Regulation of the Financial Services Authority Number 19/POJK.03/2017 on the Determination of Status and Supervisory Follow-up for Community Credit Banks and Sharia Community Financing Banks

COPY
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 19 /POJK.03/2017
ON
THE DETERMINATION OF STATUS AND SUPERVISORY FOLLOW-UP FOR COMMUNITY CREDIT BANKS AND SHARIA COMMUNITY FINANCING BANKS BY THE GRACE OF THE ALMIGHTY GOD, THE BOARD OF COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY, Considering:
a. that efforts to rehabilitate Community Credit Banks (BPR) and Sharia Community Financing Banks (BPRS) are ongoing activities to encourage the growth of the banking industry; b. that in efforts to rehabilitate banks, problems in Community Credit Banks (BPR) and Sharia Community Financing Banks (BPRS) need to be detected early by enhancing supervisory measures against Community Credit Banks (BPR) and Sharia Community Financing Banks (BPRS) under normal supervision that have experienced performance declines and are potentially subject to intensive supervision;
c. that Community Credit Banks (BPR) and Sharia Community Financing Banks (BPRS) previously under normal or intensive supervision that subsequently experience financial difficulties endangering the continuity of their business need to be placed under special supervision by the Financial Services Authority;
d. that in efforts to rehabilitate Community Credit Banks (BPR) and Sharia Community Financing Banks (BPRS) under both intensive and special supervision, the Financial Services Authority establishes supervisory measures that must be supported and implemented by members of the Board of Directors, members of the Board of Commissioners, and shareholders of Community Credit Banks (BPR) and Sharia Community Financing Banks (BPRS) within a specified time limit; e. that based on the considerations referred to in letters a through d, it is necessary to establish a Financial Services Authority Regulation on the Determination of Status and Supervisory Follow-up for Community Credit Banks (BPR) and Sharia Community Financing Banks (BPRS); 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 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);

DECIDES:
Establish: FINANCIAL SERVICES AUTHORITY REGULATION ON THE DETERMINATION OF STATUS AND SUPERVISORY FOLLOW-UP FOR COMMUNITY CREDIT BANKS (BPR) AND SHARIA COMMUNITY FINANCING BANKS (BPRS).

CHAPTER I
GENERAL PROVISIONS
Article 1
In this Financial Services Authority Regulation:

1. Community Credit Bank, hereinafter abbreviated as BPR, is a bank that conducts conventional business activities and does not provide payment circulation services in its operations.
2. Sharia Community Financing Bank, hereinafter abbreviated as BPRS, is a Sharia bank that does not provide payment circulation services in its operations.
3. Deposit Insurance Agency is the Deposit Insurance Agency as referred to in Law Number 24 of 2004 concerning the 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 the Deposit Insurance Agency into Law.
4. Board of Directors:
   a. for BPR or BPRS in the legal form of a Limited Liability Company (Perseroan Terbatas), refers to the Board of Directors as referred to in Law Number 40 of 2007 concerning Limited Liability Companies; b. for BPR in the legal form of:
   1) Regional Public Company (Perusahaan Umum Daerah) or Regional Owned Company (Perusahaan Perseroan Daerah) refers to the Board of Directors as referred to in Law Number 23 of 2014 concerning Regional Government as amended several times, lastly by Law Number 9 of 2015 concerning the Second Amendment to Law Number 23 of 2014 concerning Regional Government;
   2) Regional Company (Perusahaan Daerah) refers to the Board of Directors of a BPR that has not yet changed its legal form to a Regional Public Company (Perusahaan Umum Daerah) or Regional Owned Company (Perusahaan Perseroan Daerah) as referred to in Law Number 23 of 2014 concerning Regional Government as amended several times, lastly by Law Number 9 of 2015 concerning the Second Amendment to Law Number 23 of 2014 concerning Regional Government;
   c. for BPR in the legal form of a Cooperative, refers to the management as referred to in Law Number 25 of 1992 concerning Cooperatives.
5. Board of Commissioners:
   a. for BPR or BPRS in the legal form of a Limited Liability Company (Perseroan Terbatas), refers to the Board of Commissioners as referred to in Law Number 40 of 2007 concerning Limited Liability Companies; b. for BPR in the legal form of:
   1) Regional Owned Company (Perusahaan Perseroan Daerah) refers to the Commissioners as referred to in Law Number 23 of 2014 concerning Regional Government as amended several times, lastly by Law Number 9 of 2015 concerning the Second Amendment to Law Number 23 of 2014 concerning Regional Government;
   2) Regional Company (Perusahaan Daerah) refers to the Supervisors of a BPR that has not yet changed its legal form to a Regional Public Company (Perusahaan Umum Daerah) or Regional Owned Company (Perusahaan Perseroan Daerah) as referred to in Law Number 23 of 2014 concerning Regional Government as amended several times, lastly by Law Number 9 of 2015 concerning the Second Amendment to Law Number 23 of 2014 concerning Regional Government;
   c. for BPR in the legal form of a Cooperative, refers to the Supervisors as referred to in Law Number 25 of 1992 concerning Cooperatives.
6. Minimum Capital Requirement (KPMM) is the ratio of capital to risk-weighted assets that must be provided by BPR as referred to in Financial Services Authority regulations regarding KPMM and the fulfillment of minimum core capital for BPR, and Financial Services Authority regulations regarding KPMM and the fulfillment of minimum core capital for BPRS.
7. Cash Ratio (CR) is the ratio of liquid assets to current liabilities as referred to in statutory regulations governing the assessment of the health level of BPR and the system for assessing the health level of BPR based on Sharia principles.

