SEOJK on Asset Quality Assessment for Islamic Commercial Banks and Islamic Business Units

To:

1. The Board of Directors of Islamic Commercial Banks; and
2. The Board of Directors of Conventional Commercial Banks that have Islamic Business Units at their respective locations.

COPY

CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 8/SEOJK.03/2015

ON

ASSET QUALITY ASSESSMENT FOR ISLAMIC COMMERCIAL BANKS AND ISLAMIC BUSINESS UNITS

In light of the implementation of the Financial Services Authority Regulation Number 16/POJK.03/2014 concerning Asset Quality Assessment for Islamic Commercial Banks and Islamic Business Units (State Gazette of the Republic of Indonesia Year 2014 Number 347, Supplement to the State Gazette of the Republic of Indonesia Number 5625), it is necessary to regulate implementation provisions regarding asset quality assessment for Islamic Commercial Banks and Islamic Business Units in this Financial Services Authority Circular as follows:

I. GENERAL PROVISIONS

A. With the increasing complexity of business and risk profiles, and in order to anticipate the impact of the general economic conditions, Islamic Commercial Banks and Islamic Business Units (hereinafter referred to as Banks) need to enhance their ability and effectiveness in managing credit risk and minimizing potential losses from the provision of funds.

B. The development of the Islamic banking industry needs to be supported, among other things, by asset quality assessment instruments that better reflect the characteristics of customer contracts and businesses financed, as well as the products offered by the Bank.

C. In order to manage credit risk, the Bank determines asset quality in the form of Financing resulting from the assessment of factors influencing the condition and performance of customers, which consist of business prospects, customer performance, and the customer's ability to pay.

D. Furthermore, to minimize potential losses from the provision of funds, the Bank may conduct Financing Restructuring for customers who still have business prospects and the ability to pay, while still observing prudent principles, Sharia principles, and applicable financial accounting standards.

E. In the implementation of prudent principles, the improvement of quality for restructured Financing is only carried out after the customer has fulfilled the obligation to pay principal installments and/or margin/profit share/ujrah for a certain period of time.

F. The Bank must present accurate and comprehensive financial statements that reflect the Bank's overall performance in accordance with applicable financial accounting standards, particularly in the formation of Impairment Loss Reserves (CKPN). In addition to meeting financial accounting standards, the Bank must still calculate Asset Impairment Provisions (PPA) which must be formed; any shortfall will affect the Bank's capital adequacy ratio calculation.

II. FINANCING QUALITY

A. Financing quality is determined based on an analysis of 3 (three) assessment factors, namely business prospects, customer performance, and the ability to pay.

B. The determination of Financing quality is carried out by considering the significance and materiality of the three assessment factors and their respective components, as well as their relevance to the characteristics of the relevant customer. The criteria for each component in determining Financing quality are as referred to in Appendix I of this Financial Services Authority Circular.

C. Financing quality is set in 5 (five) assessment categories, namely Performing, Special Mention, Substandard, Doubtful, and Loss.

D. One component in the business prospects assessment factor as referred to in paragraph II letter A is the effort undertaken by large-scale and/or high-risk customers to maintain environmental sustainability, evidenced by an Environmental Impact Analysis (AMDAL). This is in line with Law Number 32 of 2009 concerning Environmental Protection and Management and Government Regulation Number 27 of 2012 concerning Environmental Permits. AMDAL results are required by the Bank to ensure that financed projects maintain environmental sustainability.

In the disbursement of funds, the Bank must pay attention to the type of business plan and/or activities that must be equipped with AMDAL as established in the Regulation of the Minister of State for the Environment Number 05 of 2012 concerning Types of Business Plans and/or Activities Required to Have AMDAL.

Meanwhile, in conducting financing quality assessment, particularly the customer's business prospects, the Bank must continue to pay attention to the assessment results of the Implementation of the Corporate Performance Rating Program in Environmental Management (PROPER) issued by the Ministry of Environment.

III. ISLAMIC SECURITIES QUALITY

Islamic securities can be classified into Islamic securities recognized based on market value, namely available for sale and/or trading Islamic securities, and Islamic securities recognized based on acquisition cost, namely hold-to-maturity Islamic securities. In addition, in order to accommodate certain characteristics of Islamic securities available in the market that can be held by the Bank, there are also Islamic securities linked or guaranteed by specific underlying assets, and Islamic securities issued by banks and/or endorsed by banks. For Islamic securities in the form of sukuk originating from changes in contracts and/or contract content that result in the non-fulfillment of Sharia Principles, quality assessment is based on Financing quality assessment. For Islamic securities that, based on their characteristics, are not actively traded on the stock exchange and do not have a rating, quality assessment is based on placement quality provisions if the party settling is another Bank in Indonesia, or based on Financing quality provisions if the party settling is not a Bank in Indonesia.

In the event that Islamic securities have more than one rating obtained from different rating agencies, the rating used is as follows:

1. If Islamic securities have 2 (two) different ratings, the Bank must use the lowest rating;
2. If Islamic securities have 3 (three) or more different ratings, the Bank must use the second-highest rating. Example: If Islamic securities have ratings AA, A+, BBB+, in assessing the quality of these Islamic securities, the rating used is the second-highest, namely A+.

Investment grade in the determination of Islamic securities quality refers to regulations governing rating agencies and ratings recognized by the Financial Services Authority.

IV. ADMINISTRATIVE ACCOUNT TRANSACTIONS (TRA)

A. The determination of TRA quality does not apply to facilities where the agreement contains a clause that the Bank may cancel the provision of funds, either partially or entirely, due to certain conditions or reasons (uncommitted).

B. The calculation of general and special reserves in the form of TRA does not apply to facilities where the agreement contains a clause that the Bank may cancel the provision of funds, either partially or entirely, due to certain conditions or reasons (uncommitted).

C. The calculation of general reserves does not apply to Financing facilities that have not been drawn down and are not unilaterally cancellable (committed).

