SEOJK No. 8/SEOJK.03/2016 on Minimum Capital Provision and Minimum Core Capital Fulfillment for Rural Banks

To:
Directors of Rural Banks
At your office.

COPY
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 8 /SEOJK.03/2016 ON MINIMUM CAPITAL PROVISION AND FULFILLMENT OF MINIMUM CORE CAPITAL FOR RURAL BANKS

In connection with Financial Services Authority Regulation Number 5/POJK.03/2015 on Minimum Capital Provision and Fulfillment of Minimum Core Capital for Rural Banks (State Gazette of the Republic of Indonesia Year 2015 Number 73, Supplement to the State Gazette of the Republic of Indonesia Number 5686), hereinafter referred to as POJK KPMM BPR, it is necessary to regulate the implementation of POJK KPMM BPR in this Circular Letter of the Financial Services Authority as follows:

I. GENERAL PROVISIONS

1. Capital is one of the important factors for BPR in terms of business development and absorbing potential loss risks.

2. The minimum capital provision obligation for BPR, hereinafter abbreviated as KPMM, is determined based on the risks contained in the balance sheet assets. Technically, KPMM is measured based on a certain percentage of Risk-Weighted Assets (RWA).

3. The assessment of KPMM fulfillment is based on a quantitative calculation of core capital and supplementary capital compared to the assessment of BPR assets weighted according to the risk level inherent in each asset position as per regulations.

4. Core capital is a capital component with the strongest and most stable characteristics to absorb risks. In order to encourage operation that is economical and meets minimum standards regarding organizational structure as well as adequate facilities and infrastructure so that it can develop optimally and increase services to the community while still based on prudential principles, BPR must have strong capital. Thus, BPR is required to provide minimum core capital in accordance with Financial Services Authority regulations.

5. Supplementary capital is a capital component that has capital characteristics so that it can be categorized as one of the capital components, but does not have cash value or can be settled by meeting requirements and approvals as regulated in Financial Services Authority regulations.

6. Considering that capital is an important factor for BPR in the context of healthy business development and the ability to absorb loss risks, BPR must always monitor its capital condition by calculating its own capital adequacy at least monthly using the minimum capital requirement calculation format as in Appendix I of this Financial Services Authority Circular Letter.

II. CAPITALIZATION

1. Minimum Capital Fulfillment Obligation

In accordance with Article 2 of POJK KPMM BPR, BPR is required to provide minimum capital of 12% (twelve percent) of RWA by December 31, 2019 at the latest.

2. Capital Components

a. Capital consists of core capital and supplementary capital.

b. Core Capital consists of:

1. Main Core Capital includes:
   a) paid-up capital; b) additional capital reserves:
   i. share premium;
   ii. capital installment funds;
   iii. donation capital;
   iv. general reserves;
   v. purpose reserves;
   vi. prior years' profits; and
   vii. current year profits.

2. Additional Core Capital.

c. Supplementary Capital consists of:

1. Capital components meeting certain requirements;

2. Surplus from revaluation of fixed assets; and

3. General Provision for Productive Asset Write-offs (PPAP) at a maximum of 1.25% (one point two five percent) of RWA.

4. Minimum Core Capital Provision Obligation

In accordance with POJK KPMM BPR, BPR is required to provide minimum core capital of 8% (eight percent) of RWA by December 31, 2019 at the latest.

4. Capital Installment Funds

a. Capital installment funds, hereinafter abbreviated as DSM, are calculated as core capital if they have been recorded as DSM Equity. Capital installment funds as part of core capital are deposited with the purpose of increasing capital, placed by the BPR in the form of a deposit at a General Bank in Indonesia under the name “Commissioner Board of the Financial Services Authority q.q. (BPR name)” and include the name of the additional capital contributor and a note that withdrawal can only be done after obtaining written approval from the Financial Services Authority and/or in the form of a deposit at the relevant BPR under the name ”Commissioner Board of the Financial Services Authority q.q. (shareholder contributor name)” and include a note that withdrawal can only be done after obtaining written approval from the Financial Services Authority.

b. Recognition of DSM Equity originating from:

1. Capital installments in the form of deposits at General Banks
   a) The BPR initially records DSM in the form of deposits at General Banks in the DSM Liability position. b) After obtaining approval from the Financial Services Authority, the BPR recognizes capital installments placed in the form of deposits at General Banks as DSM Equity by reclassifying the recording from the DSM Liability position to the DSM Equity position.