Article 2
(1) The Financial Services Authority has the authority to determine the supervisory status of BPR or BPRS.
(2) The supervisory status of BPR or BPRS as referred to in paragraph (1) consists of:
a. normal supervision; b. intensive supervision; or
c. special supervision.

Article 3
(1) The Board of Directors, Board of Commissioners, and/or controlling shareholders of BPR or BPRS under normal supervision that have significant problems must submit an action plan to the Financial Services Authority. (2) The procedure for submitting the action plan to be implemented by BPR or BPRS contained in the action plan as referred to in paragraph (1) refers to statutory regulations governing the assessment of the health level of BPR or the system for assessing the health level of BPR based on Sharia principles. (3) Further provisions regarding the action plan as referred to in paragraph (1) and paragraph (2) are regulated in a Financial Services Authority Circular Letter.

CHAPTER II
BPR AND BPRS UNDER INTENSIVE SUPERVISION
Article 4
The Financial Services Authority places BPR or BPRS under intensive supervision if BPR or BPRS is assessed to have potential difficulties endangering the continuity of its business.

Article 5
(1) In the period from the effective date of this Financial Services Authority Regulation until December 31, 2019, the Financial Services Authority places BPR or BPRS under intensive supervision as referred to in Article 4 if BPR or BPRS meets the criteria:
a. KPMM ratio less than 8% (eight percent) but equal to or greater than 4% (four percent); b. average CR over the last 6 (six) months less than 4% (four percent) but equal to or greater than 3% (three percent); and/or
c. health level with:

1. "unhealthy" rating for 3 (three) consecutive assessment periods or "not healthy" for BPR; and
2. composite rating of 4 (four) for 3 (three) consecutive assessment periods or composite rating of 5 (five) for BPRS.
   (2) Since January 1, 2020, the Financial Services Authority places BPR or BPRS under intensive supervision as referred to in Article 4 if BPR or BPRS meets the criteria:
   a. KPMM ratio less than 12% (twelve percent) but equal to or greater than 8% (eight percent); b. average CR over the last 6 (six) months less than 5% (five percent) but equal to or greater than 4% (four percent); and/or
   c. health level of BPR or BPRS with composite rating of 4 (four) for 3 (three) consecutive assessment periods or composite rating of 5 (five).

Article 6
(1) The Financial Services Authority places BPR or BPRS under intensive supervision as referred to in Article 4 for a maximum period of 1 (one) year calculated from the date of the Financial Services Authority notification letter. (2) The Financial Services Authority has the authority to extend the duration of intensive supervision as referred to in paragraph (1) by 1 (one) time for a maximum period of 1 (one) year. (3) The extension of the duration of intensive supervision as referred to in paragraph (2) may be granted if BPR or BPRS meets the requirements:
a. KPMM ratio and average CR over the last 6 (six) months show improvement based on the implementation of the action plan previously submitted; and/or b. the health level of BPR or BPRS still does not meet or has met the criteria for normal supervision. (4) The extension of the duration of BPR or BPRS under intensive supervision as referred to in paragraph (2) may be accompanied by enhanced supervisory measures.

