Regulation of the Financial Services Authority Number 15/POJK.03/2017 on Determination of Status and Follow-up of Supervision of General Banks

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
COPY
REGULATION OF THE FINANCIAL SERVICES AUTHORITY NUMBER 15/POJK.03/2017 ON DETERMINATION OF STATUS AND FOLLOW-UP OF SUPERVISION OF GENERAL BANKS BY THE GRACE OF THE ALMIGHTY GOD THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY, Considering:
a. that in order to support the creation of financial system stability, a healthy banking system is required; b. that as part of banking rehabilitation efforts, problems arising in banks need to be addressed early by increasing supervisory measures against banks, starting from normal supervision which may potentially become intensive supervision;
c. that with the enactment of Law Number 9 of 2016 concerning the Prevention and Handling of Financial System Crises, it is necessary to refine regulations regarding the determination of status and follow-up of supervision of general banks;
d. that based on the considerations referred to in letters a through c, it is necessary to establish a Regulation of the Financial Services Authority concerning the Determination of Status and Follow-up of Supervision of General Banks;

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 concerning Amendments to Law Number 7 of 1992 concerning Banking (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 24 of 2004 concerning Deposit Insurance Agency (State Gazette of the Republic of Indonesia Year 2004 Number 96, Supplement to the State Gazette of the Republic of Indonesia Number 4420) as amended by Law Number 7 of 2009 concerning the Determination of Government Regulation in Lieu of Law Number 3 of 2008 concerning Amendments to Law Number 24 of 2004 concerning Deposit Insurance Agency into Law (State Gazette of the Republic of Indonesia Year 2009 Number 8, Supplement to the State Gazette of the Republic of Indonesia Number 4963);
3. 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);
4. Law Number 21 of 2011 concerning 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);
5. Law Number 9 of 2016 concerning the Prevention and Handling of Financial System Crises (State Gazette of the Republic of Indonesia Year 2016 Number 70, Supplement to the State Gazette of the Republic of Indonesia Number 5872);

DECIDING:
Determining: REGULATION OF THE FINANCIAL SERVICES AUTHORITY CONCERNING THE DETERMINATION OF STATUS AND FOLLOW-UP OF SUPERVISION OF GENERAL BANKS.

CHAPTER I
GENERAL PROVISIONS
Article 1
In this Regulation of the Financial Services Authority, the following terms are defined as:

1. Bank means General Bank as referred to in Law Number 7 of 1992 concerning Banking as amended by Law Number 10 of 1998 concerning Amendments to Law Number 7 of 1992 concerning Banking, and Sharia General Bank as referred to in Law Number 21 of 2008 concerning Sharia Banking, including branch offices of banks located abroad.
2. Deposit Insurance Agency, hereinafter abbreviated as LPS, means the Deposit Insurance Agency as referred to in Law Number 24 of 2004 concerning Deposit Insurance Agency as amended by Law Number 7 of 2009 concerning the Determination of Government Regulation in Lieu of Law Number 3 of 2008 concerning Amendments to Law Number 24 of 2004 concerning Deposit Insurance Agency into Law.
3. Financial Services Authority, hereinafter abbreviated as OJK, is an independent institution having the functions, duties, and authorities for regulation, supervision, examination, and investigation as referred to in Law Number 21 of 2011 concerning Financial Services Authority.
4. Systemic Bank means a Bank that, due to its asset size, capital, and liabilities; the breadth of its network or complexity of transactions for banking services; and its interconnection with other financial sector entities, could cause the failure of some or all other Banks or financial service sectors, both operationally and financially, if such Bank experiences difficulties or fails.
5. Receiving Bank means a Bank other than an intermediary bank that receives the transfer of assets and/or liabilities from the originating bank.
6. Controlling Shareholder, for Banks, hereinafter abbreviated as PSP, means a legal entity, individual, and/or business group that:
   a. holds shares in a company or Bank of 25% (twenty-five percent) or more of the issued shares with voting rights; or b. holds shares in a company or Bank of less than 25% (twenty-five percent) of the issued shares with voting rights but can be proven to have controlled the company or Bank, directly or indirectly.
7. Board of Directors means:
   a. for Banks in the form of a Limited Liability Company (Perseroan Terbatas), the Board of Directors as referred to in Law Number 40 of 2007 concerning Limited Liability Companies; b. for Banks in the form of a Regional Public Enterprise (Perusahaan Umum Daerah) or Regional Owned Enterprise (Perusahaan Perseroan Daerah), the Board of Directors as referred to in Law Number 23 of 2014 concerning Regional Government as last amended by Law Number 9 of 2015 concerning the Second Amendment to Law Number 23 of 2014 concerning Regional Government;
   c. for Banks in the form of a Cooperative legal entity, the managers as referred to in Law Number 25 of 1992 concerning Cooperatives;
   d. for branch offices of banks located abroad, the head of the branch office of the bank located abroad, namely the branch head and one level below the branch head.
8. Board of Commissioners means:
   a. for Banks in the form of a Limited Liability Company (Perseroan Terbatas), the Board of Commissioners as referred to in Law Number 40 of 2007 concerning Limited Liability Companies; b. for Banks in the form of a Regional Public Enterprise (Perusahaan Umum Daerah), the Supervisory Board as referred to in Law Number 23 of 2014 concerning Regional Government as last amended by Law Number 9 of 2015 concerning the Second Amendment to Law Number 23 of 2014 concerning Regional Government;
   c. for Banks in the form of a Regional Owned Enterprise (Perusahaan Perseroan Daerah), the Commissioners as referred to in Law Number 23 of 2014 concerning Regional Government as last amended by Law Number 9 of 2015 concerning the Second Amendment to Law Number 23 of 2014 concerning Regional Government;
   d. for Banks in the form of a Cooperative legal entity, the Supervisors as referred to in Law Number 25 of 1992 concerning Cooperatives.
9. Minimum Reserve Ratio, hereinafter abbreviated as GWM, means the minimum reserve ratio as regulated in laws and regulations concerning minimum reserve ratios.

