Regulation of the Financial Services Authority of the Republic of Indonesia Number 28 of 2023 Concerning the Determination of Status and Supervisory Follow-up for People's Economy Banks and Sharia People's Economy Banks

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REGULATION OF THE FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA NUMBER 28 OF 2023 CONCERNING THE DETERMINATION OF STATUS AND SUPERVISORY FOLLOW-UP FOR PEOPLE'S ECONOMY BANKS AND SHARIA PEOPLE'S ECONOMY BANKS BY THE GRACE OF THE ALMIGHTY GOD, THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY, Considering:
a. that to support and realize efforts to develop and strengthen the banking sector, specifically People's Economy Banks and Sharia People's Economy Banks, in line with the increasingly complex and diverse development of the financial services industry; b. that to implement the provisions of Article 16A paragraph (8) and Article 16C paragraph (10) of Law Number 9 of 2016 concerning the Prevention and Handling of Financial System Crises, as amended by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector;
c. that to implement the provisions of Article 37 paragraph (6) of Law Number 7 of 1992 concerning Banking, as amended several times, most recently by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector;
d. that to implement the provisions of Article 54 paragraph (6) of Law Number 21 of 2008 concerning Sharia Banking, as amended by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector; e. that based on the considerations referred to in letters a, b, c, and d, it is necessary to establish a Financial Services Authority Regulation concerning the Determination of Status and Supervisory Follow-up for People's Economy Banks and Sharia People's Economy Banks; Considering:

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 several times, most recently by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (State Gazette of the Republic of Indonesia Year 2023 Number 4, Supplement to the State Gazette of the Republic of Indonesia Number 6845);
2. Law Number 21 of 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), as amended by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (State Gazette of the Republic of Indonesia Year 2023 Number 4, Supplement to the State Gazette of the Republic of Indonesia Number 6845);
3. Law Number 21 of 2011 concerning the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Supplement to the State Gazette of the Republic of Indonesia Number 5253), as amended by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (State Gazette of the Republic of Indonesia Year 2023 Number 4, Supplement to the State Gazette of the Republic of Indonesia Number 6845);
4. 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), as amended by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (State Gazette of the Republic of Indonesia Year 2023 Number 4, Supplement to the State Gazette of the Republic of Indonesia Number 6845);
   DECIDING:
   Establishing: FINANCIAL SERVICES AUTHABILITY REGULATION CONCERNING THE DETERMINATION OF STATUS AND SUPERVISORY FOLLOW-UP FOR PEOPLE'S ECONOMY BANKS AND SHARIA PEOPLE'S ECONOMY BANKS.

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

1. People's Economy Bank, hereinafter abbreviated as BPR, is a conventional bank type that does not provide services in current account transactions directly.
2. Sharia People's Economy Bank, hereinafter referred to as BPR Syariah, is a Sharia bank type that does not provide services in current account transactions directly.
3. Deposit Insurance Agency is the Deposit Insurance Agency as defined in the laws concerning the Deposit Insurance Agency.
4. Board of Directors is the board of directors for BPR and BPR Syariah in the form of a limited liability company, regional public enterprise, regional joint-stock company, regional enterprise, or management for BPR and BPR Syariah in the form of a cooperative legal entity.
5. Board of Commissioners is the board of commissioners for BPR and BPR Syariah in the form of a limited liability company, commissioner for BPR and BPR Syariah in the form of a regional joint-stock company, supervisory board for BPR and BPR Syariah in the form of a regional public enterprise and regional enterprise, and supervisor for BPR and BPR Syariah in the form of a cooperative legal entity.
6. Minimum Capital Requirement, hereinafter abbreviated as KPMM, is the ratio of capital to risk-weighted assets that must be provided by BPR and BPR Syariah.
7. Cash Ratio, hereinafter abbreviated as CR, is the ratio of liquid assets to current liabilities.
8. Health Level of BPR and BPR Syariah, hereinafter abbreviated as TKS, is the result of the assessment of the condition of BPR and BPR Syariah conducted against the factors of risk profile, governance, profitability, and capitalization of BPR and BPR Syariah.
9. Composite Rating, hereinafter abbreviated as PK, is the final rating result of the TKS assessment.

CHAPTER II
SUPERVISORY STATUS OF BPR AND BPR SYARIAH
First Section
General
Article 2
(1) The Financial Services Authority has the authority to determine the supervisory status of BPR or BPR Syariah.
(2) The supervisory status of BPR or BPR Syariah as referred to in paragraph (1) consists of:
a. BPR or BPR Syariah under normal supervision; b. BPR or BPR Syariah under rehabilitation; or
c. BPR or BPR Syariah under resolution.
Article 3
(1) In the event that a BPR or BPR Syariah under normal supervision experiences difficulties endangering the continuity of its business, the Financial Services Authority has the authority to request the BPR or BPR Syariah to submit an action plan. (2) BPR or BPR Syariah must submit the action plan as referred to in paragraph (1) to the Financial Services Authority within a maximum of 14 (fourteen) working days from the date of the Financial Services Authority's request. (3) The Financial Services Authority may request BPR and BPR Syariah to adjust the action plan as referred to in paragraph (2).
Article 4
(1) BPR or BPR Syariah must submit a report on the realization of the action plan as referred to in Article 3 paragraph (1) to the Financial Services Authority.
(2) BPR or BPR Syariah submits the report on the realization of the action plan as referred to in paragraph (1) within a maximum of 10 (ten) working days after the implementation of the action plan.
(3) Under certain conditions, the Financial Services Authority may determine a different submission period for the report from the period as referred to in paragraph (2).