Article 7
The Financial Services Authority notifies BPR or BPRS in writing regarding:
a. the placement of BPR or BPRS under intensive supervision as referred to in Article 2 paragraph (2) letter b and Article 4; and b. the placement of the extension of the duration of BPR or BPRS under intensive supervision as referred to in Article 6 paragraph (2), accompanied by the reasons for placement and supervisory measures that must be carried out by BPR or BPRS.

Article 8
BPR or BPRS under intensive supervision must carry out supervisory measures ordered by the Financial Services Authority, namely:
a. strengthening the capital of BPR or BPRS, including through capital contributions; b. replacing members of the Board of Directors and/or members of the Board of Commissioners of BPR or BPRS;
c. writing off non-performing loans or financing and calculating the losses of BPR or BPRS against the capital of BPR or BPRS;
d. conducting a merger or consolidation with another BPR or BPRS; e. selling BPR or BPRS to a buyer willing to assume all obligations of BPR or BPRS; f. selling part or all of the assets and/or obligations of BPR or BPRS to a bank or other party; g. restricting the payment of remuneration or other forms equivalent to it to members of the Board of Directors and/or members of the Board of Commissioners of BPR or BPRS, or remuneration to related parties; h. not expanding the office network;
i. suspending certain business activities for a period determined by the Financial Services Authority; and/or
j. other supervisory measures in accordance with statutory regulations.

Article 9
(1) BPR or BPRS under intensive supervision must submit:
a. an action plan according to the problems of BPR or BPRS; b. a report on the implementation of the action plan; and
c. a complete list of related parties.
(2) In addition to the obligations as referred to in paragraph (1), BPR or BPRS under intensive supervision must carry out other actions and/or report certain matters upon request by the Financial Services Authority. (3) The obligations as referred to in paragraph (1) letters a and c must be submitted to the Financial Services Authority no later than 10 (ten) working days since BPR or BPRS was placed under intensive supervision. (4) The action plan as referred to in paragraph (1) letter a must at least contain improvement plans according to the problems faced by BPR or BPRS, accompanied by the time frame for completion.

Article 10
(1) The Financial Services Authority submits approval or rejection of the action plan as referred to in Article 9 paragraph (1) letter a no later than 10 (ten) working days since the action plan is received in complete form. (2) In the event that the action plan submitted by BPR or BPRS is approved by the Financial Services Authority, BPR or BPRS must implement the action plan since the date the approval is communicated. (3) In the event that the action plan submitted by BPR or BPRS is rejected by the Financial Services Authority, BPR or BPRS must submit an improved action plan no later than 5 (five) working days since the notification date.

Article 11
(1) In the event that BPR or BPRS is placed under intensive supervision due to capital problems as referred to in Article 5 paragraph (1) letter a and paragraph (2) letter a, BPR or BPRS and/or shareholders of BPR or BPRS must submit a capital improvement plan to address capital problems as part of the action plan as referred to in Article 9 paragraph (1) letter a. (2) The capital improvement plan of BPR or BPRS as referred to in paragraph (1) must reflect the ability of BPR or BPRS to achieve and maintain the KPMM ratio established by the Financial Services Authority within the time frame as referred to in Article 6 paragraph (1). (3) The procedure for adding paid-up capital for capital improvement as referred to in paragraph (1):
a. for BPR refers to the provisions as referred to in Financial Services Authority regulations regarding BPR and Financial Services Authority regulations regarding KPMM and the fulfillment of minimum core capital for BPR; and b. for BPRS refers to the provisions as referred to in Financial Services Authority regulations regarding BPRS and Financial Services Authority regulations regarding KPMM and the fulfillment of minimum core capital for BPRS.