Article 2
(1) The supervision status of Banks is determined by OJK.
(2) The supervision status of Banks as referred to in paragraph (1) consists of:
a. normal supervision; b. intensive supervision; or
c. special supervision.

Article 3
(1) Banks under intensive supervision are determined by OJK when the Bank is assessed to have potential difficulties endangering the continuity of business.
(2) A Bank is assessed to have potential difficulties endangering the continuity of business as referred to in paragraph (1) if it meets one or more of the following criteria:
a. the Minimum Capital Adequacy Ratio (KPMM) ratio is equal to or greater than 8% (eight percent) but less than the KPMM ratio according to the Bank's risk profile which must be met by the Bank; b. the core capital (tier 1) ratio is less than a specific percentage determined by OJK;
c. the GWM ratio in Rupiah is equal to or greater than the ratio determined for GWM in Rupiah which must be met by the Bank, but based on OJK's assessment, the Bank has fundamental liquidity problems;
d. the net non-performing loan (NPL net) ratio or net non-performing financing (NPF net) ratio is more than 5% (five percent) of total loans or total financing; e. the health level of the Bank with a composite rating of 4 (four) or composite rating 5 (five); and/or f. the health level of the Bank with a composite rating of 3 (three) and governance with a governance factor rating of 4 (four) or governance factor rating 5 (five).

Article 4
(1) Banks under intensive supervision as referred to in Article 3 are determined by OJK for a maximum period of 1 (one) year from the date of OJK's notification letter.
(2) The period of intensive supervision as referred to in paragraph (1) may be extended by OJK at most 1 (one) time and for a maximum of 1 (one) year only for Banks under intensive supervision that meet the criteria:
a. net non-performing loan (NPL net) ratio or net non-performing financing (NPF net) ratio is more than 5% (five percent) of total loans or total financing, and the resolution is complex; b. the health level of the Bank with a composite rating of 4 (four) or composite rating 5 (five); and/or
c. the health level of the Bank with a composite rating of 3 (three) and governance with a governance factor rating of 4 (four) or governance factor rating 5 (five).
(3) Extension of the period for Banks under intensive supervision due to criteria as referred to in paragraph (2) letters b or c is accompanied by increased supervisory actions.

Article 5
(1) Banks are determined by OJK under special supervision when Banks determined under intensive supervision or Banks under normal supervision are assessed to have difficulties endangering the continuity of business. (2) Banks are assessed to have difficulties endangering the continuity of business as referred to in paragraph (1) when meeting one or more of the following criteria:
a. KPMM ratio is less than 8% (eight percent); and/or b. GWM ratio in Rupiah is less than the ratio determined for GWM in Rupiah which must be met by the Bank, and based on OJK's assessment:

1. The Bank experiences fundamental liquidity problems; or
2. The Bank experiences deteriorating liquidity developments in a short period.
   (3) Banks are determined by OJK under special supervision as referred to in paragraph (1) for a maximum period of 3 (three) months from the date of OJK's notification letter.

CHAPTER II
BANKS OTHER THAN SYSTEMIC BANKS
Section One
Non-Systemic Banks under Normal Supervision Assessed to Have Significant Problems
Article 6
(1) In the event that Non-Systemic Banks under normal supervision are assessed to have significant problems, Non-Systemic Banks must submit an action plan to OJK.
(2) The procedure for submitting the action plan and improvement steps to be implemented by Non-Systemic Banks contained in the action plan as referred to in paragraph (1) refers to OJK regulations concerning the assessment of the health level of general banks and OJK regulations concerning the assessment of the health level of Sharia general banks and Sharia business units.

Section Two
Non-Systemic Banks under Intensive Supervision
Article 7
(1) Non-Systemic Banks are determined by OJK under intensive supervision when meeting the criteria as referred to in Article 3.
(2) Non-Systemic Banks determined under intensive supervision as referred to in paragraph (1) are notified in writing by OJK regarding:
a. the determination of Non-Systemic Banks under intensive supervision as referred to in Article 3; or b. the determination of the extension of the period for Non-Systemic Banks under intensive supervision as referred to in Article 4 paragraph (2), accompanied by the reasons for determination and supervisory steps or actions that must be carried out by Non-Systemic Banks.

Article 8
(1) Non-Systemic Banks under intensive supervision must carry out supervisory actions ordered by OJK.
(2) Supervisory actions ordered by OJK as referred to in paragraph (1) are:
a. writing off loans or financing or fund disbursements classified as non-performing and calculating the losses of Non-Systemic Banks with the capital of Non-Systemic Banks; b. restricting the payment of remuneration or other forms equivalent to members of the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board, or remuneration to related parties;
c. not making repayments or settlements of additional core capital instruments or supplementary capital instruments;
d. not making or delaying profit distribution; e. strengthening or adding capital of Non-Systemic Banks, including through capital contributions; f. not conducting certain transactions with related parties and/or other parties determined by OJK; g. restricting the implementation of plans to issue products and/or implement new activities; h. not conducting or restricting asset growth, participations, and/or new fund provision;
i. selling part or all of the assets and/or liabilities of Non-Systemic Banks to banks and/or other parties;
j. not expanding the office network; k. not conducting certain business activities;
l. closing the office network of Non-Systemic Banks;
m. not conducting interbank transactions; n. conducting mergers or consolidations with other banks; o. replacing the Board of Directors and/or Board of Commissioners of Non-Systemic Banks; p. handing over the management of all or part of the activities of Non-Systemic Banks to other parties; q. selling Non-Systemic Banks to buyers willing to take over all liabilities of Non-Systemic Banks; r. placing statutory managers; and/or s. other supervisory actions.