Second Section
BPR and BPR Syariah Under Rehabilitation
Article 5
The Financial Services Authority determines BPR or BPR Syariah under rehabilitation as referred to in Article 2 paragraph (2) letter b for BPR or BPR Syariah that meet the criteria:
a. TKS with PK 5 (five) for 2 (two) consecutive periods; b. CR average for the last 3 (three) months is less than 5% (five percent); and/or
c. KPMM ratio is less than 12% (twelve percent).
Article 6
(1) The Financial Services Authority determines BPR or BPR Syariah under rehabilitation as referred to in Article 5 for a maximum period of 1 (one) year calculated from the date of the Financial Services Authority's notification letter. (2) In the event that a BPR or BPR Syariah under rehabilitation receives fund placement from the Deposit Insurance Agency, the period of the BPR or BPR Syariah under rehabilitation ends in accordance with the end period of the Deposit Insurance Agency's fund placement. (3) If the end of the period as referred to in paragraph (1) falls on a holiday, the supervisory status period under rehabilitation ends on the next working day.
Article 7
(1) BPR or BPR Syariah meeting the criteria as referred to in Article 5 may not be determined as BPR or BPR Syariah under rehabilitation for a certain period with the following provisions:
a. having obtained the result of the review of the implementation preparation documents for merger, consolidation, and/or takeover stating that the BPR or BPR Syariah meets the requirements and the process of merger, consolidation, and/or takeover can continue, for BPR or BPR Syariah currently in the process of merger, consolidation, and/or takeover; b. there is a capital deposit from shareholders or prospective shareholders; and/or
c. there is a rehabilitation action plan,
in order to meet the criteria for normal supervisory status.
(2) The capital deposit as referred to in paragraph (1) letter b has been placed in the form of a deposit at a commercial bank in accordance with the Financial Services Authority Regulation concerning rural credit banks or the Financial Services Authority Regulation concerning Sharia rural financing companies. (3) BPR or BPR Syariah as referred to in paragraph (1) that is known to:
a. not follow up on the process of merger, consolidation, or takeover and/or paid-in capital addition; b. not realize the action plan; or
c. experience worsening financial conditions, and/or does not yet meet normal criteria, is determined by the Financial Services Authority as BPR or BPR Syariah under rehabilitation.
Article 8
(1) BPR or BPR Syariah under rehabilitation must submit:
a. an action plan according to the problems of the BPR or BPR Syariah within a maximum of 10 (ten) working days from the date the BPR or BPR Syariah is determined under rehabilitation; and b. a report on the realization of the action plan to the Financial Services Authority for the position at the end of each month within a maximum of 10 (ten) working days of the following month. (2) BPR or BPR Syariah under rehabilitation must:
a. maintain the financial condition of the BPR or BPR Syariah so that there is no material decrease in assets and/or increase in liabilities of the BPR or BPR Syariah; and b. support the implementation of actions by the Deposit Insurance Agency, consisting of:

1. due diligence to determine the overall condition of the BPR or BPR Syariah;
2. exploration with other banks willing to accept the transfer of part or all of the assets and/or liabilities of the BPR or BPR Syariah; and/or
3. exploration with investors willing to take over the BPR or BPR Syariah.
   (3) In addition to the obligations as referred to in paragraph (1), BPR or BPR Syariah under rehabilitation must take other actions and/or report specific matters upon order of the Financial Services Authority.
   Article 9
   (1) The Financial Services Authority submits approval or rejection of the action plan as referred to in Article 8 paragraph (1) letter b within a maximum of 10 (ten) working days from the date the action plan is received in complete form. (2) In the event that the action plan submitted by the BPR or BPR Syariah is approved by the Financial Services Authority, the BPR or BPR Syariah must realize the action plan from the date of the Financial Services Authority's approval letter. (3) In the event that the action plan submitted by the BPR or BPR Syariah is rejected by the Financial Services Authority, the BPR or BPR Syariah must submit an improved action plan within a maximum of 5 (five) working days from the date of the Financial Services Authority's notification letter.
   Article 10
   (1) BPR or BPR Syariah may be released from the status of BPR or BPR Syariah under rehabilitation after meeting the criteria:
   a. TKS minimum PK 4 (four); b. CR average for the last 3 (three) months is at least 5% (five percent); and
   c. KPMM ratio is at least 12% (twelve percent).
   (2) The determination of BPR or BPR Syariah exiting the status of BPR or BPR Syariah under rehabilitation as referred to in paragraph (1) considers the resilience of the financial condition of the BPR or BPR Syariah.