Article 12
(1) BPR or BPRS must submit a report on the implementation of the action plan as referred to in Article 9 paragraph (1) letter b and/or the implementation of capital improvement as referred to in Article 11 paragraph (1) to the Financial Services Authority at the end of each month no later than 7 (seven) working days of the following month. (2) The implementation report as referred to in paragraph (1) must contain at least:
a. problems of BPR or BPRS; b. improvement actions already carried out by BPR or BPRS; and
c. the time frame for implementation of improvements.

Article 13
(1) In the period from the effective date of this Financial Services Authority Regulation until December 31, 2019, the Financial Services Authority removes BPR or BPRS from intensive supervision if BPR or BPRS meets the criteria:
a. KPMM ratio of at least 8% (eight percent); b. average CR over the last 6 (six) months of at least 4% (four percent); and
c. health level with a rating of "healthy" or "fairly healthy" for BPR, or health level with a composite rating of 1 (one), 2 (two), or 3 (three) for BPRS.
(2) Since January 1, 2020, the Financial Services Authority removes BPR or BPRS from intensive supervision if BPR or BPRS meets the criteria:
a. KPMM ratio of at least 12% (twelve percent); b. average CR over the last 6 (six) months of at least 5% (five percent); and
c. health level of BPR or BPRS with composite rating of 1 (one), 2 (two), or 3 (three).

Article 14
The Financial Services Authority communicates in writing regarding BPR or BPRS removed from intensive supervision to the respective BPR or BPRS.

Article 15
(1) In the event that the duration of intensive supervision or the extension of the duration of intensive supervision as referred to in Article 6 paragraph (1) and paragraph (2) has expired and the health level of BPR or BPRS does not meet the criteria for removal from intensive supervision, the Financial Services Authority:
a. continues supervisory measures against BPR or BPRS already carried out during the intensive supervision period; and/or b. applies supervisory measures not yet carried out against BPR or BPRS under intensive supervision, including in the context of resolving non-performing loans or financing. (2) In addition to applying supervisory measures as referred to in paragraph (1), the Financial Services Authority may:
a. assess the ability and propriety of controlling shareholders, members of the Board of Directors, and/or members of the Board of Commissioners of BPR or BPRS; and/or b. request controlling shareholders to transfer ownership of shares to other parties by:

1. all share ownership of controlling shareholders in BPR; or
2. at least 90% (ninety percent) of shares of controlling shareholders in BPRS.

Article 16
Further provisions regarding BPR or BPRS under intensive supervision as referred to in Article 4 through Article 15 are regulated in a Financial Services Authority Circular Letter.

CHAPTER III
BPR AND BPRS UNDER SPECIAL SUPERVISION
Article 17
(1) The Financial Services Authority places BPR or BPRS under special supervision if BPR or BPRS is assessed to be experiencing difficulties endangering the continuity of its business.
(2) The placement of BPR or BPRS under special supervision as referred to in paragraph (1) may be done without prior placement of BPR or BPRS under intensive supervision.

Article 18
(1) In the period from the effective date of this Financial Services Authority Regulation until December 31, 2019, the Financial Services Authority places BPR or BPRS under special supervision as referred to in Article 17 if BPR or BPRS meets the criteria:
a. KPMM ratio less than 4% (four percent) but greater than 0% (zero percent); and/or b. average CR over the last 6 (six) months less than 3% (three percent) but greater than 1% (one percent).
(2) Since January 1, 2020, the Financial Services Authority places BPR or BPRS under special supervision as referred to in Article 17 if BPR or BPRS meets the criteria:
a. KPMM ratio less than 8% (eight percent) but greater than 2% (two percent); and/or b. average CR over the last 6 (six) months less than 4% (four percent) but greater than 1% (one percent).
(3) The Financial Services Authority places BPR or BPRS under special supervision if the duration of intensive supervision or the extension of the duration of intensive supervision has expired and does not meet the criteria for removal from intensive supervision as referred to in Article 13 paragraph (1) letters a and b or Article 13 paragraph (2) letters a and b.

Article 19
The Financial Services Authority places BPR or BPRS under special supervision as referred to in Article 17 for a maximum period of 3 (three) months from the date of the Financial Services Authority notification letter.

Article 20
The Financial Services Authority notifies BPR and BPRS in writing regarding the placement of BPR or BPRS under special supervision as referred to in Article 17, accompanied by the reasons for placement and supervisory measures that must be carried out by BPR or BPRS.