Article 9
(1) Non-Systemic Banks under intensive supervision must:
a. submit an action plan according to the problems faced; b. submit the realization of the action plan;
c. submit a complete list of related parties; and
d. take other actions and/or report certain matters determined by OJK.
(2) In the event that Non-Systemic Banks are determined under intensive supervision due to capital problems as referred to in Article 3 paragraph (2) letters a and b, in addition to fulfilling the provisions as referred to in paragraph (1), Non-Systemic Banks and/or PSP must submit a capital restoration plan to address the capital problems of Non-Systemic Banks.

Article 10
Non-Systemic Banks must submit an action plan according to the problems faced and submit a complete list of related parties as referred to in Article 9 paragraph (1) letters a and c within a maximum of 10 (ten) working days since Non-Systemic Banks were determined under intensive supervision.

Article 11
(1) The action plan as referred to in Article 9 paragraph (1) letter a must at least contain improvement plans according to the problems faced by Non-Systemic Banks, accompanied by the resolution timeframe. (2) The action plan as referred to in paragraph (1) is evaluated by OJK within a maximum of 5 (five) working days since the action plan is received completely. (3) In the event that the submitted action plan is rejected by OJK, Non-Systemic Banks must submit a revised action plan within a maximum of 5 (five) working days from the date of rejection notification.

Article 12
(1) Non-Systemic Banks and/or PSP must submit the capital restoration plan as referred to in Article 9 paragraph (2) to OJK within a maximum of 10 (ten) working days since Non-Systemic Banks were determined under intensive supervision. (2) The capital restoration plan as referred to in paragraph (1) must describe the ability of Non-Systemic Banks to achieve and maintain the KPMM ratio determined by OJK within the timeframe determined as referred to in Article 4 paragraph (1). (3) The capital restoration plan of Non-Systemic Banks is assessed by OJK within a maximum of 5 (five) working days since the capital restoration plan is received completely. (4) In the event that the capital restoration plan of Non-Systemic Banks as referred to in paragraph (1) is rejected, Non-Systemic Banks must submit a revised capital restoration plan within a maximum of 5 (five) working days from the date of rejection.

Article 13
(1) Non-Systemic Banks must submit to OJK the realization of the action plan as referred to in Article 9 paragraph (1) letter b and/or the realization of the capital restoration plan as referred to in Article 9 paragraph (2), at the end of each month, no later than the seventh working day of the following month. (2) The realization of the action plan and/or the realization of the capital restoration plan as referred to in paragraph (1) must contain at least:
a. the problems of Non-Systemic Banks; b. the improvement actions taken by Non-Systemic Banks; and
c. the implementation time of improvements.

Article 14
(1) Non-Systemic Banks are determined no longer under intensive supervision when the condition of Non-Systemic Banks improves and no longer meets the criteria as referred to in Article 3. (2) The determination as Non-Systemic Banks no longer under intensive supervision is notified in writing by OJK to Non-Systemic Banks.

Section Three
Non-Systemic Banks under Special Supervision
Article 15
(1) Non-Systemic Banks are determined by OJK under special supervision when meeting the criteria as referred to in Article 5.
(2) The determination of Non-Systemic Banks under special supervision as referred to in paragraph (1) is notified in writing by OJK.
(3) In addition to notification to Non-Systemic Banks as referred to in paragraph (2), the status determination under special supervision is notified by OJK to LPS.
(4) Notification to Non-Systemic Banks as referred to in paragraph (2) contains the determination of Non-Systemic Banks under special supervision accompanied by the reasons for determination and supervisory steps or actions that must be carried out by Non-Systemic Banks.

Article 16
(1) Non-Systemic Banks under special supervision must increase capital to meet the KPMM ratio and/or fulfill GWM obligations in accordance with laws and regulations.
(2) Capital increase as referred to in paragraph (1) must be fulfilled by Non-Systemic Banks within the timeframe as referred to in Article 5 paragraph (3).

Article 17
(1) Non-Systemic Banks under special supervision must carry out supervisory actions ordered by OJK.
(2) Supervisory actions ordered by OJK as referred to in paragraph (1) are:
a. prohibiting Non-Systemic Banks from selling or reducing asset amounts without OJK approval, except for Bank Indonesia Certificates, Sharia Bank Indonesia Certificates, Bank Indonesia Deposit Certificates, Foreign Currency Bank Securities, current accounts at Bank Indonesia, interbank claims, and/or Government Securities; b. prohibiting Non-Systemic Banks from changing ownership for:

1. shareholders holding shares of Non-Systemic Banks of 10% (ten percent) or more; and/or
2. PSP including parties exercising control over Non-Systemic Banks in the business group structure of Non-Systemic Banks,
   except with OJK approval; and/or
   c. ordering Non-Systemic Banks to report every change in ownership of shares of Non-Systemic Banks of less than 10% (ten percent) to OJK.

Article 18
(1) In addition to supervisory actions as referred to in Article 16 and Article 17, OJK has the authority to order Non-Systemic Banks under special supervision to carry out supervisory actions as referred to in Article 8 paragraph (2). (2) Supervisory actions determined when Non-Systemic Banks are under intensive supervision remain valid.

Article 19
(1) Non-Systemic Banks under special supervision must submit to OJK:
a. the latest financial statements consisting of the balance sheet, profit and loss statement, and administrative account; b. the latest details of productive assets grouped by quality;
c. the latest composite rating of the health level of Non-Systemic Banks;
d. information and documents regarding:

1. the latest list of aggregated customer deposits grouped by nominal value;
2. the latest list of details of claims and liabilities of Non-Systemic Banks to related parties; and
3. other information required by OJK;
   e. the latest financial statements of companies receiving capital participation from Non-Systemic Banks other than temporary capital participation for credit or financing restructuring; f. the latest structure of the business group related to Non-Systemic Banks, including legal entities holding shares of Non-Systemic Banks up to ultimate shareholders; and g. cash flow projection reports for a period of 1 (one) month ahead or based on other reporting periods, detailed daily and with frequency as determined by OJK. (2) Reports as referred to in paragraph (1) must be submitted to OJK within a maximum of 3 (three) working days since Non-Systemic Banks were determined under special supervision.