Third Section
BPR and BPR Syariah Under Resolution
Article 11
The Financial Services Authority determines BPR or BPR Syariah under resolution as referred to in Article 2 paragraph (2) letter c for BPR or BPR Syariah that meet the criteria:
a. before the end of the period of BPR or BPR Syariah under rehabilitation as referred to in Article 6, the capitalization and/or liquidity conditions of the BPR or BPR Syariah experience worsening, including:

1. KPMM ratio becomes less than or equal to 2% (two percent) and/or CR average for the last 3 (three) months becomes less than or equal to 1% (one percent); or
2. based on the Financial Services Authority's assessment at any time, the BPR or BPR Syariah:
   a) experiences a decrease in KPMM ratio and/or CR; and b) is unable to increase the KPMM ratio to at least 12% (twelve percent) and/or CR average for the last 3 (three) months to at least 5% (five percent). b. up to the end of the period of BPR or BPR Syariah under rehabilitation, the BPR or BPR Syariah has not been able to meet the KPMM ratio of at least 12% (twelve percent) and/or CR average for the last 3 (three) months of at least 5% (five percent); or
   c. BPR or BPR Syariah is unable to return the fund placement of the Deposit Insurance Agency.
   Article 12
   OJK determines different procedures for assessing ability and propriety for parties appointed by the Deposit Insurance Agency in handling BPR or BPR Syariah under resolution.
   Article 13
   In the event that the Deposit Insurance Agency decides to conduct rescue of the BPR or BPR Syariah under resolution as referred to in Article 11, the respective BPR or BPR Syariah remains in the status of BPR or BPR Syariah under resolution until the rescue process by the Deposit Insurance Agency is completed.
   Article 14
   The Financial Services Authority determines BPR or BPR Syariah exits the status under resolution after the Deposit Insurance Agency completes the rescue process as referred to in Article 13.
   Article 15
   (1) BPR or BPR Syariah violating the provisions as referred to in Article 3 paragraph (2), Article 4 paragraph (1), Article 8 paragraph (1), paragraph (3), Article 9 paragraph (2), and/or paragraph (3) is subject to administrative sanctions in the form of a written reprimand. (2) In the event that BPR or BPR Syariah has been subject to administrative sanctions as referred to in paragraph (1), and continues to violate the provisions as referred to in Article 3 paragraph (2), Article 4 paragraph (1), Article 8 paragraph (1), paragraph (3), Article 9 paragraph (2), and/or paragraph (3), BPR or BPR Syariah is subject to administrative sanctions in the form of temporary suspension of part of its business activities. (3) In the event that BPR or BPR Syariah has been subject to administrative sanctions as referred to in paragraph (1), and continues to violate the provisions as referred to in Article 3 paragraph (2), Article 4 paragraph (1), Article 8 paragraph (1), paragraph (3), Article 9 paragraph (2), and/or paragraph (3), the principal party of BPR or BPR Syariah may be subject to administrative sanctions in the form of prohibition as a principal party in accordance with the Financial Services Authority Regulation concerning re-evaluation for principal parties of financial service institutions.

CHAPTER III
SUPERVISORY ACTIONS
Article 16
BPR or BPR Syariah under normal supervision experiencing difficulties endangering the continuity of its business as referred to in Article 3 paragraph (1) or BPR or BPR Syariah under rehabilitation as referred to in Article 5 must take supervisory actions ordered by the Financial Services Authority, including:
a. restricting the authority of the General Meeting of Shareholders, Board of Commissioners, Board of Directors, and shareholders; b. requesting and/or ordering shareholders to increase capital;
c. requesting shareholders to replace members of the Board of Commissioners, and/or Board of Directors;
d. requesting and/or ordering BPR or BPR Syariah to write off non-performing loans or financing and calculate the losses of BPR or BPR Syariah with its capital; e. requesting BPR or BPR Syariah to merge or consolidate with other BPR or BPR Syariah; f. requesting shareholders to sell ownership of BPR or BPR Syariah to buyers; g. requesting and/or ordering BPR or BPR Syariah to hand over the management of all or part of the activities of BPR or BPR Syariah to other parties; h. requesting and/or ordering BPR or BPR Syariah to sell part or all of the assets and/or liabilities of BPR or BPR Syariah to other parties;
i. ordering shareholders to provide loans to BPR or BPR Syariah;
j. ordering shareholders to support the implementation of the duties of the Financial Services Authority and Deposit Insurance Agency when addressing problems of BPR or BPR Syariah; k. appointing statutory managers and ordering BPR or BPR Syariah to support the implementation of the duties of statutory managers placed at BPR or BPR Syariah;
l. ordering BPR or BPR Syariah not to conduct certain transactions with related parties and/or other parties determined by the Financial Services Authority;
m. restricting certain business activities of BPR or BPR Syariah; n. issuing written orders to BPR or BPR Syariah and/or specific parties; and/or o. ordering BPR or BPR Syariah to take other steps deemed necessary by the Financial Services Authority.
Article 17
(1) BPR or BPR Syariah violating the provisions as referred to in Article 16 is subject to administrative sanctions in the form of a written reprimand.
(2) In the event that BPR or BPR Syariah has been subject to administrative sanctions as referred to in paragraph (1), and continues to violate the provisions as referred to in Article 16, BPR or BPR Syariah is subject to administrative sanctions in the form of temporary suspension of part of its business activities. (3) In the event that BPR or BPR Syariah has been subject to administrative sanctions as referred to in paragraph (1), and continues to violate the provisions as referred to in Article 16, the principal party of BPR or BPR Syariah may be subject to administrative sanctions in the form of prohibition as a principal party in accordance with the Financial Services Authority Regulation concerning re-evaluation for principal parties of financial service institutions. (4) BPR or BPR Syariah that does not execute written orders as referred to in Article 16 letter n is subject to criminal sanctions in accordance with the Laws concerning the Financial Services Authority.