Article 21
(1) In the period from the effective date of this Financial Services Authority Regulation until December 31, 2019, BPR and BPRS under special supervision must increase capital to meet a KPMM ratio of at least 8% (eight percent) and an average CR over the last 6 (six) months of at least 4% (four percent). (2) Since January 1, 2020, BPR or BPRS under special supervision must increase capital to meet a KPMM ratio of at least 12% (twelve percent) and an average CR over the last 6 (six) months of at least 5% (five percent). (3) The capital increase as referred to in paragraph (1) and paragraph (2) is carried out by considering the potential losses and liquidity needs of BPR or BPRS under special supervision for the next 6 (six) months. (4) The capital increase as referred to in paragraph (1) and paragraph (2) must be fulfilled within a time frame of 3 (three) months as referred to in Article 19. (5) The procedure for adding capital as referred to in paragraph (1) and paragraph (2):
a. for BPR refers to the provisions as referred to in Financial Services Authority regulations regarding BPR and Financial Services Authority regulations regarding KPMM and the fulfillment of minimum core capital for BPR; and b. for BPRS refers to the provisions as referred to in Financial Services Authority regulations regarding BPRS and Financial Services Authority regulations regarding KPMM and the fulfillment of minimum core capital for BPRS.

Article 22
BPR or BPRS under special supervision is prohibited from selling or reducing the amount of assets without the approval of the Financial Services Authority.

Article 23
(1) In addition to supervisory measures as referred to in Article 21 and Article 22, BPR or BPRS under special supervision must carry out supervisory measures as referred to in Article 8 ordered by the Financial Services Authority. (2) Supervisory measures already established when BPR or BPRS was under intensive supervision and not yet completed by BPR or BPRS remain valid during the special supervision period.

Article 24
BPR or BPRS under special supervision must:
a. submit an action plan according to the problems of BPR or BPRS no later than 5 (five) working days since BPR or BPRS was placed under special supervision, signed by the Board of Directors, Board of Commissioners, and controlling shareholders of BPR or BPRS; b. implement the action plan as referred to in letter a;
c. submit a report on the implementation of each action and/or the level of achievement of the action plan no later than 5 (five) working days since the implementation and/or achievement of the action plan;
d. adjust the submitted action plan as referred to in letter a upon request by the Financial Services Authority; e. submit a complete list of related parties no later than 5 (five) working days since BPR or BPRS was placed under special supervision; f. report certain matters established by the Financial Services Authority, namely:

1. the latest financial statements;
2. details of productive assets grouped by quality; and
3. the latest information and documents regarding:
   a) customer deposit lists; b) detailed lists of claims and obligations of BPR or BPRS to related parties; and g. carry out other actions in accordance with orders from the Financial Services Authority.

Article 25
(1) BPR or BPRS under normal supervision or intensive supervision but experiencing a decline:
a. KPMM ratio becomes equal to or less than 0% (zero percent) or average CR over the last 6 (six) months becomes equal to or less than 1% (one percent), occurring in the period from the effective date of this Financial Services Authority Regulation until December 31, 2019; and b. KPMM ratio becomes equal to or less than 2% (two percent) or average CR over the last 6 (six) months becomes equal to or less than 1% (one percent), occurring since January 1, 2020, is designated under special supervision for a maximum period of 2 (two) months from the date of designation. (2) BPR or BPRS designated under special supervision as referred to in paragraph (1) must complete the action plan according to the BPR or BPRS issues within a maximum period of 2 (two) months from the date of designation.

Article 26
(1) The time period as referred to in Article 19 or Article 25 paragraph (1) does not limit the time for the Financial Services Authority to conduct research on improvement efforts already made by the BPR or BPRS as referred to in Article 21 and Article 23. (2) After the research as referred to in paragraph (1) is completed, the Financial Services Authority designates the BPR or BPRS to exit or not exit special supervision.

Article 27
(1) The Financial Services Authority notifies in writing to the Deposit Insurance Corporation regarding BPR or BPRS designated under special supervision as referred to in Article 17 and Article 25 paragraph (1). (2) Notification to the Deposit Insurance Corporation as referred to in paragraph (1) is accompanied by information regarding the condition of the respective BPR or BPRS.