Article 20
(1) OJK restricts certain business activities of Non-Systemic Banks under special supervision for a maximum of 1 (one) month in the special supervision period, if:
a. OJK assesses that the condition of Non-Systemic Banks is deteriorating; and/or b. violations of banking regulations are committed by the Board of Directors, Board of Commissioners, Sharia Supervisory Board, and/or PSP. (2) Restrictions on certain business activities as referred to in paragraph (1) are notified by OJK to Non-Systemic Banks and LPS.

Article 21
(1) Non-Systemic Banks under special supervision subject to restrictions on certain business activities may be announced by OJK on the OJK website.
(2) The announcement of Non-Systemic Banks under special supervision as referred to in paragraph (1) is accompanied by:
a. the reasons for restrictions on certain business activities; and b. improvement actions that must be carried out by Non-Systemic Banks and/or prohibitions ordered by OJK as referred to in Article 16 and Article 17. (3) Non-Systemic Banks as referred to in paragraph (1) that have made improvements so that they no longer meet the criteria for Non-Systemic Banks under special supervision as regulated in Article 5 are announced by OJK on the OJK website.

Article 22
(1) Banks other than Systemically Important Banks as referred to in Article 21 must notify all office networks regarding specific business activities subject to restrictions and orders established by the OJK as referred to in Article 16 and Article 17. (2) Notification to all office networks as referred to in paragraph (1) must be carried out on the date of receipt of the notification of restriction on specific business activities from the OJK as referred to in Article 20 paragraph (2).

Article 23
Banks other than Systemically Important Banks under special supervision established by the OJK cannot be rehabilitated if:
a. the time period as referred to in Article 5 paragraph (3) has not yet expired but the condition of the Bank other than Systemically Important Bank deteriorates so that:
1. the KPMM ratio is equal to or less than 4% (four percent) and is assessed as unable to be increased to 8% (eight percent); and/or
2. the Rupiah GWM ratio is equal to 0% (zero percent) and is assessed as unable to be resolved in accordance with statutory regulations; or
b. the time period as referred to in Article 5 paragraph (3) has expired and:
1. the KPMM ratio of the Bank other than Systemically Important Bank is less than 8% (eight percent); and/or
2. the Rupiah GWM ratio is less than the ratio established for Rupiah GWM that must be fulfilled by the Bank other than Systemically Important Bank.

Article 24
In the event that a Bank other than a Systemically Important Bank under special supervision meets the criteria as a Bank other than a Systemically Important Bank that cannot be rehabilitated, the OJK must notify in writing to:
a. the Bank other than a Systemically Important Bank under special supervision established as unable to be rehabilitated; and b. the LPS to obtain a decision on the resolution of the Bank other than a Systemically Important Bank as referred to in letter a.

Article 25
(1) A Bank other than a Systemically Important Bank as referred to in Article 24 that is rescued by the LPS remains obligated to implement supervisory actions that have been established by the OJK. (2) A Bank other than a Systemically Important Bank as referred to in Article 24 that is rescued by the LPS is exempted from being established as a Bank other than a Systemically Important Bank under intensive supervision or a Bank other than a Systemically Important Bank under special supervision.

Article 26
In the event that the LPS decides not to rescue a Bank other than a Systemically Important Bank, the OJK revokes the business license of the Bank other than a Systemically Important Bank after obtaining notification of the decision from the LPS.

CHAPTER III
SYSTEMICALLY IMPORTANT BANKS
First Section
Systemically Important Banks under Normal Supervision Assessed to Have Significant Problems

Article 27
(1) In the event that a Systemically Important Bank under normal supervision is assessed to have significant problems, the Systemically Important Bank must:
a. implement an action plan (recovery plan) for financial problems; and/or b. submit an action plan to the OJK for problems other than financial problems.
(2) The procedure for submitting an action plan and improvement steps to be implemented by the Systemically Important Bank contained in the action plan as referred to in paragraph (1) refers to OJK regulations governing the assessment of the health level of commercial banks or OJK regulations governing the assessment of the health level of Islamic commercial banks and Islamic business units.

Second Section
Systemically Important Banks under Intensive Supervision

Article 28
(1) A Systemically Important Bank is established under intensive supervision if it meets the criteria as referred to in Article 3.
(2) A Systemically Important Bank established under intensive supervision as referred to in paragraph (1) must be notified in writing by the OJK regarding:
a. the establishment of the Systemically Important Bank under intensive supervision as referred to in Article 3; or b. the establishment of the extension of the time period for the Systemically Important Bank under intensive supervision as referred to in Article 4 paragraph (2), accompanied by the reasons for the establishment and the supervisory steps or actions that must be carried out by the Systemically Important Bank.

Article 29
(1) A Systemically Important Bank established under intensive supervision must:
a. implement an action plan (recovery plan) to overcome financial problems; and/or b. submit an action plan to overcome problems other than financial problems.
(2) A Systemically Important Bank established under intensive supervision as referred to in paragraph (1) is also obligated to submit a complete list of related parties.
(3) Provisions regarding the submission of an action plan and the realization report of the action plan as referred to in paragraph (1) letter b must refer to the provisions as referred to in Article 11 and Article 13.

Article 30
A Systemically Important Bank established under intensive supervision, in addition to implementing an action plan (recovery plan) and an action plan, must implement supervisory actions ordered by the OJK as referred to in Article 8 paragraph (2).