V. PROVISION OF FUNDS IN CERTAIN AREAS

A. In order to enhance the intermediary function and encourage economic growth in certain areas, which in the opinion of the Financial Services Authority require special handling, Banks are given special treatment for a certain period to assess the quality of fund provision to customers located in the aforementioned certain areas. The special treatment in conducting quality assessment is based solely on the factor of timely payment of principal and/or margin/profit share/ujrah.

B. The fund provision given special treatment is Financing and other fund provisions (in the form of issuing guarantees or opening letters of credit) up to the amount of Rp5,000,000,000.00 (five billion rupiah) for investment and/or working capital.

C. The determination of certain areas and certain periods as referred to in paragraph V letter A is established in a Decision of the Commissioners Board of the Financial Services Authority.

VI. ABANDONED PROPERTY

Abandoned property is fixed assets in the form of property owned by the Bank but not used for the Bank's usual business activities. Included in the Bank's usual business activities are property used to support the Bank's business activities and owned in reasonable quantities, such as official residences, property used for educational facilities, and other property designated for use in business activities in the near future.

VII. ASSET IMPAIRMENT PROVISIONS AND IMPAIRMENT LOSS RESERVES

Since the implementation of financial accounting standards regulating the formation of CKPN for asset loss provisioning, Banks are required to form CKPN as a replacement for PPA in the Bank's financial statements.

In order to meet banking prudent principles, the Financial Services Authority still requires Banks to calculate PPA.

Although the results of the PPA calculation are not recorded in the Bank's financial statements, the results of the PPA calculation will affect the capital calculation in fulfilling the Minimum Capital Adequacy Ratio (KPMM) as follows:

1. PPA on Productive Assets a. If the calculated PPA required to be formed on Productive Assets is greater than the CKPN already formed, the Bank must calculate the difference between the PPA and CKPN calculation as a reduction in capital in the KPMM ratio calculation. b. If the calculated PPA required to be formed on Productive Assets is equal to or less than the CKPN already formed, the Bank does not need to calculate the PPA difference in the KPMM ratio calculation.

Example of Productive Asset PPA: Bank Capital is Rp150,000,000,000.00 (one hundred fifty billion rupiah) and the calculated PPA required to be formed on Financing is Rp20,000,000,000.00 (twenty billion rupiah). The influence of the PPA calculation on capital is as follows:

Table 1 Rp million Scenario | PPA Calculation Result | CKPN Formed | Difference | Influence on KPMM Ratio Calculation | Capital after PPA Influence 1 | 20,000 | 16,000 | (4,000) | 4,000 | 146,000 2 | 20,000 | 20,000 | | | 150,000 3 | 20,000 | 22,000 | 2,000 | 0 | 150,000

2. PPA on Non-Productive Assets For Non-Productive Assets, the Bank must calculate the entire PPA calculation result as a reduction in the KPMM ratio calculation. If there is CKPN already formed by the bank on the balance sheet for Non-Productive Assets in accordance with applicable financial accounting standards, the PPA calculation for Non-Productive Assets is performed on the value of Non-Productive Assets after deducting the CKPN already formed.

Example of PPA on Non-Productive Assets: Bank Capital is Rp100,000,000,000.00 (one hundred billion rupiah). The Bank has Non-Productive Assets in the form of AYDA for 2 (two) years, so the quality of the said AYDA is classified as Loss. Therefore, the PPA calculated on the said AYDA is 100% (one hundred percent) of the value of the AYDA after deducting impairment losses. Thus, the influence of the PPA calculation on the KPMM ratio calculation is as follows:

Table 2 Rp million Scenario | AYDA Value | AYDA Impairment after Impairment Loss | Non-Productive PPA Required to be Formed | Influence on KPMM Ratio Calculation | Capital after Non-Productive PPA Influence 1 | 1,000 | 0 | 1,000 | 100% x 1,000 = 1,000 | 99,000 2 | 1,000 | 200 | 800 | 100% x 800 = 800 | 99,200

VIII. FINANCING RESTRUCTURING

In order to minimize potential losses due to troubled customers, the Bank may conduct Financing Restructuring for customers experiencing difficulties in paying principal and/or margin/profit share/ujrah, provided that the relevant customer still has good business prospects and is assessed to be able to fulfill obligations after Financing is restructured. The said Financing Restructuring is implemented in accordance with prudent principles, Sharia principles, and applicable financial accounting standards.

Granting Murabahah bill discounts as an appreciation for customers who pay installments on time is not categorized as Financing Restructuring, provided that the appreciation is not agreed upon in advance and is only a one-time occurrence (not applicable every month of installments).

In order to implement prudent principles and Sharia principles, the Bank must have Financing Restructuring guidelines containing procedures and methods for implementing Financing Restructuring, which must contain at least the following:

1. Analysis and Documentation In conducting analysis on Financing to be restructured, the Bank must at least pay attention to the following: a. Evaluation of customer problems, including:

1. evaluation of the causes of principal and/or margin/profit share/ujrah arrears based on financial statements, cash flow, financial projections, market conditions, and other factors related to the customer's business;
2. estimation of the return of all principal and/or margin/profit share/ujrah based on the Financing agreement before and after Financing Restructuring. The estimation should be based on financial ratios, including projected financial ratios, reflecting the customer's financial condition and ability to repay the received Financing; and
3. evaluation of customer management performance to determine the need for customer corporate organizational restructuring, which can be done by replacing shareholders, directors, and other managerial changes. If necessary, the Bank can use external expert assistance to conduct such organizational restructuring. b. Approaches and assumptions used in calculating cash flow projections and values to be received from principal installments and/or margin/ujrah to be received. c. Analysis, conclusions, and recommendations in adjusting Financing requirements such as changes in tenor, and/or addition of facilities. Such adjustments are made by considering the business cycle and the customer's ability to pay so that the customer is estimated to be able to fulfill principal and/or margin/profit share/ujrah payment obligations until maturity. d. If Financing Restructuring is done by providing additional Financing, the purpose and use of the additional Financing must be clear. Additional Financing is not permitted to settle principal and/or margin/profit share/ujrah arrears. In the event that Financing Restructuring results in the customer's obligations becoming larger, the Bank may require new collateral. e. Adjustments to the repayment schedule must reflect the customer's ability to pay. f. Details related to the transparency of Financing requirements, including financial agreements in the Financing agreement, such as the customer's corporate recapitalization plan or clauses allowing the Bank to change margin/profit share/ujrah as long as it does not conflict with Sharia principles, is in line with the customer's ability to pay, and complies with applicable legislation. g. Requirements that Financing agreements and other documents related to the implementation of Financing Restructuring must have legal force. h. Completeness of documents required for the implementation of Financing Restructuring.