2. Capital installments in the form of deposits at the relevant BPR
   a) The BPR records capital installments at the relevant BPR in the savings – deposit position. b) After obtaining approval from the Financial Services Authority, the BPR recognizes capital installments as DSM Equity by reclassifying the recording from the deposit savings position to the DSM Equity position. Capital installments recorded as DSM Equity are not treated as savings. Thus, DSM Equity is recognized as a component in the KPMM calculation.

c. BPR is required to complete DSM administrative requirements by December 31, 2019 at the latest.

d. DSM that existed before these regulations took effect must immediately complete DSM administrative requirements by December 31, 2019 at the latest.

e. BPR that does not complete administrative requirements within the time limits referred to in letters c and d is subject to administrative sanctions as referred to in Article 21 letters a and b of POJK KPMM BPR until the administrative requirements are fulfilled.

f. DSM that is not completed with administrative requirements as referred to in letter e cannot be calculated as a core capital component but is still recorded in the DSM Equity position.

5. Report on the Use of Fixed Assets and/or Other Assets Originating from Capital Installments or Donation Capital

Considering Article 7 paragraph (2) and Article 8 paragraph (3) of POJK KPMM BPR, BPR submits a report on asset use to the Financial Services Authority accompanied by:
a. proof of use of buildings, rooms, and supporting infrastructure, and b. administrative documents proving the purpose of asset use for BPR operations, including Board of Directors decisions regarding asset use.

6. Additional Core Capital Components and Supplementary Capital Components

a. Capital additions in the form of additional core capital components and supplementary capital components can be made by shareholders or external parties.

b. Applications for additional core capital components and supplementary capital components are made by BPR to the Financial Services Authority by submitting agreement documents containing requirements as referred to in POJK KPMM BPR.

c. Recognition as additional core capital components and supplementary capital components in the KPMM calculation is done after obtaining approval from the Financial Services Authority.

d. Repayment or settlement of additional core capital components and supplementary capital components can be done after obtaining approval from the Financial Services Authority.

e. BPR that has capital components in the form of loan capital and subordinated loans that existed before the implementation of POJK KPMM BPR must submit an application for approval to the Financial Services Authority accompanied by agreement documents meeting the requirements as stated in Article 5 paragraphs (2) and (3) of POJK KPMM BPR or Article 10 paragraph (1) letter a of POJK KPMM BPR before December 31, 2019 to be recognized as additional core capital components or supplementary capital components.

f. BPR that has not obtained approval from the Financial Services Authority by December 31, 2019 cannot calculate loans as referred to in letter e in the BPR capital calculation for the reporting period ending December 31, 2019. Furthermore, BPR must perform reclassification in accounting to become loans received until approval is obtained from the Financial Services Authority.

7. Donation Capital in the Form of Other Assets

a. Applications for approval of donation capital must be submitted to the Financial Services Authority accompanied by documents:

1. a statement letter from the party transferring donation capital, whether from shareholders or external parties, that the fixed assets transferred to the BPR are free from claims or disputes;
2. the results of fixed asset valuation by an independent appraiser containing information such as value/price, type/type, status, and location of fixed assets;
3. General Meeting of Shareholders (GMS) approval; and
4. proof of announcement of fixed assets transferred as donation capital in 2 (two) daily newspapers.

b. After obtaining approval from the Financial Services Authority, the BPR processes the transfer of title for assets in the form of land and buildings to the name of the BPR.

8. Considering the provisions of Article 17 and Article 26 of POJK KPMM BPR, the application of capital ratios as regulated in Article 2 and Article 4 of POJK KPMM BPR and capital components as regulated in Article 3 of POJK KPMM BPR, takes effect starting from the January 2020 reporting period.

9. Considering that the provisions of Article 11 of POJK KPMM BPR are part of the RWA calculation in the capital ratio calculation as regulated in Article 2 and Article 4 of POJK KPMM BPR, the application of Article 11 of POJK KPMM BPR takes effect starting from the January 2020 reporting period.

III. CALCULATION OF RISK-WEIGHTED ASSETS (RWA)

1. In calculating RWA, asset positions recorded in the BPR balance sheet are multiplied by risk weights in the form of certain percentages.