Article 31
(1) In the context of preparing for the handling of solvency problems, the OJK notifies the establishment of the Systemically Important Bank established under intensive supervision to the LPS. (2) In the context of preparing for the handling of solvency problems as referred to in paragraph (1), the asset and/or liability assessment and/or due diligence of the Systemically Important Bank under intensive supervision is carried out by the LPS after coordinating with the OJK.

Article 32
(1) A Systemically Important Bank is established as no longer being under intensive supervision if the condition of the Systemically Important Bank improves and no longer meets the criteria as referred to in Article 3. (2) The establishment of a Systemically Important Bank that is no longer under intensive supervision must be notified in writing by the OJK to the relevant Systemically Important Bank. (3) Notification of the establishment of a Systemically Important Bank that is no longer under intensive supervision as referred to in paragraph (2) due to solvency problems must also be submitted to the LPS.

Third Section
Systemically Important Banks under Special Supervision

Article 33
A Systemically Important Bank is established by the OJK under special supervision if it meets the criteria as referred to in Article 5.

Article 34
A Systemically Important Bank established under special supervision must implement an action plan (recovery plan) to overcome financial problems.

Article 35
(1) The establishment of a Systemically Important Bank under special supervision must be notified in writing by the OJK to the relevant Systemically Important Bank.
(2) Notification to the Systemically Important Bank established under special supervision as referred to in paragraph (1) is accompanied by the reasons for the establishment and the supervisory steps or actions that must be implemented by the Systemically Important Bank. (3) In addition to notification to the Systemically Important Bank as referred to in paragraph (1), the establishment of the Systemically Important Bank under special supervision must be notified by the OJK to the LPS.

Article 36
(1) In the event that a Systemically Important Bank is established under special supervision as referred to in Article 33, the OJK requests the LPS to increase the intensity of preparation for handling the solvency problems of the Systemically Important Bank established as a Systemically Important Bank under special supervision. (2) In the context of increasing the intensity of preparation for handling solvency problems as referred to in paragraph (1), the LPS may take necessary steps in accordance with statutory regulations, after coordinating with the OJK.

Article 37
(1) A Systemically Important Bank under special supervision must carry out capital additions to fulfill the KPMM ratio and/or the obligation to fulfill GWM in accordance with statutory regulations. (2) Capital additions as referred to in paragraph (1) must be fulfilled within the time period as referred to in Article 5 paragraph (3).

Article 38
(1) A Systemically Important Bank under special supervision must implement supervisory actions ordered by the OJK as referred to in Article 17 and Article 18.
(2) A Systemically Important Bank established under special supervision must submit reports, data, or information to the OJK as referred to in Article 19.

Article 39
(1) The OJK requests the convening of a meeting of the Financial Stability Committee (KSSK) if a Systemically Important Bank under special supervision meets the criteria:
a. the time period as referred to in Article 5 paragraph (3) has not yet expired but:
1. the KPMM ratio is equal to or more than 4% (four percent) but less than 8% (eight percent) and the OJK assesses that the Systemically Important Bank can no longer be rehabilitated; and/or
2. the Rupiah GWM ratio is equal to 0% (zero percent) and is assessed as unable to be resolved in accordance with statutory regulations; or
b. the time period as referred to in Article 5 paragraph (3) has expired and:
1. the KPMM ratio of the Systemically Important Bank is less than 8% (eight percent); and/or
2. the Rupiah GWM ratio is less than the ratio established for Rupiah GWM that must be fulfilled by the Systemically Important Bank.
(2) The OJK requests the convening of a KSSK meeting to establish steps for handling problems of the Systemically Important Bank under special supervision that meets the criteria as referred to in paragraph (1).

Article 40
In the event that a Systemically Important Bank under special supervision as referred to in Article 39 paragraph (2) is decided by the KSSK to be handed over to the LPS for handling based on the Law on Prevention and Handling of Financial System Crises and the Law on Deposit Insurance Institutions, the OJK notifies the Systemically Important Bank regarding the decision of the KSSK.

CHAPTER IV
OTHER PROVISIONS

Article 41
The submission of reports and information as regulated in this OJK Regulation is submitted to the OJK at the address:
a. Bank Supervision Department, Islamic Banking Supervision Department, or OJK Regional Office in Jakarta, for Banks with their Head Office in the Special Capital Region of Jakarta; or b. Regional Office or Local OJK Office, for Banks with their Head Office outside the Special Capital Region of Jakarta.

CHAPTER V
SANCTIONS

Article 42
Banks that violate the provisions as referred to in Article 6 paragraph (1), Article 8 paragraph (1), Article 9, Article 10, Article 11 paragraph (3), Article 12 paragraph (1), Article 12 paragraph (4), Article 13 paragraph (1), Article 16, Article 17 paragraph (1), Article 19 paragraph (1), Article 19 paragraph (2), Article 22, Article 25 paragraph (1), Article 27 paragraph (1), Article 29, Article 30, Article 34, Article 37 paragraph (1), Article 37 paragraph (2) and/or Article 38 are subject to administrative sanctions as referred to in Article 52 of Law Number 7 of 1992 concerning Banking as amended by Law Number 10 of 1998 concerning Amendments to Law Number 7 of 1992 concerning Banking or as referred to in Article 58 of Law Number 21 of 2008 concerning Islamic Banking, in the form of:
a. written reprimand; and/or b. dismissal of members of the Board of Directors and/or members of the Board of Commissioners of the Bank.

CHAPTER VI
TRANSITIONAL PROVISIONS

Article 43
At the time this OJK Regulation comes into force, the time period for Banks that were previously established under intensive supervision and the time period for Banks that were established under special supervision continue to refer to the time periods previously established by the OJK.