CHAPTER IV
WRITTEN NOTIFICATIONS AND ANNOUNCEMENTS
Article 18
(1) The Financial Services Authority submits written notifications regarding the determination of:
a. BPR or BPR Syariah under rehabilitation or under resolution; or b. BPR or BPR Syariah exiting the supervisory status under rehabilitation or under resolution, to the respective BPR or BPR Syariah, the Deposit Insurance Agency, and Bank Indonesia. (2) Written notifications regarding the determination of BPR or BPR Syariah under rehabilitation as referred to in paragraph (1) letter a to the respective BPR or BPR Syariah are accompanied by the reasons for the determination and supervisory actions required to be performed by the BPR or BPR Syariah. (3) Written notifications regarding the determination of BPR or BPR Syariah under rehabilitation as referred to in paragraph (1) letter a to the Deposit Insurance Agency and Bank Indonesia are accompanied by the latest information on supervisory actions already performed by the Financial Services Authority on the BPR or BPR Syariah. (4) Written notifications regarding the determination of BPR or BPR Syariah under resolution as referred to in paragraph (1) letter a to the Deposit Insurance Agency are accompanied by a request to decide whether to rescue or not rescue the BPR or BPR Syariah.
Article 19
In the event that the Deposit Insurance Agency decides not to rescue the BPR or BPR Syariah as referred to in Article 18 paragraph (4), the Financial Services Authority revokes the business license of the respective BPR or BPR Syariah based on a written request from the Deposit Insurance Agency.
Article 20
(1) The Financial Services Authority notifies the decision to revoke the business license of BPR or BPR Syariah as referred to in Article 19 to the respective BPR or BPR Syariah, the Deposit Insurance Agency, and Bank Indonesia. (2) Settlement of BPR or BPR Syariah whose business license has been revoked by the Financial Services Authority is conducted by the Deposit Insurance Agency.
Article 21
(1) In the event that the Financial Services Authority orders business activity restrictions as referred to in Article 16 letter m in the form of determining prohibitions on fund collection and/or fund distribution, the Financial Services Authority notifies in writing to the BPR or BPR Syariah regarding the determination and/or revocation of the aforementioned prohibitions. (2) The prohibitions on fund collection and/or fund distribution as referred to in paragraph (1) take effect from the date of the Financial Services Authority's notification letter. (3) BPR or BPR Syariah must announce the prohibitions on fund collection and/or fund distribution to the public within a maximum of 5 (five) working days after the date of determination by the Financial Services Authority. (4) BPR or BPR Syariah must submit to the Financial Services Authority proof of announcement as referred to in paragraph (3) within a maximum of 5 (five) working days from the date of the Financial Services Authority's notification letter.
Article 22
The Financial Services Authority announces the decision to revoke the business license of BPR or BPR Syariah as referred to in Article 19 to the public.
Article 23
(1) BPR or BPR Syariah violating the provisions as referred to in Article 21 paragraph (3) and/or paragraph (4) is subject to administrative sanctions in the form of a written reprimand.
(2) In the event that BPR or BPR Syariah has been subject to administrative sanctions as referred to in paragraph (1), and continues to violate the provisions as referred to in Article 21 paragraph (3) and/or paragraph (4), BPR or BPR Syariah is subject to administrative sanctions in the form of temporary suspension of part of its business activities. (3) In the event that BPR or BPR Syariah has been subject to administrative sanctions as referred to in paragraph (1), and continues to violate the provisions as referred to in Article 21 paragraph (3) and/or paragraph (4), the principal party of BPR or BPR Syariah may be subject to administrative sanctions in the form of prohibition as a principal party in accordance with the Financial Services Authority Regulation concerning re-evaluation for principal parties of financial service institutions.

CHAPTER V
FUND PLACEMENT BY THE DEPOSIT INSURANCE AGENCY
Article 24
(1) BPR or BPR Syariah under rehabilitation experiencing liquidity difficulties, which do not meet the requirements as recipients of short-term liquidity loans or short-term Sharia-based liquidity financing from Bank Indonesia, may submit a request for Deposit Insurance Agency fund placement to the Financial Services Authority. (2) The mechanism for Deposit Insurance Agency fund placement as referred to in paragraph (1) is implemented in accordance with the provisions of laws and regulations concerning Deposit Insurance Agency fund placement.
Article 25
(1) BPR or BPR Syariah under rehabilitation or BPR or BPR Syariah under resolution that are Issuers or Public Companies that have received fund placement by the Deposit Insurance Agency and are ordered by the Deposit Insurance Agency and/or the Financial Services Authority to:
a. increase paid-in capital; or b. conduct certain transactions that meet the criteria:

1. materiality of certain transactions; and/or
2. affiliate transactions and/or transactions containing conflicts of interest,
   are exempt from the provisions of laws and regulations in the Capital Market field regarding the right to pre-emptive rights, material transactions, affiliate transactions, and/or transactions containing conflicts of interest. (2) BPR or BPR Syariah under rehabilitation or BPR or BPR Syariah under resolution that are Issuers or Public Companies that do not receive fund placement by the Deposit Insurance Agency and are ordered by the Deposit Insurance Agency and/or the Financial Services Authority to:

a. making additional paid-in capital; or b. conducting certain transactions that meet the criteria:

1. materiality of the specific transaction; and/or
2. affiliate transactions and/or transactions containing conflicts of interest,
   which are exempt from capital market regulations regarding the right to pre-emptive rights, material transactions, affiliate transactions, and/or transactions containing conflicts of interest.