2. Asset positions as referred to in number 1 are the value and/or net claims of assets recorded in the balance sheet, including interest income to be received (if any), after deducting specific PPAP according to regulations governing asset quality and the formation of PPAP for BPR.

3. Risk weights as referred to in number 1 are based on the risks contained in the type and characteristics of assets, debtor groups, guarantors, nature, and grouping of overdue claims.

4. The excess of general PPAP that must be formed, which has been calculated as a supplementary capital component, is calculated as a reducing factor for the RWA calculation.

5. Considering the principles as referred to in number 1, the detail of risk weights is as follows:

0% :
a. Cash; b. Bank Indonesia Certificates (SBI);
c. Loans provided with liquid collateral in the form of SBI, bonds issued by the Government of the Republic of Indonesia, savings and/or deposits blocked at the relevant BPR based on an agreement between the BPR and the customer accompanied by a withdrawal power of attorney, and precious metals, at the lower value between the collateral and the debit balance; and
d. Assets Taken Over (AYDA) that have exceeded 1 (one) year since the date of takeover.

15% : Loans provided with collateral in the form of jewelry gold stored or under the control of the BPR.

20% :
a. Placements in other banks in the form of current accounts, time deposits, deposit certificates, savings, and other claims to other banks. b. Loans to or guaranteed by other banks or Regional Governments.
c. Part of loans guaranteed by State-Owned Enterprises/Regional-Owned Enterprises (BUMN/BUMD) that conduct business as credit guarantors. The BUMN/BUMD conducting business as a credit guarantor must meet all the following criteria:

1. The guarantee scheme meets the requirements:
   a) The guarantee period for credit is at least equal to the credit period; b) Credit guarantee is unconditional and irrevocable.
   These requirements must be stated in the agreement between the BPR and the credit guarantee institution;
2. The BUMN/BUMD credit guarantor as referred to in number 1 must comply with regulations governing credit guarantee institutions.

30% : Loans with collateral in the form of land and residential/commercial buildings secured by the first mortgage right.

50% :
a. Loans to BUMN/BUMD or loans guaranteed by BUMN/BUMD that conduct credit guarantee business but do not meet the requirements for a risk weight of 20% (twenty percent) as stated above. b. Loans to Employees/Pensioners meeting the following requirements:

1. Employees or pensioners from civil servants (PNS), members of the Indonesian National Armed Forces/Police (TNI/POLRI), state institution employees, or BUMN/BUMD employees.
2. The total financing limit for each employee or pensioner is IDR 200,000,000.00 (two hundred million rupiah) or maximum monthly credit installments of 30% (thirty percent) of the remaining monthly wage/salary (take home pay) after deducting all applicable normal deductions and after deducting loan installments at other banks or institutions.
3. Employees/Pensioners are insured by life insurance from an insurance company meeting the following criteria:
   a) has a business license from the Financial Services Authority; b) the latest financial report has been audited by a public accountant and meets the minimum solvency requirements according to legislation; and c) is not a related party to the BPR;
4. Installment payments or loan settlement come from wages/pension benefits based on a power of attorney to deduct wages/pension benefits from employees/pensioners to the BPR.
   BPR keeps a photocopy of the written proof of the power of attorney to deduct wages/pension benefits from the debtor to a general bank or PT Pos Indonesia (standing instruction) to debit the debtor's account or transfer funds in a certain amount to pay credit installments to the BPR periodically according to the installment schedule until the loan is settled.
5. BPR keeps the original letter of appointment of employees or pension decision letters or Pension Registration Index Card (KARIP) and the life insurance policy of the debtor.
   c. Loans with collateral in the form of land and residential/commercial buildings having certificates controlled by the BPR and supported by a power of sale but not secured by the first mortgage right.

70% :
a. Loans provided to micro and small businesses meeting all the following criteria:

1. Meet the criteria for micro and small businesses as referred to in Legislation regarding micro, small, and medium enterprises, namely:
   a) micro businesses are businesses with net assets of at most IDR 50,000,000.00 (fifty million rupiah), excluding land and buildings for business, or having annual sales results of at most IDR 300,000,000.00 (three hundred million rupiah); b) small businesses are businesses with net assets greater than IDR 50,000,000.00 (fifty million rupiah) up to a maximum of IDR 500,000,000.00 (five hundred million rupiah), excluding land and buildings for business, or having annual sales results greater than IDR 300,000,000.00 (three hundred million rupiah) up to a maximum of IDR 2,500,000,000.00 (two billion five hundred million rupiah).
2. Financing limits to debtors are at most IDR 500,000,000.00 (five hundred million rupiah).
3. Do not meet the criteria for Loans with collateral in the form of land, buildings, and houses.
   b. Loans with collateral in the form of motor vehicles, ships, or motorized boats accompanied by proof of ownership and have been encumbered via fiduciary according to legislation.