2. Monitoring Procedures The Bank must have written procedures to monitor restructured Financing to ensure the customer's ability to make payments in accordance with the requirements in the new Financing agreement.

Some steps that the Bank must take in monitoring the implementation of Financing Restructuring include: a. requesting the customer to submit financial statements accompanied by key financial ratios, business development, and the implementation of action plans, which are necessary for the Bank to continuously monitor the customer's business and financial conditions. The customer also reports the impact of various actions taken as part of Financing Restructuring, such as customer corporate recapitalization and policies not to distribute dividends; b. evaluating restructured Financing every quarter, including if there are significant differences between projections and realization, such as from principal installments and margin/profit share/ujrah, cash flow, and/or collateral valuation; and c. formulating steps to be taken if the customer experiences payment difficulties again after Financing Restructuring.

3. Determination of Quality of Restructured Financing The determination of quality for restructured Financing is as follows: a. at most equal to the quality of Financing before Financing Restructuring was conducted, provided that the customer has not fulfilled the obligation to pay principal installments and/or margin/profit share/ujrah consecutively for 3 (three) periods according to the agreed time; b. may increase at most 1 (one) level from the quality of Financing before Financing Restructuring was conducted, if the customer has fulfilled the payment obligations as referred to in letter a; and c. Financing quality is determined based on assessment factors of business prospects, customer performance, and ability to pay:

1. after the determination of Financing quality as referred to in letter b; or
2. in the event that the customer does not meet the conditions and/or payment obligations in the Financing Restructuring agreement, both during and after 3 (three) times the payment periods according to the agreed time.

Example 1: In January 2015, the Bank conducted Financing Restructuring on Customer A's Murabahah Financing facility with Financing quality classified as Loss. The Financing Restructuring agreement stated that Customer A must pay principal installments and/or margin monthly starting from February 15, 2015. Subsequently, Customer A was able to fulfill payment obligations according to the Financing Restructuring agreement time for 3 (three) consecutive payment periods (February 15, 2015, March 15, 2015, and April 15, 2015).

Table 3 Period of Agreement Fulfillment | Payment | Other Requirements | Financing Quality at End of Assessment Month February 2015 | Fulfill | Fulfill | Loss March 2015 | Fulfill | Fulfill | Loss April 2015 | Fulfill | Fulfill | Can increase at most one level to Doubtful May 2015 | Fulfill | Fulfill | Based on assessment factors of business prospects, customer performance, and ability to pay

Example 2: In January 2015, the Bank conducted Murabahah Financing Restructuring on Customer B's Financing facility with Financing quality classified as Doubtful. The Financing Restructuring agreement stated that Customer B must pay principal installments and/or margin monthly starting from February 15, 2015. Subsequently, in the third payment period (April 15, 2015), Customer B was unable to fulfill payment obligations on time. Thus, the quality of Customer B's Financing since February 2015 is determined as follows:

Table 4 Period of Agreement Fulfillment | Payment | Other Requirements | Financing Quality at End of Assessment Month February 2015 | Fulfill | Fulfill | Doubtful March 2015 | Fulfill | Fulfill | Doubtful April 2015 | Not Fulfill | Fulfill | Based on assessment factors of business prospects, customer performance, and ability to pay, at most Doubtful May 2015 | Fulfill | Fulfill | At most Doubtful (same as Financing quality before restructuring) June 2015 | Fulfill | Fulfill | At most Doubtful (same as Financing quality before restructuring) July 2015 | Fulfill | Fulfill | Can increase at most one level to Substandard August 2015 and thereafter | Fulfill | Fulfill | Based on assessment factors of business prospects, customer performance, and ability to pay

Example 3: In January 2015, the Bank conducted Financing Restructuring on Customer C's Murabahah Financing facility with Financing quality classified as Substandard. The Financing Restructuring agreement stated that Customer C must pay principal installments and/or margin monthly starting from February 15, 2015, in addition to Customer C being requested to replace one of its executives no later than January 31, 2015. Customer C always fulfilled payment obligations on time. However, the executive replacement was only done in April 2015, so before the executive replacement, Customer C was considered not to have met the agreed requirements. Thus, the quality of Customer C's Financing since February 2015 is determined as follows:

Table 5 Period of Agreement Fulfillment at End of Assessment Month | Payment | Other Requirements February | Fulfill | Not Fulfill | Based on assessment factors of business prospects, customer performance, and ability to pay, at most Substandard March 2015 | Fulfill | Not Fulfill | Based on assessment factors of business prospects, customer performance, and ability to pay, at most Substandard April 2015 | Fulfill | Fulfill | Can increase at most one level to Special Mention May 2015 and thereafter | Fulfill | Fulfill | Based on assessment factors of business prospects, customer performance, and ability to pay

4. Granting of Payment Grace Period In conducting Financing Restructuring, the Bank may provide facilities in the form of granting a payment grace period. Restructured Financing with a grace period...

grace period) for principal installments or margin/profit-sharing/ujrah applies only to: a. Financing based on Murabahah, Istishna’, Ijarah, Ijarah Muntahiya Bittamlik, Mudharabah, and Musyarakah contracts; and b. usage types for working capital and investment. Financing quality after restructuring with a grace period is regulated differently, namely, during the grace period, its quality is set the same as the financing quality before restructuring. Generally, a grace period can be granted by the Bank to customers in the form of deferral of principal financing installments or margin/profit-sharing/ujrah payments.