Article 28
(1) BPR or BPRS designated under special supervision for a maximum period of 2 (two) months as referred to in Article 25 paragraph (1) is prohibited from conducting fund collection and fund disbursement activities. (2) The prohibition on fund collection and fund disbursement as referred to in paragraph (1) applies from the date of designation under special supervision for a maximum period of 2 (two) months as referred to in Article 25 paragraph (1) until the BPR or BPRS is released from special supervision.

Article 29
(1) In the period from the effective date of this Financial Services Authority Regulation until December 31, 2019, the Financial Services Authority designates BPR or BPRS to exit special supervision if the BPR or BPRS meets the criteria:
a. KPMM ratio of at least 8% (eight percent); and b. average CR over the last 6 (six) months of at least 4% (four percent).

(2) Since January 1, 2020, the Financial Services Authority designates BPR or BPRS to exit special supervision if the BPR or BPRS meets the criteria:
a. KPMM ratio of at least 12% (twelve percent); and b. average CR over the last 6 (six) months of at least 5% (five percent).
(3) Fulfillment of the criteria as referred to in paragraph (1) and paragraph (2) must take into account potential losses and liquidity needs for the next 6 (six) months.

Article 30
(1) The Financial Services Authority sends written notification to the BPR or BPRS that:
a. the respective BPR or BPRS is released from special supervision as referred to in Article 29; and b. the prohibition on conducting fund collection and fund disbursement activities for the respective BPR or BPRS as referred to in Article 28 paragraph (1) is lifted. (2) The Financial Services Authority sends written notification regarding BPR or BPRS released from special supervision to the Deposit Insurance Corporation.

Article 31
(1) The Financial Services Authority has the authority to place supervisors to conduct direct monitoring of the operational activities of BPR or BPRS designated under special supervision as referred to in Article 17 paragraph (1).

(2) The placement of supervisors as referred to in paragraph (1) does not reduce the responsibility of the Board of Directors members, Board of Commissioners members, and/or controlling shareholders of the BPR or BPRS regarding the operational activities and obligations of the BPR or BPRS.

Article 32
Further provisions regarding BPR or BPRS under special supervision as referred to in Article 17 to Article 31 are regulated in a Financial Services Authority Circular Letter.

CHAPTER IV
BPR AND BPRS THAT CANNOT BE REHABILITATED AND ARE TRANSFERRED TO THE DEPOSIT INSURANCE CORPORATION

Article 33
BPR or BPRS is designated as BPR or BPRS that cannot be rehabilitated if the BPR or BPRS under special supervision has exceeded the time period in special supervision as referred to in Article 19 or Article 25 paragraph (1) and does not meet the criteria:
a. KPMM ratio of at least 8% (eight percent) and average CR over the last 6 (six) months of at least 4% (four percent) in the period from the effective date of this Financial Services Authority Regulation until December 31, 2019; and b. KPMM ratio of at least 12% (twelve percent) and average CR over the last 6 (six) months of at least 5% (five percent) since January 1, 2020.

Article 34
BPR or BPRS is designated as BPR or BPRS that cannot be rehabilitated if the BPR or BPRS is still within the time period in special supervision as referred to in Article 19 but experiences a decline:
a. KPMM ratio becomes equal to or less than 0% (zero percent) and/or average CR over the last 6 (six) months becomes equal to or less than 1% (one percent), occurring in the period from the effective date of this Financial Services Authority Regulation until December 31, 2019; b. KPMM ratio becomes equal to or less than 2% (two percent) and/or average CR over the last 6 (six) months becomes equal to or less than 1% (one percent), occurring since January 1, 2020.

Article 35
During the special supervision period as referred to in Article 19 and Article 25 paragraph (1), the Financial Services Authority may at any time designate BPR or BPRS as unable to be rehabilitated, in case based on the Financial Services Authority's assessment, the BPR or BPRS is unable to increase:
a. KPMM ratio to at least 8% (eight percent) and/or average CR over the last 6 (six) months to at least 4% (four percent) in the period from the effective date of this Financial Services Authority Regulation until December 31, 2019; b. KPMM ratio to at least 12% (twelve percent) and/or average CR over the last 6 (six) months to at least 5% (five percent) since January 1, 2020.