100% :
a. Claims or other loans that do not meet the risk weight criteria above. b. Claims or loans that are overdue or of bad quality.
c. Fixed assets, inventory, and intangible assets.
d. AYDA that has not exceeded 1 (one) year since the date of takeover. e. Other assets other than those mentioned above.

6. Parts of loans not covered by collateral or not guaranteed by Regional Governments or other banks or BUMN/BUMD as referred to in number 5 are subject to higher risk weights according to asset criteria.

7. In the event that collateral as referred to in the RWA calculation is proven to be in dispute and/or dual ownership, the corresponding loan portion is subject to a risk weight of 100% (one hundred percent).

8. Productive assets with Fair, Doubtful, or Bad quality in the RWA calculation are valued at book value, i.e., debit balance after deducting specific PPAP for productive assets with Fair, Doubtful, and Bad quality. Asset quality assessment (KAP) and the formation of PPAP refer to regulations governing KAP and the formation of PPAP for BPR.

The RWA calculation format is as in Appendix II, which is an integral part of this Financial Services Authority Circular Letter.

IV. PROCEDURE FOR CALCULATING THE RATIO OF MINIMUM CAPITAL PROVISION AND MINIMUM CORE CAPITAL OBLIGATION

The calculation of the KPMM and minimum core capital ratio for BPR is done as follows:

1. Perform RWA calculation by:
   a. multiplying the nominal value of asset positions by their respective risk weights, namely:

1. RWA calculation for productive assets as:
   a) SBI, is the recording value as regulated in accounting guidelines applicable to BPR; b) placements or loans with Fair, Doubtful, or Bad quality at book value (debit balance after deducting formed PPAP) as referred to in Roman III number 5 multiplied by risk weights according to the type and characteristics of loans and/or collateral;
2. RWA calculation for non-productive assets as:
   a) cash and other assets at the value recorded in accounting; b) fixed assets, inventory, intangible assets, and other assets at book value, i.e., by subtracting acquisition price with depreciation that has been done; c) AYDA at the recording value as regulated in accounting guidelines applicable to BPR; b. summing RWA from each asset position;
   c. if there is an excess difference between general PPAP that must be calculated and the limit of general PPAP that can be calculated as supplementary capital, the excess general PPAP is calculated as a reducing factor for the RWA calculation.

2. Perform core capital calculation by summing main core capital and additional core capital, and considering reducing factors such as deferred tax calculations, goodwill, disagio, AYDA that has exceeded 1 (one) year since takeover at the value recorded in the BPR balance sheet, prior years' losses, and/or current year losses.

3. Perform total capital calculation by summing core capital and supplementary capital.

4. Calculate the KPMM and minimum core capital ratio by:
   a. The KPMM ratio is comparing the total BPR capital in number 3 with RWA in number 1. b. The minimum core capital ratio is comparing the total BPR core capital in number 2 with RWA in number 1.

The minimum capital requirement and minimum core capital calculation format for BPR is as in Appendix I, which is an integral part of this Financial Services Authority Circular Letter.

V. FULFILLMENT OF MINIMUM CORE CAPITAL

1. BPR must maintain minimum core capital of at least IDR 6,000,000,000.00 (six billion rupiah) as follows:
   a. for BPR that at the time of implementation of POJK KPMM BPR had core capital of less than IDR 3,000,000,000.00 (three billion rupiah) is after December 31, 2024; b. for BPR that at the time of implementation of POJK KPMM BPR had core capital of at least IDR 3,000,000,000.00 (three billion rupiah) but less than IDR 6,000,000,000.00 (six billion rupiah) or has already had core capital of at least IDR 6,000,000,000.00 (six billion rupiah) is after December 31, 2019;
   c. for BPR that obtained a business license from the Financial Services Authority with paid-up capital of less than IDR 6,000,000,000.00 (six billion rupiah) after the implementation of POJK KPMM BPR is 5 (five) years after obtaining the business license from the Financial Services Authority.