Example 1: Financing restructuring is conducted on a Murabahah financing facility for customer D’s working capital, with financing quality classified as Substandard (Kurang Lancar). For customer D, the Bank grants a grace period for principal installments for 3 (three) months, while margin payments are made monthly. During the 3 (three) month grace period, the customer's quality is set following the quality before restructuring, i.e., Substandard (Kurang Lancar). After the grace period ends, customer D can fulfill their obligations according to the Financing Restructuring Agreement. In this regard, customer D’s financing quality is set as follows:

Table 6 Assessment Month End Period Fulfillment of Agreement Quality Principal Margin 1 - fulfill Substandard 2 - fulfill Substandard 3 - fulfill Substandard 4 fulfill fulfill Substandard 5 fulfill fulfill Substandard 6 fulfill fulfill can increase at most one level to Special Mention (Dalam Perhatian Khusus) 7 fulfill fulfill based on assessment factors of business prospects, customer performance, and repayment ability

Example...

Example 2: Financing restructuring is conducted on a Murabahah financing facility for customer E, with financing quality classified as Doubtful (Diragukan). For customer E, the Bank grants a grace period for principal installments for 6 (six) months, while margin payments are made monthly. During the 6 (six) month grace period, customer E’s quality is set following the quality before restructuring, i.e., Doubtful (Diragukan). After the grace period ends, customer E can fulfill their obligations according to the Financing Restructuring Agreement. In this regard, customer E’s financing quality is set as follows:

Table 7 Assessment Month End Period Fulfillment of Agreement Quality Principal Margin 1 - fulfill Doubtful 2 - fulfill Doubtful 3 - fulfill Doubtful 4 - fulfill Doubtful 5 - fulfill Doubtful 6 - fulfill Doubtful 7 fulfill fulfill Doubtful 8 fulfill fulfill Doubtful 9 fulfill fulfill can increase at most one level to Substandard (Kurang Lancar) 10 and further fulfill fulfill based on assessment factors of business prospects, customer performance, and repayment ability

5. Application of Sharia Principles in Financing Restructuring includes: a. The Bank may charge compensation (ta’widh) to customers who default or violate agreements, causing losses to the Bank. b. Compensation is set at the actual costs incurred by the Bank in collecting rights that should have been paid by the customer, and not potential losses estimated to occur... (potential loss) due to lost opportunities (opportunity loss/al-furshah al-dha’i’ah). c. The determination of compensation and calculation methods must be stipulated in a financing contract addendum. d. Financing restructuring is conducted with reference to applicable fatwas. The procedure for Financing Restructuring is conducted with reference to Appendix II of this Financial Services Authority Circular.

IX. DELIVERY ADDRESS OF ACTION PLAN The Action Plan is submitted to the Financial Services Authority at the following addresses:

1. Sharia Banking Department, Menara Radius Prawiro, Bank Indonesia Office Complex, Jl. M.H. Thamrin No. 2 Jakarta 10350, for Banks headquartered in the Financial Services Authority Head Office operational area; or
2. Regional Office or local Financial Services Authority Office, for Banks headquartered outside the Financial Services Authority Head Office operational area.

X. OTHERS Appendix I and Appendix II are an integral part of this Financial Services Authority Circular.

XI. CLOSING At the time this Financial Services Authority Circular takes effect: a. Bank Indonesia Circular No. 13/10/DPbS dated April 13, 2011 regarding Asset Quality Assessment for Sharia Commercial Banks and Sharia Business Units; b. Bank Indonesia Circular No. 10/34/DPbS dated October 22, 2008 regarding Financing Restructuring for Sharia Commercial Banks and Sharia Business Units; and c. Bank Indonesia Circular No. 13/18/DPbS dated May 30, 2011 regarding Amendments to Bank Indonesia Circular No. 10/34/DPbS dated October 22, 2008 regarding Financing Restructuring for Sharia Commercial Banks and Sharia Business Units, are revoked and declared invalid. This Financial Services Authority Circular takes effect on the date it is established. To be known by everyone, ordering the promulgation of this Financial Services Authority Circular by placing it in the State Gazette of the Republic of Indonesia. Established in Jakarta on March 10, 2015 EXECUTIVE HEAD OF BANKING SUPERVISOR FINANCIAL SERVICES AUTHORITY, Signed, NELSON TAMPUBOLON STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2015 NO. 23 DATED MARCH 20, 2015…… Copy matches the original Legal Director I Legal Department, Signed, Signed, Sudarmaji

APPENDIX I FINANCIAL SERVICES AUTHORITY CIRCULAR NO. 8./SEOJK.03/2015 REGARDING ASSET QUALITY ASSESSMENT FOR SHARIA COMMERCIAL BANKS AND SHARIA BUSINESS UNITS

1. FINANCING QUALITY CLASSIFICATION BASED ON PROFIT-SHARING CONTRACTS ASSESSMENT FACTOR L DPK KL D M A. BUSINESS PROSPECTS Potential business growth  Potential for growth of customer business activities is good.  Potential for growth of customer business activities is limited.  Potential for growth of customer business activities is very limited or does not experience growth.  Customer business activities decline.  Customer business viability is highly doubtful and difficult to recover.  High probability that business activities will cease. Market conditions and customer position in competition  Stable market and not influenced by changes in economic conditions.  Good market position, not much influenced by changes in economic conditions.  Market influenced by changes in economic conditions.  Market highly influenced by changes in economic conditions.  Loss of market share along with declining economic conditions.  Operations are not continuous.  Limited competition, including a strong position in the market.  Market share proportional to competitors.  Good market position but many competitors, however can recover if implementing new business strategies.  Business competition is very intense and company operations experience serious problems. Operate...

ASSESSMENT FACTOR L DPK KL D M  Operate at optimum capacity.  Operate at almost optimum capacity.  Do not operate at optimum capacity.  Capacity is not at a level that can support operations. Management quality (independence, experience, and competence) and labor issues  Management is very good.  Management is good.  Management is fairly good.  Management is poor.  Management is very poor.  Labor is adequate and/or has never been recorded as experiencing disputes or labor strikes, or has experienced minor disputes/ strikes but has been resolved well. Labor is generally adequate, has experienced labor disputes/ strikes that have been resolved well but there is still a possibility of recurrence.  Labor is excessive and/or there are disputes or strikes whose impact is quite material on customer business activities.  Labor is excessive in large numbers so as to cause unease and/or there are disputes or strikes whose impact is quite material on customer business activities. Labor is excessive in large numbers so as to cause unease and there are disputes/ strikes with material impact on customer business activities. Support from group or affiliate  Group or affiliate company is stable and supports business.  Group or affiliate company is stable and has no burdensome impact on the customer.  Relationship with group or affiliate company begins to have a burdensome impact on the customer.  Group or affiliate company has provided a burdensome impact on the customer.  Group or affiliate company is very detrimental to the customer. Efforts...