CHAPTER VI
IMPLEMENTATION OF SUPERVISORY TASKS

Article 26
In carrying out supervisory tasks, the Financial Services Authority is authorized to:
a. request BPR or BPR Syariah to take and submit data or documents from every place related to the BPR or BPR Syariah; b. request BPR or BPR Syariah to take and submit data or documents and information from every party that, in the assessment of the Financial Services Authority, has influence over the BPR or BPR Syariah; and
c. order the BPR or BPR Syariah to block specific accounts.

Article 27
(1) The implementation of authority as referred to in Article 26 letters a and b is carried out in direct supervision and indirect supervision.
(2) Authority exercised in direct supervision as referred to in paragraph (1) and the imposition of sanctions are implemented in accordance with Financial Services Authority Regulations regarding requirements and procedures for bank examinations. (3) Authority exercised in indirect supervision as referred to in paragraph (1) is implemented in accordance with written requests from the Financial Services Authority to the BPR or BPR Syariah. (4) BPR and BPR Syariah are required to comply with the written request of the Financial Services Authority as referred to in paragraph (3).

Article 28
(1) Orders to block specific accounts as referred to in Article 26 letter c are carried out based on the authority of the Financial Services Authority or requests from other parties to the Financial Services Authority. (2) Blocking orders as referred to in paragraph (1) are directed against accounts suspected of being used to receive or hold funds from acts indicated as violations of regulations in the financial services sector. (3) Blocking as referred to in paragraph (1) is carried out for a specific period or until there is an order from the Financial Services Authority to lift the blocking. (4) BPR and BPR Syariah are required to execute the orders of the Financial Services Authority as referred to in Article 26 letter c. (5) If necessary, the Financial Services Authority is authorized to issue orders to block specific accounts as referred to in Article 26 letter c in the form of written orders. (6) Further provisions regarding the blocking of specific accounts are regulated by the Financial Services Authority.

Article 29
Blocking of specific accounts in the name of a person or other party who has been declared a suspect or defendant by the police, prosecutor, judge, or other law enforcement officials based on authority granted by law, may be carried out in accordance with regulations without requiring permission from the Financial Services Authority.

Article 30
(1) BPR or BPR Syariah that violate regulations as referred to in Article 27 paragraph (4) are subject to administrative sanctions in the form of written reprimands, at most 2 (two) times, each with a grace period of 7 (seven) days, by the Financial Services Authority. (2) BPR or BPR Syariah that violate regulations as referred to in Article 28 paragraph (4) are subject to administrative sanctions in the form of written reprimands. (3) In the event that BPR or BPR Syariah have been subject to administrative sanctions as referred to in paragraph (1) or paragraph (2) and continue to violate regulations as referred to in Article 27 paragraph (4) and/or Article 28 paragraph (4), the principal party of the BPR or BPR Syariah may be subject to administrative sanctions in the form of prohibition as a principal party in accordance with Financial Services Authority Regulations regarding the re-evaluation of principal parties of financial service institutions.

CHAPTER VII
TRANSITIONAL PROVISIONS

Article 31
At the time this Financial Services Authority Regulation comes into force, the determination of the supervisory status of BPR or BPR Syariah by the Financial Services Authority that has been carried out based on Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector remains valid.

CHAPTER VIII
CLOSING PROVISIONS

Article 32
At the time this Financial Services Authority Regulation comes into force:
a. Financial Services Authority Regulation Number 19/POJK.03/2017 concerning the Determination of Status and Follow-up Supervision of People's Credit Banks and Sharia People's Financing Banks (State Gazette of the Republic of Indonesia Year 2017 Number 97, Supplement to the State Gazette of the Republic of Indonesia Number 6052) and its implementing provisions regarding the determination of status and follow-up supervision of people's credit banks and Sharia people's financing banks; and b. Financial Services Authority Regulation Number 32/POJK.03/2019 concerning Amendments to Financial Services Authority Regulation Number 19/POJK.03/2017 concerning the Determination of Status and Follow-up Supervision of People's Credit Banks and Sharia People's Financing Banks (State Gazette of the Republic of Indonesia Year 2019 Number 238, Supplement to the State Gazette of the Republic of Indonesia Number 6433) and its implementing provisions regarding amendments to regulations on the determination of status and follow-up supervision of people's credit banks and Sharia people's financing banks, are repealed and declared invalid.

Article 33
This Financial Services Authority Regulation comes into force on December 31, 2023.

This copy is in accordance with the original
Director of Legal Affairs 1
Legal Department
Mufli Asmawidjaja

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

Determined in Jakarta on December 29, 2023
DEPUTY CHAIRMAN OF THE COMMISSIONERS COUNCIL
FINANCIAL SERVICES AUTHORITY OF THE REPUBLIC
OF INDONESIA AS A MEMBER
OF THE COMMISSIONERS COUNCIL REPLACING
THE CHAIRMAN OF THE COMMISSIONERS COUNCIL
FINANCIAL SERVICES AUTHORITY OF THE REPUBLIC
OF INDONESIA,
MIRZA ADITYASWARA

Promulgated in Jakarta on December 29, 2023
MINISTER OF LAW AND HUMAN RIGHTS
OF THE REPUBLIC OF INDONESIA,
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2023 NUMBER 46/OJK signed

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 28 OF 2023
CONCERNING
DETERMINATION OF STATUS AND FOLLOW-UP SUPERVISION OF PEOPLE'S ECONOMIC BANKS AND SHARIA PEOPLE'S ECONOMIC BANKS

I. GENERAL
In efforts to develop and strengthen the banking sector, specifically BPR and BPR Syariah, in line with the increasingly complex and diverse development of the financial services industry, early detection is needed regarding problems and conditions of BPR or BPR Syariah that are under normal supervision but are experiencing difficulties that endanger their business continuity. This is a preventive step to address problems early so as not to disrupt the business continuity of BPR or BPR Syariah.