2. BPR that experiences a decrease in core capital to less than IDR 6,000,000,000.00 (six billion rupiah) after the time limit as referred to in number 1 must increase core capital to at least IDR 6,000,000,000.00 (six billion rupiah) by December 31, 2019 at the latest 6 (six) months since:
   a. monthly reports submitted to the Financial Services Authority showing core capital below IDR 6,000,000,000.00 (six billion rupiah):
   Example:
   BPR A has met the minimum core capital of IDR 6,000,000,000.00 (six billion rupiah) as of June 30, 2024.
   Based on the monthly position report as of January 31, 2025, it is known that BPR A's core capital decreased to IDR 5,000,000,000.00 (five billion rupiah). In relation to this condition, BPR A must increase its core capital to at least IDR 6,000,000,000.00 (six billion rupiah) by July 31, 2025 at the latest or on the first working day thereafter if July 31, 2025 is a holiday; or b. the date of the minutes of the Financial Services Authority's examination results showing core capital below IDR 6,000,000,000.00 (six billion rupiah), whether conducted through general or special examinations. Example:
   Based on the monthly position report as of January 31, 2025, BPR B's core capital was IDR 6,100,000,000.00 (six billion one hundred million rupiah) but based on the minutes of the general examination results by the Financial Services Authority on March 7, 2025, it is known that BPR B's core capital was IDR 5,000,000,000.00 (five billion rupiah). In relation to this condition, BPR B must increase its core capital to at least IDR 6,000,000,000.00 (six billion rupiah) by September 7, 2025 at the latest or on the first working day thereafter if September 7, 2025 is a holiday.

In light of the aforementioned conditions, Rural Bank B must increase its core capital to at least IDR 6,000,000,000.00 (six billion rupiah) no later than Sunday, September 7, 2025. Given that September 7, 2025, falls on a Sunday (a holiday), the deadline for fulfilling core capital requirements is the first working day following September 7, 2025.

3. The action plan referred to in Article 18 of the POJK on Minimum Capital Provision and Fulfillment of Minimum Core Capital for Rural Banks (POJK KPMM BPR) submitted to the Financial Services Authority must contain at least:
   a. a plan for fulfilling the minimum core capital, carried out through measures such as profit growth, paid-in capital additions, mergers, consolidations, and/or acquisitions; b. stages of the minimum core capital fulfillment plan based on the Rural Bank's projections up to the final deadline for fulfilling the minimum core capital as per the POJK KPMM BPR;
   c. the Rural Bank's profit projections in the action plan, considering historical profit achievement data, current economic conditions, and the Rural Bank's capacity;
   d. a plan for fulfilling capital ratios; e. a plan for adjusting borrowed capital to become additional core capital components and subordinated loans to become supplementary capital components (if any); and f. a plan for resolving Equity DSM that has exceeded 90 days since the issuance of the POJK KPMM BPR but has not yet met the requirements to become paid-in capital (if any).

4. In the event that the action plan materials submitted by the Rural Bank do not comply with item 3, the Rural Bank must adjust the action plan no later than June 30, 2016.

5. Projections for fulfilling the minimum core capital of the Rural Bank are prioritized to come from profit growth. If the minimum core capital cannot be fulfilled from the Rural Bank's profit growth, the Rural Bank must include measures to fulfill the minimum core capital derived from additional paid-in capital by shareholders and/or new investors, or by merging or consolidating with another Rural Bank, or being acquired by a new investor.

6. The Financial Services Authority may request the Rural Bank to adjust the feasibility of the submitted action plan.

7. Considering Article 15 paragraph (2) of the POJK KPMM BPR, Rural Banks are prohibited from distributing profits if:
   a. profit distribution results in core capital decreasing to less than IDR 6,000,000,000.00 (six billion rupiah); or b. the Rural Bank has not fulfilled the minimum core capital of IDR 6,000,000,000.00 (six billion rupiah).

The term "profit distribution" includes, among others, dividend payments to shareholders, bonus distributions to management (performance-based fees/tantiem), and incentive payments that are non-operational in nature. The prohibition on profit distribution takes effect no later than for the 2016 profit year. In the event that the Rural Bank's action plan includes a prohibition on distributing 2015 profits, the Rural Bank cannot distribute 2015 profits.