ASSESSMENT FACTOR L DPK KL D M Efforts made by the customer to maintain environmental protection (in accordance with applicable legislation).  Environmental management efforts are good and achieve results at least in accordance with minimum requirements as stipulated in applicable legislation.  Environmental management efforts are poor and have not yet met minimum requirements as stipulated in applicable legislation.  Environmental management efforts are poor and have not yet met minimum requirements as stipulated in applicable legislation, with deviations that are quite material.  The company has not made significant environmental management efforts or has made efforts but has not yet met minimum requirements as stipulated in applicable legislation, with material deviations.  The company has not made significant environmental management efforts or has made efforts but has not yet met minimum requirements as stipulated in applicable legislation, and has the possibility of being sued in court. B. CUSTOMER PERFORMANCE Profit acquisition  Profit acquisition is equal to or higher than profit target and stable.  Profit acquisition meets profit target but has potential to decrease.  Profit acquisition is lower than profit target.  Profit acquisition is very small or negative.  Experiences significant losses.  Losses...

ASSESSMENT FACTOR L DPK KL D M  Operational losses are financed by asset sales.  Customer is unable to meet all obligations and business activities cannot be sustained. Capital structure  Strong capital with debt amounts lower than equity.  Capital is fairly good and owners have the ability to provide additional capital if necessary.  Debt-to-equity ratio is fairly high.  Debt-to-equity ratio is high.  Debt-to-equity ratio is very high. Cash flow  Strong liquidity and working capital.  Liquidity and working capital are generally good.  Liquidity is low and working capital is limited.  Liquidity is very low.  Liquidity problems.  Cash flow analysis shows that the customer can fulfill financing repayment obligations and profit-sharing share  Cash flow analysis shows that although the customer can fulfill financing repayment obligations and profit-sharing share, there are indications of specific issues that, if not addressed, will affect future payments.  Cash flow analysis shows that the customer is only able to provide a profit-sharing share and/or part of the  Cash flow analysis shows the inability to repay financing installments and profit-sharing share.  Cash flow analysis shows that the customer is unable to cover production costs.  New financing  New financing without additional funding sources. profit-sharing share but there are indications of specific issues that, if not addressed, will affect future payments. financing installments. used to meet maturing obligations. used to cover operational losses. Sensitivity to market risk  Portfolio amount sensitive to foreign exchange rate changes is relatively small or has been hedged well.  Some portfolios are sensitive to foreign exchange rate changes but are still controlled.  Business activities are affected by foreign exchange rate changes.  Business activities are threatened due to foreign exchange rate changes.  Business activities are threatened due to foreign exchange rate fluctuations. C. REPAYMENT ABILITY Timeliness of principal and profit- sharing payments a. There are principal installment payments  Principal installment payments are timely or financing  There are overdue principal installments up to 90 (ninety) days or there are overdue principal settlements up to 30 (thirty) days after maturity; and/or  There are overdue principal installments that have exceeded 90 (ninety) days up to 120 (one hundred twenty) days or there are overdue principal settlements exceeding 30 (thirty) days up to 60 (sixty) days after maturity; and/or  There are overdue principal installments that have exceeded 120 (one hundred twenty) days up to 180 (one hundred eighty) days or there are overdue principal settlements exceeding 60 (sixty) days up to 90 (ninety) days after maturity; and/or  There are overdue principal installments that have exceeded 180 (one hundred eighty) days or there are overdue principal settlements exceeding 90 (ninety) days after maturity; and/or  Profit-sharing ratio (RBH) to principal payment (PBH) ratio is greater than or equal to 80% (eighty percent).  Profit-sharing ratio (RBH) to principal payment (PBH) ratio is greater than 50% (fifty percent) and less than 80% (eighty percent).  Profit-sharing ratio (RBH) to principal payment (PBH) ratio is greater than 50% (fifty percent) and less than 80% (eighty percent) for a period of more than 1 (one) period up to 6 (six) periods of cumulative payments or  Profit-sharing ratio (RBH) to principal payment (PBH) ratio is greater than 50% (fifty percent) and less than 80% (eighty percent) for a period of more than 6 (six) up to 9 (nine) periods of cumulative payments or  Profit-sharing ratio (RBH) to principal payment (PBH) ratio is greater than 50% (fifty percent) and less than 80% (eighty percent) for more than 9 (nine) periods of cumulative payments or Profit-sharing ratio (RBH) to principal payment (PBH) ratio is equal to or Profit-sharing ratio (RBH) to principal payment (PBH) ratio is equal to or less than 50% (fifty percent) up to 3 (three) periods of cumulative payments.  (RBH ≥ 80% PBH)  (50% < RBH/PBH < 80%) Profit-sharing ratio (RBH) to principal payment (PBH) ratio is equal to or less than 50% (fifty percent) up to 3 (three) periods of cumulative payments.  (50% < RBH/PBH < 80%) Profit-sharing ratio (RBH) to principal payment (PBH) ratio is equal to or less than 50% (fifty percent) for a period of more than 3 (three) up to 6 (six) periods of cumulative payments).  (50% < RBH/PBH < 80% for a period of more than 1 (one) period up to 6 (six) periods of cumulative payments or RBH/PBH ≤ 50% up to 3 (three) periods of cumulative payments). Profit-sharing ratio (RBH) to principal payment (PBH) ratio is equal to or less than 50% (fifty percent) for a period of more than 3 (three) up to 6 (six) periods of cumulative payments).  (50% < RBH/PBH < 80% for a period of more than 6 (six) up to 9 (nine) periods of cumulative payments or RBH/PBH ≤ 50% for a period of more than 3 (three) up to 6 (six) periods of cumulative payments). less than 50% (fifty percent) for more than 6 (six) periods of cumulative payments).  (50% < RBH/PBH < 80% for more than 9 (nine) periods of cumulative payments or RBH/PBH ≤ 50% for more than 6 (six) periods of cumulative payments). (b. No principal installment payments  Financing has not yet matured; and  There are overdue principal settlements that have not exceeded 30 (thirty) days after maturity; and/or  There are overdue principal settlements exceeding 30 (thirty) days up to 60 (sixty) days after maturity; and/or  There are overdue principal settlements exceeding 60 (sixty) days up to 90 (ninety) days after maturity; and/or  There are overdue principal settlements exceeding 90 (ninety) days after maturity; and/or  Profit-sharing ratio (RBH) to principal payment (PBH) ratio is greater than or equal to 80% (eighty percent).  Profit-sharing ratio (RBH) to principal payment (PBH) ratio is greater than 50% (fifty percent) and less than 80% (eighty percent).  Profit-sharing ratio (RBH) to principal payment (PBH) ratio is greater than 50% (fifty percent) and less than 80% (eighty percent) for a period of more than 1 (one) period up to 6 (six) periods of cumulative payments or Profit-sharing ratio (RBH) to principal payment (PBH) ratio is equal to or less than 50% (fifty  Profit-sharing ratio (RBH) to principal payment (PBH) ratio is greater than 50% (fifty percent) and less than 80% (eighty percent) for a period of more than 6 (six) up to 9 (nine) periods of cumulative payments or Profit-sharing ratio (RBH) to principal payment (PBH) ratio is equal to or less than 50% (fifty  Profit-sharing ratio (RBH) to principal payment (PBH) ratio is greater than 50% (fifty percent) and less than 80% (eighty percent) for more than 9 (nine) periods of cumulative payments or Profit-sharing ratio (RBH) to principal payment (PBH) ratio is equal to or less than 50% (fifty percent) for more than 6 (six) periods of cumulative payments).

