivery of transaction receipts to the respective Bank customers.

Article 28

In the event that the implementation of Laku Pandai requires support from other parties related to information and communication technology, the Bank must have a written cooperation agreement with such other parties.

Article 29

The application systems used to support the implementation of Laku Pandai must aim to achieve interoperability.

CHAPTER V
IMPLEMENTATION OF CUSTOMER DUE DILIGENCE (CDD)
Article 30

(1) For prospective savings customers with BSA characteristics, Banks with Agent assistance may apply simplified Customer Due Diligence (CDD) procedures.
(2) The simplified CDD procedures as referred to in paragraph (1) cannot be applied to prospective customers if, at least:
a. there is a mismatch in the prospective customer's profile; b. the prospective customer is a Politically Exposed Person (PEP); and/or
c. there is a suspicion of money laundering and/or terrorism financing transactions.
(3) For prospective customers as referred to in paragraph (1), Banks with Agent assistance must request information covering at least:
a. full name; b. residential address according to identity documents and domicile address if available; and
c. place and date of birth; and
d. occupation.
(4) Prospective customer information as referred to in paragraph (3) must be supported by identity documents or other documents replacing identity documents that can provide assurance to the Bank regarding the prospective customer's profile and specimen signature.

Article 31

(1) Savings customers with BSA characteristics who have applied for account recording through Agents may only conduct cash deposit transactions during the verification process before it is completed by the Bank. (2) Banks must have procedures for the return of cash deposits made by customers as referred to in paragraph (1) if the Bank's verification process rejects the account opening application.

Article 32

(1) Banks must create and store a list of savings customers with BSA characteristics whose account opening was conducted through simplified CDD procedures.
(2) In the event that customer savings no longer meet the BSA characteristics as referred to in Article 5 paragraph (5), Banks with Agent assistance must conduct CDD again through the CDD procedures as referred to in regulations regarding the implementation of anti-money laundering and counter-terrorism financing programs for Banks.

CHAPTER VI
IMPLEMENTATION OF INFORMATION TECHNOLOGY RISK MANAGEMENT
Article 33

(1) Banks must apply principles of data security and e-banking transaction control on electronic systems for the implementation of Laku Pandai as referred to in regulations regarding the implementation of risk management in the use of information technology for Banks. (2) In implementing the principle of authenticity (authentication), Laku Pandai Organizing Banks must determine at least two factors of authenticity (two-factor authentication). (3) In implementing the principle of non-repudiation, Laku Pandai Organizing Banks must apply at least messaging security and end-to-end encryption.

CHAPTER VII
CUSTOMER PROTECTION
Article 34

(1) Laku Pandai Organizing Banks must apply consumer protection principles as referred to in regulations regarding consumer protection in the financial services sector. (2) The mechanism and procedures for implementing consumer protection principles as referred to in paragraph (1) refer to applicable regulations.

CHAPTER VIII
REPORTING
Article 35

Banks that have obtained approval to become Laku Pandai organizers must submit:
a. reports on the realization of Laku Pandai implementation for the first time, at the latest 15 (fifteen) working days after Laku Pandai is implemented; b. reports on cooperation plans with Agents for the implementation of Laku Pandai every year included in the Business Plan (RBB) of the relevant year; and
c. reports on the realization of cooperation with Agents together with the realization reports of the Business Plan (RBB) as per applicable regulations.

Article 36

(1) Laku Pandai Organizing Banks must submit reports on the development of Laku Pandai implementation.
(2) Reports on the development of Laku Pandai implementation as referred to in paragraph (1) are submitted quarterly for the positions of March, June, September, and December. (3) Reports on the development of Laku Pandai implementation as referred to in paragraph (1) are submitted at the latest on the 15th (fifteenth) day after the end of the reporting month. (4) In the event that the 15th (fifteenth) day falls on a holiday, reports must be submitted at the latest on the last working day prior. (5) In the event that reports on the development of Laku Pandai implementation as referred to in paragraph (5) cannot yet be submitted, Banks submit hardcopy and softcopy reports online to the Financial Services Authority (OJK).

Article 37

Reports on the first cooperation plan with legal entity Agents who have cooperated with other Banks organizing similar business activities as referred to in Article 23 paragraph (4) must be submitted at least 7 (seven) working days before the cooperation is carried out.

Article 38

(1) Laku Pandai Organizing Banks are declared late in submitting reports on the realization of Laku Pandai implementation if the reports are received by the Financial Services Authority (OJK) after the submission deadline as referred to in Article 35 letter a. (2) Laku Pandai Organizing Banks are declared late in submitting reports on the development of Laku Pandai implementation if the reports are received by the Financial Services Authority (OJK) after the submission deadline as referred to in Article 36. (3) Laku Pandai Organizing Banks are declared late in submitting cooperation plan reports if the reports are received by the Financial Services Authority (OJK) after the submission deadline as referred to in Article 37.