Article 36
The Financial Services Authority notifies in writing to the BPR or BPRS under special supervision designated as BPR or BPRS that cannot be rehabilitated.

Article 37
The Financial Services Authority notifies in writing to the Deposit Insurance Corporation and requests the Deposit Insurance Corporation to provide a decision to save or not save the BPR or BPRS meeting the criteria as referred to in Article 33 to Article 35.

Article 38
In the event that the Deposit Insurance Corporation decides not to save the BPR or BPRS as referred to in Article 37, the Financial Services Authority revokes the business license of the respective BPR or BPRS after receiving notification from the Deposit Insurance Corporation.

Article 39
(1) The Financial Services Authority notifies the decision to revoke the business license of the BPR or BPRS as referred to in Article 38 to the respective BPR or BPRS and the Deposit Insurance Corporation.
(2) Further resolution of the BPR or BPRS whose business license has been revoked by the Financial Services Authority is conducted by the Deposit Insurance Corporation.

Article 40
Further provisions regarding BPR or BPRS that cannot be rehabilitated and are transferred to the Deposit Insurance Corporation as referred to in Article 33 to Article 39 are regulated in a Financial Services Authority Circular Letter.

CHAPTER V
ANNOUNCEMENT

Article 41
(1) The Financial Services Authority announces BPR or BPRS designated:
a. under special supervision; or b. released from special supervision, on the same day as the date of designation.
(2) The Financial Services Authority announces BPR or BPRS that:
a. are prohibited from conducting fund collection and fund disbursement; or b. are permitted to conduct fund collection and fund disbursement again, on the same day as the date of the notification letter.
(3) BPR or BPRS must announce the prohibition on fund collection and fund disbursement as referred to in paragraph (2) letter a on the same day as the date of the notification letter.

Article 42
The Financial Services Authority announces the decision to revoke the business license of the BPR or BPRS as referred to in Article 38 to the public.

Article 43
Further provisions regarding the announcement procedure as referred to in Article 41 and Article 42 are regulated in a Financial Services Authority Circular Letter.

CHAPTER VI
REPORTING

Article 44
(1) BPR or BPRS under special supervision must submit daily balance sheet reports weekly to the Financial Services Authority.
(2) The report as referred to in paragraph (1) must be submitted on the first working day of the following week.
(3) In the event that the working day as referred to in paragraph (2) exceeds the end limit of the special supervision period, the report must be submitted no later than 1 (one) working day after the end of the special supervision period. (4) Further provisions regarding the report as referred to in paragraph (1) are regulated in a Financial Services Authority Circular Letter.

CHAPTER VII
SANCTIONS

Article 45
(1) BPR or BPRS violating provisions as referred to in Article 3 paragraph (1), Article 8, Article 9 paragraph (1), Article 9 paragraph (2), Article 9 paragraph (3), Article 10 paragraph (2), Article 10 paragraph (3), Article 11 paragraph (1), Article 12 paragraph (1), Article 21 paragraph (1), Article 21 paragraph (2), Article 21 paragraph (4), Article 41 paragraph (3), and/or Article 44 are subject to administrative sanctions, namely:
a. written reprimand; b. downgrade of health level; and/or
c. inclusion of Board of Directors members, Board of Commissioners members, and/or controlling shareholders in the list of parties receiving the "fail" predicate in the competency and propriety test of BPR or BPRS as referred to in provisions of legislation governing the competency and propriety test of BPR or BPRS.
(2) BPR or BPRS violating provisions as referred to in Article 22, Article 24, Article 25 paragraph (2), and/or Article 28 paragraph (1) are subject to administrative sanctions, namely:
a. written reprimand; b. downgrade of health level;
c. temporary suspension of part of the business activities of BPR or BPRS; and/or
d. inclusion of Board of Directors members, Board of Commissioners members, and/or shareholders in the list of parties receiving the "fail" predicate in the competency and propriety test of BPR or BPRS as referred to in provisions of legislation governing the competency and propriety test of BPR or BPRS.