ASSESSMENT FACTOR L DPK KL D M  (RBH ≥ 80% PBH)  (50% < RBH/PBH < 80%) percent) up to 3 (three) periods of cumulative payments.  (50% < RBH/PBH < 80% for a period of more than 1 (one) period up to 6 (six) periods of cumulative payments or RBH/PBH ≤ 50% up to 3 (three) periods of cumulative payments). percent) for a period of more than 3 (three) up to 6 (six) periods of cumulative payments).  (50% < RBH/PBH < 80% for a period of more than 6 (six) up to 9 (nine) periods of cumulative payments or RBH/PBH ≤ 50% for more than 3 (three) up to 6 (six) periods of cumulative payments). periods of cumulative payments).  (50% < RBH/PBH < 80% for more than 9 (nine) periods of cumulative payments or RBH/PBH ≤ 50% for more than 6 (six) periods of cumulative payments). Availability and accuracy of customer financial information  Customer always submits financial information regularly and accurately.  Customer submits financial information regularly and accurately.  Customer submits financial information irregularly but still accurately.  Customer submits financial information irregularly and is doubtful.  Customer does not submit financial information or cannot be trusted. Document completeness of Financing  Financing documentation is complete and mortgage encumbrance is strong.  Financing documentation is complete and mortgage encumbrance is strong.  Financing documentation is incomplete and mortgage encumbrance is weak.  Financing documentation is incomplete and mortgage encumbrance is weak.  Financing documentation and/or mortgage encumbrance does not exist. Compliance with Financing agreements  No violations of Financing agreements.  Violations of Financing agreements that are non-principled.  Violations of principal requirements in Financing agreements that are quite principled.  Violations of principal requirements in Financing agreements that are principled.  Violations of principal requirements in Financing agreements that are highly principled. Suitability of facility usage  Fund usage according to Financing application.  Fund usage is less suitable than Financing application, but the amount is not material.  Fund usage is less suitable than Financing application with a quite material amount.  Fund usage is less suitable than Financing application with a material amount.  Most fund usage is not suitable than Financing application.  Amount and type of facilities given are in accordance with needs.  Amount and type of facilities given are larger than needs, but the amount is not material.  Amount and type of facilities given are larger than needs with a quite material amount.  Amount and type of facilities given are larger than needs with a material amount.  Amount and type of facilities given are larger than needs with a very material amount.  Financing extension in accordance with  Financing extension is less suitable than customer need analysis.  Financing extension is not in accordance with customer need analysis (financing extension to hide financial difficulties).  Financing extension is not in accordance with customer need analysis (financing extension to hide financial difficulties) with quite material deviations. analysis...

ASSESSMENT FACTOR L DPK KL D M analysis of customer needs. with customer need analysis. customer need analysis (financing extension to hide financial difficulties) with quite material deviations. customer need analysis. Fairness of payment source for obligations  Payment source can be clearly identified and agreed upon by the bank and customer.  Payment source can be identified and agreed upon by the bank and customer.  Payment comes from sources other than those agreed.  Payment source is unknown, while the agreed source is no longer possible.  There is no possible payment source.  Payment source is in accordance with the structure/type of Financing received.  Payment source is less suitable than the structure/type of Financing received.  Payment source is less suitable than the structure/type of Financing received in a quite material manner.  Payment source is less suitable than the structure/type of Financing received in a material manner.  Payment source is not suitable with the structure/type of Financing received. 2. FINANCING QUALITY CLASSIFICATION BASED ON SALES AND LOAN CONTRACTS ASSESSMENT FACTOR L DPK KL D M A. BUSINESS PROSPECTS Potential business growth  Potential for growth of customer business activities is good.  Potential for growth of customer business activities is limited.  Potential for growth of customer business activities is very limited or does not experience growth.  Customer business activities decline.  Customer business viability is highly doubtful and difficult to recover.  High probability that business activities will cease. Market conditions and customer position in competition  Stable market and not influenced by changes in economic conditions.  Good market position, not much influenced by changes in economic conditions.  Market influenced by changes in economic conditions.  Market highly influenced by changes in economic conditions.  Loss of market share along with declining economic conditions. Operations are not continuous.  Limited competition, including a strong position in the market.  Operate at optimum capacity.  Market share proportional to competitors. Operate at almost optimum capacity.  Good market position but many competitors, however can recover if implementing new business strategies.  Do not operate at optimum capacity.  Business competition is very intense and company operations experience serious problems.  Capacity is not at a level that can support...