In conditions where BPR or BPR Syariah are in rehabilitation, it is necessary to regulate authority in carrying out supervisory tasks, focusing on efforts to improve solvency and/or liquidity levels in accordance with established criteria to support their business continuity.

In relation to this and to implement the provisions of Article 16A paragraph (8) and Article 16C paragraph (10) of Law Number 9 of 2016 concerning the Prevention and Handling of Financial System Crises as amended by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector, as well as Article 37 paragraph (6) of Law Number 7 of 1992 concerning Banking as amended several times, lastly by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector, and Article 54 paragraph (6) of Law Number 21 of 2008 concerning Sharia Banking as amended by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector, it is necessary to have regulations that serve as the basis for determining status and follow-up supervision in this Financial Services Authority Regulation.

II. ARTICLE BY ARTICLE EXPLANATION

Article 1
It is clear enough.

Article 2
Paragraph (1)
It is clear enough.

Paragraph (2)
Letter a
What is meant by "BPR or BPR Syariah under normal supervision" is BPR or BPR Syariah that meets:
a. health level in accordance with Financial Services Authority Regulations regarding the assessment of the health level of people's credit banks and Sharia people's financing banks; b. liquidity level in accordance with Financial Services Authority regulations regarding the implementation of risk management for people's credit banks and Financial Services Authority regulations regarding the implementation of risk management for Sharia people's financing banks; and
c. capital level by taking into account risk in accordance with Financial Services Authority Regulations regarding KPMM and the fulfillment of minimum core capital for people's credit banks as well as Financial Services Authority Regulations regarding KPMM and the fulfillment of minimum core capital for Sharia people's financing banks.

Letter b
What is meant by "BPR or BPR Syariah in rehabilitation" is BPR or BPR Syariah declared by the Financial Services Authority not to meet the health level, liquidity level, and/or capital level by taking into account risk.

Letter c
What is meant by "BPR or BPR Syariah in resolution" is BPR or BPR Syariah declared by the Financial Services Authority as BPR or BPR Syariah experiencing financial difficulties and endangering its business continuity and cannot be rehabilitated in accordance with the authority held by the Financial Services Authority.

Article 3
Paragraph (1)
BPR or BPR Syariah experiences difficulties endangering its business continuity if the business conditions of the BPR or BPR Syariah worsen, among others indicated by a decrease in capital, asset quality, liquidity, and profitability, as well as management of the BPR or BPR Syariah not conducted based on prudential principles and the principles of healthy banking. What is meant by "action plan" is a plan containing improvement steps to address problems and their impact on the financial conditions and ratios of the BPR or BPR Syariah, presented periodically.

Paragraph (2)
It is clear enough.

Paragraph (3)
It is clear enough.

Article 4
Paragraph (1)
Reports on the realization of the action plan submitted by BPR or BPR Syariah among others contain explanations regarding developments and problems faced in the implementation of the action plan accompanied by evidence and/or supporting documents related thereto.

Paragraph (2)
It is clear enough.

Paragraph (3)
What is meant by "certain conditions" among others is BPR or BPR Syariah experiencing a decrease in TKS that has the potential to cause it to meet the criteria for BPR or BPR Syariah in rehabilitation.

Article 5
Letter a
The assessment of the composite TKS rating is in principle the final assessment considering the relationship or impact comprehensively and correlatively among all factors and components of TKS.
The assessment of Composite Score 5 (five) reflects the liquidity level and/or capital level of the BPR or BPR Syariah that is very poor and can cause business failure.

Letter b
The average CR for the last 3 (three) months is calculated:
a. based on the monthly report positions of the BPR or BPR Syariah; or b. daily, if the BPR or BPR Syariah is assessed to be experiencing liquidity difficulties that have the potential to endanger the business continuity of the BPR or BPR Syariah, which is obtained based on monthly reports submitted by the BPR or BPR Syariah and/or research or examinations by the Financial Services Authority. The CR calculation is carried out in accordance with Financial Services Authority regulations regarding the implementation of risk management for people's credit banks and Financial Services Authority regulations regarding the implementation of risk management for Sharia people's financing banks.

Letter c
The KPMM ratio is calculated based on financial reports submitted by the BPR or BPR Syariah and/or the results of the last examination.
The calculation of the KPMM ratio is carried out in accordance with Financial Services Authority Regulations regarding KPMM and the fulfillment of minimum core capital for people's credit banks as well as Financial Services Authority Regulations regarding KPMM and the fulfillment of minimum core capital for Sharia people's financing banks.