CHAPTER VII
CLOSING PROVISIONS

Article 44
With the implementation of this OJK Regulation:
a. Bank Indonesia Regulation Number 13/3/PBI/2011 concerning Determination of Status and Follow-up of Bank Supervision (State Gazette of the Republic of Indonesia Year 2011 Number 9, Supplement to the State Gazette of the Republic of Indonesia Number 5190); and b. Bank Indonesia Regulation Number 15/2/PBI/2013 concerning Determination of Status and Follow-up of Supervision of Conventional Commercial Banks (State Gazette of the Republic of Indonesia Year 2013 Number 93, Supplement to the State Gazette of the Republic of Indonesia Number 5417), are revoked and declared invalid.

Article 45
This OJK Regulation comes into force on the date of its promulgation.

This copy is in accordance with the original
Director of Law 1
Legal Department signed
Yuliana

To ensure everyone knows, orders the promulgation of this OJK Regulation by placing it in the State Gazette of the Republic of Indonesia.
Established in Jakarta on April 4, 2017
CHAIRMAN OF THE COMMISSIONERS BOARD
FINANCIAL SERVICES AUTHORITY, signed
MULIAMAN D. HADAD

Promulgated in Jakarta on April 7, 2017
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2017 NUMBER 65

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 15 /POJK.03/2017
CONCERNING
DETERMINATION OF STATUS AND FOLLOW-UP OF SUPERVISION OF COMMERCIAL BANKS

I. GENERAL
A healthy banking system is one of the prerequisites to support the creation of financial system stability, national economic growth, and the maintenance of public confidence in the banking industry. Therefore, every Bank problem needs to be resolved quickly so as not to disrupt financial system stability and a decrease in public confidence levels. Handling of Bank problems is carried out not only when the Bank is established under intensive supervision but since the time the Bank is under normal supervision has significant problems and is potentially to be established as a Bank under intensive supervision. This is a preventive step aimed at overcoming Bank problems as early as possible so as not to disrupt the continuity of Bank business and financial system stability. With the implementation of Law Number 9 of 2016 concerning Prevention and Handling of Financial System Crises, the Financial Stability Committee (KSSK) was formed. The KSSK carries out prevention and handling of financial system crises to implement national interests and resilience in the economic field. Each member of the KSSK acts on behalf of and in the name of the institution they lead in accordance with statutory regulations. Therefore, it is necessary to improve the mechanism for follow-up handling of Systemically Important Bank (systemically important bank) problems through changes to regulations concerning the determination of status and follow-up of supervision of commercial banks.

II. ARTICLE BY ARTICLE
Article 1
Quite clear.

Article 2
Paragraph (1)
Quite clear.
Paragraph (2)
Letter a
What is meant by "normal supervision" is supervision of Banks that do not meet the criteria as Banks assessed to have potential difficulties endangering business continuity or do not meet the criteria as Banks assessed to experience difficulties endangering business continuity. Letter b What is meant by "intensive supervision" is an increase in the supervision process against Banks that were previously under normal supervision with the aim of returning the condition of the Bank. Actions to return the condition of the Bank are carried out by establishing supervisory actions (supervisory actions) that are appropriate to the Bank's problems. Letter c What is meant by "special supervision" is an increase in the supervision process against Banks that were previously under normal or intensive supervision with the aim of returning the condition of the Bank. Actions to return the condition of the Bank are carried out by establishing supervisory actions (supervisory actions) that are appropriate to the Bank's problems.

Article 3
Paragraph (1)
Quite clear.
Paragraph (2)
Letter a
The obligation of Banks to have a KPMM ratio in accordance with the Bank's risk profile refers to statutory regulations concerning the minimum capital adequacy requirement for commercial banks and OJK regulations governing the minimum capital adequacy requirement for Islamic commercial banks. Letter b The calculation of the core capital (tier 1) ratio as referred to in statutory regulations concerning the minimum capital adequacy requirement for commercial banks and OJK regulations governing the minimum capital adequacy requirement for Islamic commercial banks. Core capital (tier 1) for branches of banks located outside the country is business funds that have been allocated as Capital Equivalency Maintained Assets (CEMA) as referred to in OJK regulations governing the minimum capital adequacy requirement for commercial banks. Letter c What is meant by "Rupiah GWM" is primary GWM for commercial banks and Rupiah GWM for Islamic commercial banks. Provisions regarding Rupiah GWM as referred to in statutory regulations concerning minimum giro requirements. What is meant by "fundamental liquidity problems" is:

1. changes in the Bank's position in the money market from a lender position (net lender) to a borrower position (net borrower);
2. increasingly worse cash flow positions as a result of large maturity mismatches, especially on a short-term time scale;
3. the Bank's efforts to obtain funds in the money market at interest rates or yields higher than fair interest rates or market interest rates;
4. dependence on collateral to obtain funds;
5. increased withdrawal of deposits before maturity; and/or
6. other fundamental liquidity problems.
   Letter d
   What is meant by "problematic credit (NPL) or problematic financing (NPF)" is credit or financing that has a less active, doubtful, or bad quality as referred to in statutory regulations concerning the assessment of the quality of commercial bank assets and OJK regulations concerning the assessment of the quality of assets of Islamic commercial banks and Islamic business units. The formula for calculating the net problematic credit ratio (NPL net) is:
   Problematic Credit - Problematic Credit Impairment Loss Reserve (CKPN) Total Credit The formula for calculating the net problematic financing ratio (NPF net) is:
   Problematic Financing – Problematic Financing CKPN Total Financing Letter e What is meant by "composite health rating of the Bank" is as referred to in OJK regulations governing the assessment of the health level of commercial banks and OJK regulations governing the assessment of the health level of Islamic commercial banks and Islamic business units. Letter f What is meant by "corporate governance factor rating" is as referred to in OJK regulations concerning the implementation of corporate governance for commercial banks and statutory regulations concerning the implementation of good corporate governance for Islamic commercial banks and Islamic business units.