FACTOR ASSESSMENT L DPK KL D M Supporting operations. Management quality (independence, experience, and competence) and labor issues

• Management is very good.
• Management is good. • Management is fairly good.
• Management is poor.
• Management is very bad.
• Labor is adequate and/or has never been recorded as experiencing labor disputes or strikes, or has experienced minor disputes/ strikes that were resolved well.
• Labor is generally adequate, has experienced labor disputes/ strikes that were resolved well but there is still a possibility of recurrence.
• Labor is excessive and/or there are disputes or strikes that have a fairly material impact on the customer's business activities.
• Labor is excessive in large numbers, potentially causing unrest and/or there are disputes or strikes that have a fairly material impact on the customer's business activities.
• Labor is excessive in large numbers, causing unrest and there are labor disputes/strikes with a material impact on the customer's business activities. Support from group or affiliate
• Group or affiliate company is stable and supports business.
• Group or affiliate company is stable and does not have a burdensome impact on the customer.
• Relationship with group or affiliate company is starting to have a burdensome impact on the customer.
• Group or affiliate company has provided a burdensome impact on the customer.
• Group or affiliate company is very detrimental to the customer. Efforts...

FACTOR ASSESSMENT L DPK KL D M Efforts made by the customer to maintain the environment (in accordance with applicable legislation)

• Environmental management efforts are good and achieve results that are at least in accordance with minimum requirements as stipulated in applicable legislation.
• Environmental management efforts are poor and do not meet minimum requirements as stipulated in applicable legislation.
• Environmental management efforts are poor and do not meet minimum requirements as stipulated in applicable legislation, with deviations that are fairly material.
• The company has not made meaningful environmental management efforts or has made efforts but has not met minimum requirements as stipulated in applicable legislation, with deviations that are material.
• The company has not made meaningful environmental management efforts or has made efforts but has not met minimum requirements as stipulated in applicable legislation, and has the possibility of being sued in court. B. CUSTOMER PERFORMANCE Profit Acquisition
• Profit acquisition is the same or higher compared to profit targets and is stable.
• Profit acquisition is consistent with profit targets but has the potential to decline.
• Profit acquisition is lower than profit targets.
• Profit acquisition is very small or negative.
• Operational losses are financed by asset sales.
• Experiencing significant losses.
• Customers are unable to meet all obligations and business activities cannot...

FACTOR ASSESSMENT L DPK KL D M be maintained. Capital Structure

• Capital is strong with debt amounts lower than capital.
• Capital is fairly good and owners have the ability to provide additional capital if necessary.
• Debt-to-equity ratio is fairly high.
• Debt-to-equity ratio is high.
• Debt-to-equity ratio is very high. Cash Flow
• Liquidity and working capital are strong.
• Liquidity and working capital are generally good.
• Liquidity is poor and working capital is limited.
• Liquidity is very low.
• Liquidity problems.
• Cash flow analysis shows that customers can meet principal and margin payment obligations without support from additional funding sources.
• Cash flow analysis shows that although customers can meet principal and margin payment obligations but there are indications of certain problems that if not addressed will affect...

FACTOR ASSESSMENT L DPK KL D M affect payments in the future. Sensitivity to market risk

• The amount of portfolio that is sensitive to changes in foreign exchange rates is relatively small or has been hedged well.
• Several portfolios are sensitive to changes in foreign exchange rates but are still controlled.
• Business activities are affected by changes in foreign exchange rates.
• Business activities are threatened by changes in foreign exchange rates.
• Business activities are threatened by fluctuations in foreign exchange rates. C. REPAYMENT ABILITY Timeliness of principal and margin payments
• Installment payments are on time and there are no arrears.
• There are arrears on principal and/or margin installment payments that have not exceeded 90 (ninety) days.
• There are arrears on principal and/or margin installment payments that have exceeded 90 (ninety) days up to 180 (one hundred eighty) days.
• There are arrears on principal and/or margin installment payments that have exceeded 180 (one hundred eighty) days up to 270 (two hundred seventy) days.
• There are arrears on principal and/or margin installment payments that have exceeded 270 (two hundred seventy) days. Availability and accuracy of information
• Customers always submit financial information
• Customers submit financial information
• Customers submit financial information
• Customers submit financial information
• Customers do not submit financial information...

FACTOR ASSESSMENT L DPK KL D M financial information of the customer financial information regularly and accurately. financial information regularly and accurately. financial information irregularly but still accurate. financial information irregularly and doubtful. or cannot be trusted. Completeness of Financing Documentation

• Financing Documentation is complete and mortgage binding is strong.
• Financing Documentation is complete and mortgage binding is strong.
• Financing Documentation is incomplete and mortgage binding is weak.
• Financing Documentation is incomplete and mortgage binding is weak.
• Financing Documentation and/or mortgage binding does not exist. Compliance with Financing Agreements
• There are no violations of Financing Agreements.
• Violations of Financing Agreements that are not principled.
• Violations of core requirements in Financing Agreements that are fairly principled.
• Violations of core requirements in Financing Agreements that are principled.
• Violations of core requirements in Financing Agreements that are very principled. Appropriateness of fund usage
• Fund usage is in accordance with the Financing application.
• Fund usage is less in accordance with the Financing application, but the amount is not material.
• Fund usage is less in accordance with the Financing application with an amount that is fairly material.
• Fund usage is less in accordance with the Financing application with an amount that is material.
• Most fund usage is not in accordance with the Financing application.
• The amount and type of facilities provided are in accordance with needs.
• The amount and type of facilities provided are larger than needs, but the amount is not material.
• The amount and type of facilities provided are larger than needs with an amount that is fairly material.
• The amount and type of facilities provided are larger than needs with an amount that is material.
• The amount and type of facilities provided are larger than needs with an amount that is very material. Extension...