Article 46
Board of Directors members, Board of Commissioners members, and/or employees of BPR or BPRS violating provisions as referred to in Article 28 paragraph (1) may be subject to sanctions as referred to in Article 49 paragraph (2) letter b of Law Number 7 of 1992 concerning Banking as amended by Law Number 10 of 1998 concerning Amendment to Law Number 7 of 1992 concerning Banking and/or Article 63 paragraph (2) letter b of Law Number 21 of 2008 concerning Sharia Banking.

CHAPTER VIII
TRANSITIONAL PROVISIONS

Article 47
(1) Follow-up handling already designated for BPR or BPRS under special supervision before this Financial Services Authority Regulation was promulgated, continues to refer to Bank Indonesia Regulation Number 11/20/PBI/2009 concerning Follow-up Handling of Rural Credit Banks in Special Supervision Status and Bank Indonesia Regulation Number 13/6/PBI/2011 concerning Follow-up Handling of Sharia Rural Financing Banks in Special Supervision Status. (2) Follow-up handling as referred to in paragraph (1), including the prohibition on fund collection and fund disbursement for BPR or BPRS, remains valid as long as the BPR or BPRS is under special supervision.

Article 48
(1) At the time this Financial Services Authority Regulation was promulgated until October 31, 2017, BPR or BPRS is designated under special supervision for a maximum period of 180 (one hundred eighty) days calculated from the date of the Financial Services Authority's notification letter. (2) The designation period of BPR or BPRS under special supervision as referred to in paragraph (1) cannot be extended.

Article 49
(1) In the period from the promulgation of this Financial Services Authority Regulation until October 31, 2017, BPR or BPRS designated under special supervision as referred to in Article 48 must comply with provisions as referred to in Article 3, Article 4, Article 6, Article 9, and Article 11 of Bank Indonesia Regulation Number 11/20/PBI/2009 concerning Follow-up Handling of Rural Credit Banks in Special Supervision Status and Article 3, Article 4, Article 7, Article 9, and Article 11 of Bank Indonesia Regulation Number 13/6/PBI/2011 concerning Follow-up Handling of Sharia Rural Financing Banks in Special Supervision Status. (2) Since November 1, 2017, BPR or BPRS designated under special supervision as referred to in Article 48 must comply with provisions as referred to in this Financial Services Authority Regulation.

CHAPTER IX
CLOSING PROVISIONS

Article 50
Provisions regulating the extension of the special supervision period as referred to in:
a. Article 10 of Bank Indonesia Regulation Number 11/20/PBI/2009 concerning Follow-up Handling of Rural Credit Banks in Special Supervision Status (State Gazette of the Republic of Indonesia Year 2009 Number 81, Supplement to the State Gazette of the Republic of Indonesia Number 5012); and b. Article 10 of Bank Indonesia Regulation Number 13/6/PBI/2011 concerning Follow-up Handling of Sharia Rural Financing Banks in Special Supervision Status (State Gazette of the Republic of Indonesia Year 2011 Number 12, Supplement to the State Gazette of the Republic of Indonesia Number 5192), are declared invalid from the date this Financial Services Authority Regulation was promulgated.

Article 51
At the time this Financial Services Authority Regulation becomes effective:
a. Bank Indonesia Regulation Number 11/20/PBI/2009 concerning Follow-up Handling of Rural Credit Banks in Special Supervision Status (State Gazette of the Republic of Indonesia Year 2009 Number 81, Supplement to the State Gazette of the Republic of Indonesia Number 5012); and b. Bank Indonesia Regulation Number 13/6/PBI/2011 concerning Follow-up Handling of Sharia Rural Financing Banks in Special Supervision Status (State Gazette of the Republic of Indonesia Year 2011 Number 12, Supplement to the State Gazette of the Republic of Indonesia Number 5192), are revoked and declared invalid.

Article 52
This Financial Services Authority Regulation becomes effective on November 1, 2017, except for the provisions of Article 48, Article 49, and Article 50 which become effective on the date of promulgation.

This copy is consistent with the original
Legal Director 1
Legal Department signed
Yuliana

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

Established in Jakarta on May 8, 2017
CHAIRMAN OF THE COMMISSIONERS BOARD
FINANCIAL SERVICES AUTHORITY, signed
MULIAMAN D. HADAD

Promulgated in Jakarta on May 10, 2017
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2017 NUMBER 97