Article 4
Paragraph (1)
The calculation of the time period for Banks under intensive supervision is at most 1 (one) year including the time period for drafting and revising the action plan.
Paragraph (2)
Letter a
What is meant by "complex resolution" includes among others the resolution of problematic credit (NPL) or problematic financing (NPF) for syndicated credit or syndicated financing and/or credit or financing that is restructured comprehensively covering business activities from upstream to downstream. Letter b What is meant by "composite health rating of the Bank" is as referred to in OJK regulations governing the assessment of the health level of commercial banks and OJK regulations governing the assessment of the health level of Islamic commercial banks and Islamic business units. Letter c What is meant by "corporate governance factor rating" is as referred to in OJK regulations concerning the implementation of corporate governance for commercial banks and statutory regulations concerning the implementation of good corporate governance for Islamic commercial banks and Islamic business units. Paragraph (3) What is meant by "increase in supervisory actions" is an increase in the number of supervisory actions and/or the application of supervisory actions that have a heavier impact on the Bank than the supervisory actions established previously.

Article 5
Paragraph (1)
Quite clear.
Paragraph (2)
Letter a
What is meant by "KPMM ratio" is the ratio as referred to in statutory regulations concerning the minimum capital adequacy requirement for commercial banks and OJK regulations governing the minimum capital adequacy requirement for Islamic commercial banks. Letter b What is meant by "Rupiah GWM ratio" is the ratio as referred to in statutory regulations concerning minimum giro requirements. Number 1 What is meant by "fundamental liquidity problems" is:
a) changes in the Bank's position in the money market from a lender position (net lender) to a borrower position (net borrower); b) increasingly worse cash flow positions as a result of large maturity mismatches, especially on a short-term time scale; c) the Bank's efforts to obtain funds in the money market at interest rates or yields higher than fair interest rates or market interest rates; d) dependence on collateral to obtain funds; e) increased withdrawal of deposits before maturity; and/or f) other fundamental liquidity problems. Number 2 What is meant by "Bank experiences worsening liquidity development" is if the tendency of the Bank's GWM ratio is increasingly decreasing. Paragraph (3) Quite clear.

Article 6
Paragraph (1)
What is meant by "Bank other than Systemically Important Bank under normal supervision assessed to have significant problems" is a Bank that receives a health level assessment with a composite rating of 3 (three) but is potentially to be established under intensive supervision as regulated in OJK regulations concerning the assessment of the health level of commercial banks and OJK regulations concerning the assessment of the health level of Islamic commercial banks and Islamic business units. The action plan contains improvement steps to be implemented by the Bank other than Systemically Important Bank in order to overcome the significant problems faced along with the target time for problem resolution. Paragraph (2) Quite clear.

Article 7
Quite clear.

Article 8
Paragraph (1)
Supervisory actions ordered by the OJK are adjusted to the problems of the Bank other than Systemically Important Bank.
Paragraph (2)
Letter a
Quite clear.
Letter b
For conventional commercial Banks other than Systemically Important Banks, what is meant by "remuneration" is remuneration as referred to in OJK regulations concerning corporate governance in the provision of remuneration for commercial banks. For Islamic commercial Banks other than Systemically Important Banks, what is meant by "remuneration" is compensation established and given to members of the Board of Directors, members of the Board of Commissioners, members of the Sharia Supervisory Board and/or employees, whether fixed or variable, in cash or non-cash form in accordance with their duties, authorities, and responsibilities. What is meant by "related parties" is related parties as referred to in statutory regulations concerning maximum credit provision limits for commercial banks. Letter c Quite clear. Letter d What is meant by "profit distribution" includes among others dividend payments and bonus payments to the Board of Directors and/or Board of Commissioners. Letter e Quite clear. Letter f What is meant by "certain transactions" includes among others fund withdrawals, provision of funding facilities such as credit or financing, securities, letters of credit, standby letters of credit, or similar items. What is meant by "related parties" is related parties as referred to in statutory regulations concerning maximum credit provision limits for commercial banks.

The term "other party" refers to a specific individual or legal entity that is not a related party.

Letter g
The term "issuance of products and/or implementation of activities" includes, among others, the issuance of debt instruments, asset securitization, and marketing cooperation.

Letter h
This is sufficiently clear.

Letter i
This is sufficiently clear.

Letter j
This is sufficiently clear.

Letter k
The term "business activities" refers to banking business as referred to in the Banking Law and the Islamic Banking Law.

Letter l
This is sufficiently clear.

Letter m
This is sufficiently clear.

Letter n
This is sufficiently clear.

Letter o
The replacement of the Board of Directors and/or the Board of Commissioners of a Bank other than a Systemic Bank may be carried out partially or for all members of the Board of Directors and/or members of the Board of Commissioners.

Letter p
This is sufficiently clear.

Letter q
This is sufficiently clear.

Letter r
The term "statutory manager" refers to the statutory manager as referred to in OJK regulations governing the procedures for determining statutory managers at financial service institutions.

Letter s
This is sufficiently clear.

Article 9
Paragraph (1)
Letter a
This is sufficiently clear.

Letter b
This is sufficiently clear.

Letter c
This is sufficiently clear.

Letter d
Other examples of actions include updating the business plan.

Paragraph (2)
The capital restoration plan may be part of the action plan.

Article 10
This is sufficiently clear.

Article 11
This is sufficiently clear.

Article 12
This is sufficiently clear.

Article 13
This is sufficiently clear.

Article 14
This is sufficiently clear.

Article 15
This is sufficiently clear.

Article 16
Paragraph (1)
Capital increases for Banks other than Systemic Banks may be carried out by shareholders of Banks other than Systemic Banks or by new investors.
The term "regulatory provisions" refers to regulations regarding the minimum capital provision requirements for commercial banks, OJK regulations governing the minimum capital provision requirements for Islamic commercial banks, and regulations regarding the minimum reserve requirement.