Article 6
Paragraph (1)
The time period for the determination of BPR or BPR Syariah in rehabilitation by the Financial Services Authority may be less than 1 (one) year by considering the problems and resilience of financial conditions and the potential of BPR and BPR Syariah to return to normal supervision status. Example:

1. Based on financial reports at the position of March 2024, it is known that the KPMM ratio of PT BPR XYZ is 13% (thirteen percent). Based on financial reports at the position of April 2024, it is known that the KPMM ratio of the BPR dropped to 2% (two percent). Therefore, the Financial Services Authority can determine PT BPR XYZ in rehabilitation with a time period of 6 (six) months.
2. Based on financial reports at the position of April 2024, it is known that the KPMM ratio of PT BPR OPQ is 13% (thirteen percent). Based on financial reports at the position of May 2024, it is known that the KPMM ratio of the BPR dropped to -30% (negative thirty percent), the Financial Services Authority can determine PT BPR OPQ in rehabilitation with a time period of 3 (three) months.

Paragraph (2)
It is clear enough.

Paragraph (3)
What is meant by "holiday" is Saturday, Sunday, or holidays determined by the Government.

Article 7
Paragraph (1)
What is meant by "meeting criteria" is the fulfillment of criteria for BPR or BPR Syariah in rehabilitation based on financial reports submitted by the BPR or BPR Syariah and/or examination results.

Letter a
It is clear enough.

Letter b
It is clear enough.

Letter c
The action plan includes action plans that are currently running or revised, which are implemented by the BPR or BPR Syariah since the date of the letter requesting the preparation or request for revision of the action plan.

Paragraph (2)
What is meant by "capital deposit" is capital deposit through an escrow account that can increase the capital of the BPR or BPR Syariah so as to meet normal supervision criteria.

Paragraph (3)
It is clear enough.

Article 8
Paragraph (1)
It is clear enough.

Paragraph (2)
Letter a
Does not include a material decrease in assets and/or increase in liabilities of the BPR or BPR Syariah if done for the rehabilitation of the BPR or BPR Syariah.

Letter b
It is clear enough.

Paragraph (3)
Other actions among others include adjusting the business plan of the BPR or BPR Syariah.
What is meant by "certain matters" is supporting data to complete or improve information on the development of the financial conditions of the BPR or BPR Syariah, among others:
a. latest financial reports; b. complete list of related parties;
c. daily balance sheet reports;
d. details of productive assets grouped by quality; and e. latest information and documents regarding:

1. list of customer deposits; and
2. list of details of claims and liabilities of the BPR or BPR Syariah to related parties.

Article 9
It is clear enough.

Article 10
It is clear enough.

Article 11
It is clear enough.

Article 12
It is clear enough.

Article 13
It is clear enough.

Article 14
It is clear enough.

Article 15
It is clear enough.

Article 16
See Explanation of Article 3 paragraph (1).

Letter a
Limiting authority among others includes limiting decisions on granting bonuses or performance-based pay, granting dividends to shareholders, or salary increases for employees and managers of the BPR or BPR Syariah.

Letter b
It is clear enough.

Letter c
Replacement of members of the Board of Directors and/or members of the Board of Commissioners of the BPR or BPR Syariah can be done partially or entirely.

Letter d
It is clear enough.

Letter e
It is clear enough.

Letter f
It is clear enough.

Letter g
It is clear enough.

Letter h
What is meant by "other party" is a party outside the BPR or BPR Syariah in question, whether other banks, other business entities, or individuals who meet the requirements.

Letter i
It is clear enough.

Letter j
It is clear enough.

Letter k
It is clear enough.

Letter l
What is meant by "related party" is a related party in accordance with Financial Services Authority Regulations regarding the maximum limit for granting credit by BPR or the maximum limit for fund disbursement by BPR Syariah.

Letter m
Examples of limiting certain business activities among others:
a. temporary cessation of opening office networks; b. temporary cessation of conducting certain business activities; and/or
c. prohibition on fund collection and/or fund disbursement.

Letter n
What is meant by "written order" is a written order in Financial Services Authority Regulations regarding Written Orders.

Letter o
What is meant by "other steps" is specific actions in the event of deviations in the business activities of the BPR or BPR Syariah and violations of regulations, by ordering the BPR or BPR Syariah to take other steps deemed necessary by the Financial Services Authority.

Article 17
It is clear enough.

Article 18
Paragraph (1)
Written notification to the BPR or BPR Syariah is carried out through letters delivered directly in meetings with members of the Board of Directors, members of the Board of Commissioners, and/or shareholders of the BPR or BPR Syariah and/or indirectly via post or other facilities.

Paragraph (2)
It is clear enough.

Paragraph (3)
Latest information on supervisory actions carried out by the Financial Services Authority among others includes supervisory actions mandated to the BPR or BPR Syariah.

Paragraph (4)
It is clear enough.

Article 19
It is clear enough.

Article 20
It is clear enough.