8. The prohibition on profit distribution as referred to in item 7 does not include incentive payments that are operational in nature, namely incentives for management linked to performance, which have been budgeted and accounted for as expenses by the Rural Bank in the current year.

9. In the event that management members are shareholders of the relevant Rural Bank, such management members cannot receive incentive payments as referred to in item 8 before the Rural Bank fulfills the minimum core capital of IDR 6,000,000,000.00 (six billion rupiah).

10. The incentive payments referred to in item 8 must be included in the Rural Bank's business plan.

11. The amount of incentive payments referred to in item 8 is at most equal to the excess of current year profit over the profit projection set aside in the same year for the staged fulfillment of minimum core capital as stated in the Rural Bank's action plan.

12. The incentive payments referred to in item 8 must not result in the Rural Bank's capital conditions failing to meet the capital ratios as regulated in Article 2 and Article 4 of the POJK KPMM BPR.

13. Rural Banks that do not fulfill the minimum core capital amount as referred to in Article 13 item 1 of the POJK KPMM BPR are subject to administrative sanctions as referred to in Article 22 paragraph (1) letters a through e of the POJK KPMM BPR.

14. Rural Banks that have fulfilled the minimum core capital as referred to in Article 13 item 1 of the POJK KPMM BPR but have not yet reached IDR 6,000,000,000.00 (six billion rupiah), or Rural Banks that have not yet fulfilled the minimum core capital of IDR 6,000,000,000.00 (six billion rupiah) as referred to in Article 13 item 3 of the POJK KPMM BPR, are subject to administrative sanctions as referred to in Article 22 paragraph (3) letters a through c of the POJK KPMM BPR.

15. Rural Banks that do not fulfill the minimum core capital of IDR 6,000,000,000.00 (six billion rupiah) within the timeframe as referred to in Article 16 of the POJK KPMM BPR, but before the deadline for fulfilling minimum core capital on December 31, 2024, are subject to administrative sanctions as referred to in Article 22 paragraph (6) letters a through c of the POJK KPMM BPR.

VI. PROCEDURES FOR SUBMITTING REPORTS AND CORRESPONDENCE ADDRESSES

1. Reports on action plans, reports on requests for approval of additional capital deposits including deposits in the form of fixed assets, reports on requests for approval of additional core capital components, reports on requests for approval of supplementary capital components, and reports on requests for approval of donated capital are submitted to the Financial Services Authority, attention to the Regional Office or the local Financial Services Authority Office.

2. The date of receipt of action plan documents is the date recorded in the Financial Services Authority's document receipt administration or the date stamped on the postmark or shipping proof from the shipping company or courier.

VII. CLOSING

The provisions in this Circular of the Financial Services Authority shall take effect on the date of determination.

Determined in Jakarta
On the date of 10 March 2016

EXECUTIVE HEAD OF BANKING SUPERVISOR
FINANCIAL SERVICES AUTHORITY,

signed

NELSON TAMPUBOLON

A copy consistent with the original

Legal Director 1
Legal Department

signed

Yuliana

APPENDIX I
CIRCULAR OF THE FINANCIAL SERVICES AUTHORITY
NUMBER 8 /SEOJK.03/2016
REGARDING
MINIMUM CAPITAL PROVISION AND FULFILLMENT OF MINIMUM CORE CAPITAL FOR RURAL BANKS

CALCULATION OF MINIMUM CAPITAL REQUIREMENTS

DESCRIPTION	AMOUNT	EACH COMPONENT	TOTAL CAPITAL
I. CORE CAPITAL
I.1 Main Core Capital
1.1.1 Paid-in Capital
1.1.2 Additional Capital Reserves
1.1.2.1 Agio
1.1.2.2 Capital deposit funds
1.1.2.3 Donated capital
1.1.2.4 General reserves
1.1.2.5 Specific reserves
1.1.2.6 Retained earnings from previous years
1.1.2.7 Current year profit after deducting PPAP shortages (maximum 50% after deducting estimated PPh liabilities)
1.1.2.8 Deferred tax	-/-
1.1.2.9 Goodwill	-/-
1.1.2.10 Disagio	-/-
1.1.2.11 EOA that has exceeded a period of 1 (one) year since acquisition, equal to the recorded value on the Rural Bank's balance sheet	-/-
1.1.2.12 Losses from previous years	-/-
1.1.2.13 Current year losses	-/-
Sub total
I.2 Additional Core Capital
I.3 TOTAL CORE CAPITAL (I.1 + I.2)
II. SUPPLEMENTARY CAPITAL
II.1 Capital components meeting specific requirements (maximum 50% of core capital)
II.2 Surplus from revaluation of fixed assets
II.3 Provisions for Write-off of General Productive Assets (maximum 1.25% of RWA)
II.4 Total Supplementary Capital (maximum 100% of core capital) (II.1 + II.2 + II.3)
III. TOTAL CAPITAL