Paragraph (2)
This is sufficiently clear.

Article 17
Paragraph (1)
This is sufficiently clear.

Paragraph (2)
Letter a
This is sufficiently clear.

Letter b
Number 1
The term "having" refers to:
a. a shareholder who individually or together with other related shareholders; b. a shareholder who acts on behalf of another shareholder causing that shareholder; or
c. a shareholder who has an option right or other right to own shares which, if exercised, would cause that shareholder to own 10% (ten percent) or more of the shares of a Bank other than a Systemic Bank. Shareholders who together with other related shareholders as referred to in letter a include shareholders who have a relationship with other shareholders in the form of ownership relationships, family relationships up to the second degree, and/or conducting cooperation to achieve common goals in controlling a Bank other than a Systemic Bank (acting in concert).

Number 2
This is sufficiently clear.

Letter c
This is sufficiently clear.

Article 18
This is sufficiently clear.

Article 19
Paragraph (1)
Letter a
This is sufficiently clear.

Letter b
This is sufficiently clear.

Letter c
This is sufficiently clear.

Letter d
This is sufficiently clear.

Letter e
This is sufficiently clear.

Letter f
The group structure report includes individuals and/or legal entities holding shares in Banks other than Systemic Banks up to the ultimate shareholders.

Letter g
The term "cash flow projection report" refers to the report as referred to in OJK regulations regarding the implementation of risk management for commercial banks.

Paragraph (2)
This is sufficiently clear.

Article 20
Paragraph (1)
The action to restrict certain business activities is intended, among others, to minimize the impact of losses, provide protection to customers, and/or minimize disturbances to financial system stability. The term "Bank's business activities" refers to the Bank's business activities as referred to in the Banking Law or the Islamic Banking Law.

Letter a
The term "Bank's condition is worsening" refers to:
1) the Bank's KPMM ratio for Banks other than Systemic Banks decreasing rapidly and assessed as unable to be increased to 8% (eight percent); and/or
2) the Bank's IDR GWM for Banks other than Systemic Banks decreasing rapidly and unable to be resolved in accordance with regulatory provisions regarding the minimum reserve requirement.

Letter b
This is sufficiently clear.

Paragraph (2)
This is sufficiently clear.

Article 21
This is sufficiently clear.

Article 22
This is sufficiently clear.

Article 23
Letter a
Number 1
This is sufficiently clear.

Number 2
The term "regulatory provisions" refers to regulations regarding the minimum reserve requirement.

Letter b
This is sufficiently clear.

Article 24
This is sufficiently clear.

Article 25
Paragraph (1)
The choice of rescue form by LPS is carried out with reference to the Law on Prevention and Handling of Financial System Crises and the Law on Deposit Insurance Institutions, such as temporary capital participation, transfer of part or all of the assets and/or liabilities of a Bank other than a Systemic Bank to a Receiving Bank, or transfer of part or all of the assets and/or liabilities of a Bank other than a Systemic Bank to an intermediary bank.

Paragraph (2)
This is sufficiently clear.

Article 26
This is sufficiently clear.

Article 27
Paragraph (1)
The term "Systemic Bank under normal supervision assessed as having significant problems" refers to a Systemic Bank that receives a composite health rating of 3 (three) but has the potential to be placed under intensive supervision as regulated in OJK regulations governing the health rating assessment of commercial banks, OJK regulations governing the health rating assessment of Islamic commercial banks, and Islamic business units.

Letter a
The implementation of the action plan (recovery plan) refers to OJK regulations regarding the action plan (recovery plan) for Systemic Banks.

Letter b
The term "problems other than financial problems" refers to problems as referred to in Article 3 paragraph (2) letters e and f.

Paragraph (2)
This is sufficiently clear.

Article 28
This is sufficiently clear.

Article 29
Paragraph (1)
Letter a
The implementation of the action plan (recovery plan) to address problems related to financial difficulties aims for the Systemic Bank under intensive supervision status to return to being a Systemic Bank under normal supervision.

Letter b
The action plan (action plan) contains improvement steps to address problems not related to financial difficulties and aims for the Systemic Bank under intensive supervision status to return to normal supervision.

Paragraph (2)
The term "related party" refers to related parties as referred to in regulatory provisions regarding the maximum credit granting limits for commercial banks.

Paragraph (3)
This is sufficiently clear.

Article 30
This is sufficiently clear.

Article 31
Paragraph (1)
Preparation for handling solvency problems includes, among others, the implementation of asset and/or liability assessments of the Systemic Bank (due diligence).

Paragraph (2)
This is sufficiently clear.

Article 32
This is sufficiently clear.

Article 33
This is sufficiently clear.

Article 34
This is sufficiently clear.

Article 35
This is sufficiently clear.

Article 36
This is sufficiently clear.

Article 37
Paragraph (1)
Capital increases for Systemic Banks may be carried out by shareholders of Systemic Banks or by new investors.

Paragraph (2)
This is sufficiently clear.

Article 38
This is sufficiently clear.

Article 39
Paragraph (1)
Letter a
Number 1
A Systemic Bank is assessed as no longer capable of being rehabilitated if the implementation of the action plan (recovery plan) during the period the Systemic Bank is under special supervision no longer makes it possible to increase the KPMM ratio to at least in accordance with the risk profile.

Number 2
This is sufficiently clear.

Letter b
This is sufficiently clear.

Paragraph (2)
This is sufficiently clear.

Article 40
This is sufficiently clear.

Article 41
This is sufficiently clear.

Article 42
This is sufficiently clear.

Article 43
This is sufficiently clear.

Article 44
This is sufficiently clear.

Article 45
This is sufficiently clear.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6039