Article 21
Paragraph (1)
What is meant by "fund collection" among others includes deposits in the form of savings and/or time deposits and loans or financing received from third parties and/or banks that conduct their business activities conventionally or based on other Sharia principles. The prohibition on fund collection is intended to prevent potential losses that can be experienced by customers, creditors, and other parties. What is meant by "fund disbursement" among others includes the disbursement of funds in the form of productive assets such as credit or financing, or in the form of non-productive assets that can reduce the ability of the BPR or BPR Syariah to fulfill obligations to customers, creditors, and other parties. Example format for the announcement of the prohibition on fund collection and fund disbursement by BPR or BPR Syariah as referred to in the Appendix which is an integral part of this Financial Services Authority Regulation. The determination of the prohibition on fund collection and/or fund disbursement considers the problems and financial conditions of the BPR or BPR Syariah and in the framework of consumer/customer protection. As an example:
PT BPR XYZ which was determined in rehabilitation at the position of February 2024 has a KPMM ratio of 10% (ten percent). Subsequently, based on financial reports at the end of March 2024, it is known that the KPMM ratio worsened to 1.5% (one point five percent), so PT BPR XYZ is subject to the prohibition on fund collection and/or fund disbursement by the Financial Services Authority.

Paragraph (2)
It is clear enough.

Paragraph (3)
It is clear enough.

Paragraph (4)
Announcements are made at the office of the BPR or BPR Syariah, at the village office or sub-district office in the location of the BPR or BPR Syariah in question, the website of the BPR or BPR Syariah and/or through local mass media, among others print media and/or electronic media.

Article 22
It is clear enough.

Article 23
It is clear enough.

Article 24
Paragraph (1)
What is meant by "liquidity difficulties" is short-term liquidity difficulties caused by incoming funds being smaller than outgoing funds (mismatch). The liquidity difficulties referred to are not caused by solvency problems.

Paragraph (2)
It is clear enough.

Article 25
It is clear enough.

Article 26
Letter a
What is meant by "data or documents" is all types of data or documents, both written and electronic, related to the object of supervision of the Financial Services Authority.
What is meant by "every place related to the BPR or BPR Syariah" is every part of the room from the office of the BPR or BPR Syariah and other places outside the BPR or BPR Syariah related to the object of supervision of the Financial Services Authority.

Letter b
What is meant by "every party" is a person or legal entity that has influence on decision-making and operations of the BPR or BPR Syariah, both directly and indirectly, among others, controlling shareholders or specific parties whose names are not listed as employees, managers, or shareholders of the BPR or BPR Syariah or equivalent but can influence the operational activities of the BPR or BPR Syariah or management decisions of the BPR or BPR Syariah.

Letter c
Specific accounts among others include deposit accounts and credit accounts or financing accounts based on Sharia principles.

Article 27
Paragraph (1)
What is meant by "direct supervision" is an examination of the BPR or BPR Syariah.
What is meant by "indirect supervision" is early supervision through research, analysis, and evaluation of reports, data, and information of the BPR or BPR Syariah.

Paragraph (2)
It is clear enough.

Paragraph (3)
It is clear enough.

Paragraph (4)
It is clear enough.

Article 28
Paragraph (1)
Other parties among others are agencies, ministries, and/or institutions in accordance with duties and authority in accordance with regulations.

Paragraph (2)
It is clear enough.

Paragraph (3)
Indications of violations of financial services sector regulations among others are based on findings, evidence, and information from the results of supervision by the Financial Services Authority that have been verified to the BPR or BPR Syariah and/or other relevant parties.

Paragraph (4)
It is clear enough.

Paragraph (5)
What is meant by "written order" is a written order in accordance with Financial Services Authority regulations regarding written orders.

Paragraph (6)
It is clear enough.

Article 29
It is clear enough.

Article 30
It is clear enough.

Article 31
It is clear enough.

Article 32
It is clear enough.

Article 33
It is clear enough.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 68/OJK

This copy is in accordance with the original
Director of Legal Affairs 1
Legal Department
Mufli Asmawidjaja

APPENDIX
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 28 OF 2023
CONCERNING
DETERMINATION OF STATUS AND FOLLOW-UP SUPERVISION OF PEOPLE'S ECONOMIC BANKS AND SHARIA PEOPLE'S ECONOMIC BANKS

Example * Format for Announcement of Prohibition on Fund Collection and/or Fund Disbursement:

ANNOUNCEMENT

Hereby we inform the entire public and/or customers that based on the letter from the Financial Services Authority Number ... dated ... Regarding ..., effective from date .... 1, our BPR/BPR Syariah:
Name : ...
Address : ...
IS PROHIBITED FROM COLLECTING FUNDS AND/OR DISBURSING FUNDS

In relation to this, in accordance with Article 21 paragraph (1) of Financial Services Authority Regulation Number … of 2023 concerning the Determination of Status and Follow-up Supervision of People's Economic Banks and Sharia People's Economic Banks, during the prohibition period we among others do not accept savings and/or deposits from the public and/or customers, and do not disburse new credit or financing. The prohibition applies until there is a further announcement.

Thus for your information.

(City), (date/month/year)
Member of the Board of Commissioners Member of the Board of Directors, signed signed

Note: 1 (filled in according to the date of determination of the prohibition on fund collection and/or fund disbursement)

• can be adjusted to needs.

Determined in Jakarta on December 29, 2023
DEPUTY CHAIRMAN OF THE COMMISSIONERS COUNCIL
FINANCIAL SERVICES AUTHORITY OF THE REPUBLIC
OF INDONESIA AS A MEMBER
OF THE COMMISSIONERS COUNCIL REPLACING
THE CHAIRMAN OF THE COMMISSIONERS COUNCIL
FINANCIAL SERVICES AUTHORITY OF THE REPUBLIC
OF INDONESIA,
MIRZA ADITYASWARA

signed signed