III. TOTAL CAPITAL (I.3 + II.4)
Total RWA before calculation of excess general PPAP
Excess general PPAP that must be calculated from the limit of general PPAP that can be counted as supplementary capital
-------------------------------------------------------
RWA	Amount of capital
Minimum Capital Ratio (CAR) = -------------------------
RWA
Amount of capital shortage to achieve a CAR ratio of 12% of RWA
Core Capital Ratio = ---------------------------------
RWA
Amount of capital shortage to achieve a core capital ratio of 8% of RWA
(-/-)

A copy consistent with the original

Legal Director 1
Legal Department

signed

Yuliana

APPENDIX II
CIRCULAR OF THE FINANCIAL SERVICES AUTHORITY
NUMBER 8 /SEOJK.03/2016
REGARDING
MINIMUM CAPITAL PROVISION AND FULFILLMENT OF MINIMUM CORE CAPITAL FOR RURAL BANKS

CALCULATION OF RISK-WEIGHTED ASSETS (RWA)

No	COMPONENT	NOMINAL	RISK WEIGHT %	RWA
1	Cash		0
2	Bank Indonesia Certificates (SBI)		0
3	Loans granted with liquid collateral in the form of SBI, bonds issued by the Government of the Republic of Indonesia, savings and/or deposits blocked at the relevant Rural Bank based on an agreement between the Rural Bank and the customer accompanied by a disbursement power of attorney, and precious metals, equal to the lower value between the collateral and the debit balance.
4	EOA that has exceeded 1 (one) year since the date of acquisition.
5	Loans granted with collateral in the form of jewelry gold stored or under the control of the Rural Bank. *)	15
6	Placements in other banks in the form of current accounts, time deposits, deposit certificates, savings, and other receivables to other banks. )	20
7	Loans to or guaranteed by other banks or Local Governments. *)	20
8	Part of loans guaranteed by State-Owned Enterprises/Local-Owned Enterprises (BUMN/BUMD) conducting credit guarantee businesses. *)	20
9	Loans with collateral in the form of land and residential houses/shop houses/office houses secured by the first mortgage right. *)	30
10	Loans to BUMN/BUMD or loans guaranteed by BUMN/BUMD conducting credit guarantee businesses but not meeting requirements for a 20% risk weight. *)	50
11	Loans to Employees/Pensioners. *)	50
12	Loans with collateral in the form of land and residential houses/shop houses/office houses having certificates controlled by the Rural Bank *)	50
13	Loans granted to micro and small businesses. *)	70
14	Loans with collateral in the form of motor vehicles, ships, or motorized boats accompanied by proof of ownership and having been subject to fiduciary registration in accordance with applicable laws and regulations. *)	70
15	Receivables or other loans not meeting the risk weight criteria above. *)	100
16	Receivables or loans that have matured or are of poor quality (non-performing). *)	100
17	Fixed assets, inventory, and intangible assets.
18	Acquired collateral (EOA) that has not exceeded 1 (one) year since the date of acquisition.
19	Other assets not listed above.	100

| Total RWA Before Calculation of Excess General PPAP | | |

Notes:
*) Filled with the nominal amount after deducting specific PPAP that must be formed by the Rural Bank (specifically for productive assets with quality categories of Less Performing, Doubtful, and Loss). ) Filled with the nominal amount after deducting specific PPAP that must be formed by the Rural Bank (specifically for productive assets with quality categories of Less Performing and Loss) except for Current Accounts.

Determined in Jakarta
On the date of 10 March 2016

EXECUTIVE HEAD OF BANKING SUPERVISOR
FINANCIAL SERVICES AUTHORITY,

signed

NELSON TAMPUBOLON

and supported by a power of attorney to sell but not secured by the first mortgage right.

A copy consistent with the original

Legal Director 1
Legal Department

signed

Yuliana