Article 39

Banks are declared not to have submitted reports as referred to in Article 35 letter a, Article 36, and Article 37 if the reports have not been received by the Financial Services Authority (OJK) after 30 (thirty) days from the report submission deadline.

Article 40

Applications to implement Laku Pandai as referred to in Article 14 paragraph (2), reports on the realization of implementation, cooperation plans with Agents, and reports on Agent development as referred to in Article 35, and reports as referred to in Article 36 paragraph (6) and Article 37, are submitted to the Financial Services Authority (OJK).

CHAPTER IX
OTHER PROVISIONS
Article 41

(1) If necessary, the Financial Services Authority (OJK) may request reports, explanations, and/or data, including conducting examinations (on-site supervision) of Agents. (2) The Financial Services Authority (OJK) may, based on certain considerations, order Laku Pandai Organizing Banks to terminate cooperation with Agents.

CHAPTER X
SANCTIONS
Article 42

(1) Laku Pandai Organizing Banks that violate provisions in Article 5 paragraph (9), Article 8, Article 19 paragraph (6) and (7), Article 22, Article 23 paragraph (4), Article 24 paragraph (2), Article 26 paragraph (2), Article 28, Article 30 paragraph (3) and (4), Article 31 paragraph (2), Article 32, and Financial Service Institutions that violate provisions in Article 3 paragraph (1), may be subject to administrative sanctions in the form of:
a. written warnings; b. restrictions and/or suspension of certain business activities; and/or
c. downgrade of health level.
(2) Laku Pandai Organizing Banks that violate provisions in Article 3 paragraph (3) are subject to administrative sanctions with reference to regulations regarding risk management. (3) Laku Pandai Organizing Banks that violate provisions in Article 33 paragraph (1) are subject to administrative sanctions with reference to regulations regarding the implementation of information technology risk management for Banks. (4) Laku Pandai Organizing Banks that violate provisions in Article 34 are subject to administrative sanctions with reference to regulations regarding consumer protection in the financial services sector.

Article 43

(1) Banks declared late in submitting reports as referred to in Article 38 are subject to sanctions in the form of written warnings and an obligation to pay IDR 100,000.00 (one hundred thousand rupiah) per day of delay with a maximum total of IDR 3,000,000.00 (three million rupiah). (2) Banks declared not to have submitted reports as referred to in Article 39 are subject to sanctions of an obligation to pay IDR 5,000,000.00 (five million rupiah). (3) In the event that Banks are subject to the sanction of an obligation to pay because they are declared not to have submitted reports, the sanction of an obligation to pay for late submission of reports is not applied. (4) The imposition of the sanction of an obligation to pay as referred to in paragraph (2) does not eliminate the obligation to submit reports.

CHAPTER XI
TRANSITIONAL PROVISIONS
Article 44

(1) For Banks that have met the requirements as referred to in Article 10 and will apply for approval to implement Laku Pandai as referred to in Article 14 in the year 2015 but have not included the Laku Pandai implementation plan in the Business Plan (RBB), may include the implementation plan in the revised RBB. (2) The submission of the revised RBB as referred to in paragraph (1) is not counted as the submission of RBB changes which can only be done once as referred to in regulations regarding bank business plans.

Article 45

Banks that will implement Laku Pandai before March 1, 2015, may submit applications for the implementation of Laku Pandai less than 60 (sixty) days before the target time for Laku Pandai implementation.

Article 46

Banks that have cooperated with specific Agents to provide other financial services or services before March 1, 2015, are not required to determine Agents starting from the simplest classification as referred to in Article 19 paragraph (4).

CHAPTER XII
CLOSING PROVISIONS
Article 47

Further provisions regarding this Financial Services Authority Regulation are regulated by Financial Services Authority Circular Letters.

Article 48

Implementation provisions in the financial services sector related to the implementation of Laku Pandai are declared to remain in force as long as they do not conflict with this Financial Services Authority Regulation.

Article 49

This Financial Services Authority Regulation takes effect on the date of its promulgation.

To ensure that everyone knows it, order the promulgation of this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Issued in Jakarta
On the date 18 November 2014
CHAIRMAN OF THE BOARD OF COMMISSIONERS
FINANCIAL SERVICES AUTHORITY,

Signed,

MULIAMAN D. HADAD

Promulgated in Jakarta
On the date 19 November 2014
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA,

Signed,

YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2014 NUMBER 350