FACTOR ASSESSMENT L DPK KL D M

• Financing Extension is in accordance with the analysis of customer needs.
• Financing Extension is less in accordance with the analysis of customer needs.
• Financing Extension is not in accordance with the analysis of customer needs (Financing Extension to conceal financial difficulties).
• Financing Extension is not in accordance with the analysis of customer needs (Financing Extension to conceal financial difficulties) with deviations that are fairly material.
• Financing Extension without analysis of customer needs.

3. CLASSIFICATION OF FINANCING QUALITY BASED ON LEASE AGREEMENTS (IJARAH) FACTOR ASSESSMENT L DPK KL D M A. BUSINESS PROSPECTS Growth Potential

• Growth potential of customer business activities is good.
• Growth potential of customer business activities is limited.
• Growth potential of customer business activities is very limited or
• Customer business activities are declining.
• Customer business sustainability is highly doubtful and difficult to recover. not...

FACTOR ASSESSMENT L DPK KL D M experiencing growth.

• High probability business activities will be halted. Market conditions and customer position in competition
• Stable market and not influenced by changes in economic conditions.
• Market position is good, not much influenced by changes in economic conditions.
• Market is influenced by changes in economic conditions.
• Market is highly influenced by changes in economic conditions.
• Loss of market in line with downward economic conditions.
• Limited competition, including strong position in the market.
• Market share is comparable to competitors.
• Market position is fairly good but there are many competitors, but can recover if implementing new business strategies.
• Business competition is very intense and company operations experience serious problems. Management quality (independence, experience, and competence) and labor issues
• Management is very good.
• Management is good. • Management is fairly good.
• Management is poor.
• Management is very bad.
• Labor is adequate and/or has never been recorded as experiencing disputes or strikes.
• Labor is generally adequate, has experienced disputes/ strikes that have been resolved well but there is still a possibility of recurrence.
• Labor is excessive and/or there are disputes or strikes that have a fairly material impact on
• Labor is excessive in large numbers, potentially causing unrest and/or there are
• Labor is excessive in large numbers, causing unrest and there are labor...

FACTOR ASSESSMENT L DPK KL D M labor disputes that were resolved well but there is still a possibility of recurrence. customer's business activities. disputes or strikes that have a fairly material impact on customer's business activities. disputes/strikes labor with a material impact on customer's business activities. Support from group or affiliate

• Group or affiliate company is stable and supports business.
• Group or affiliate company is stable and does not have a burdensome impact on the customer.
• Relationship with group or affiliate company is starting to have a burdensome impact on the customer.
• Group or affiliate company has provided a burdensome impact on the customer.
• Group or affiliate company is very detrimental to the customer. Efforts made by the customer to maintain the environment (in accordance with applicable legislation)
• Environmental management efforts are good and achieve results that are at least in accordance with minimum requirements as stipulated in applicable legislation-
• Environmental management efforts are poor and do not meet minimum requirements as stipulated in applicable legislation.
• Environmental management efforts are poor and do not meet minimum requirements as stipulated in applicable legislation, with deviations
• The company has not made meaningful environmental management efforts or has made efforts but has not met minimum requirements as stipulated in applicable legislation, with deviations that are material.
• The company has not made meaningful environmental management efforts or has made efforts but has not met minimum requirements as stipulated in applicable legislation, and has the possibility of being sued in court. B. CUSTOMER PERFORMANCE Profit Acquisition
• Profit acquisition is the same or higher compared to profit targets and is stable.
• Profit acquisition is consistent with profit targets but has the potential to decline.
• Profit acquisition is lower than profit targets.
• Profit acquisition is very small or negative.
• Operational losses are financed by asset sales.
• Experiencing significant losses.
• Customers are unable to meet all obligations and business activities cannot be maintained. Capital Structure
• Capital is strong with debt amounts lower than capital.
• Capital is fairly good and owners have the ability to provide additional
• Debt-to-equity ratio is fairly high.
• Debt-to-equity ratio is high.
• Debt-to-equity ratio is very high. capital...

FACTOR ASSESSMENT L DPK KL D M additional capital if necessary. Cash Flow

• Liquidity and working capital are strong.
• Liquidity and working capital are generally good.
• Liquidity is poor and working capital is limited.
• Liquidity is very low.
• Liquidity problems.
• Cash flow analysis shows that customers can meet lease payment obligations without support from additional funding sources.
• Cash flow analysis shows that although customers can meet lease payment obligations but there are indications of certain problems that if not addressed will affect payments in the future.
• Cash flow analysis shows that customers can only pay part of the lease.
• Cash flow analysis shows inability to pay lease.
• Cash flow analysis shows that customers are unable to cover production costs.
• New financing is used to meet obligations that are due.
• New financing is used to cover operational losses. Sensitivity to market risk
• The amount of portfolio that is sensitive to changes in foreign exchange rates is relatively small or
• Several portfolios are sensitive to changes in foreign exchange rates but are still controlled.
• Business activities are affected by changes in foreign exchange rates.
• Business activities are threatened by changes in foreign exchange rates.
• Business activities are threatened by fluctuations in foreign exchange rates. has...

FACTOR ASSESSMENT L DPK KL D M been hedged well. C. REPAYMENT ABILITY Timeliness of lease payments

• Lease payments are on time.
• There are arrears on lease payments that have not exceeded 90 (ninety) days.
• There are arrears on lease payments that have exceeded 90 (ninety) days up to 180 (one hundred eighty) days. There are arrears on lease payments that have exceeded 180 (one hundred eighty) days up to 270 (two hundred seventy) days.
• There are arrears on lease payments that have exceeded 270 (two hundred seventy) days. Availability and accuracy of customer financial information
• Customers always submit financial information regularly and accurately.
• Customers submit financial information regularly and accurately.
• Customers submit financial information irregularly but still accurate.
• Customers submit financial information irregularly and doubtful.
• Customers do not submit financial information or cannot be trusted. Completeness of Financing Documentation
• Financing Documentation is complete and mortgage binding is strong.
• Financing Documentation is complete and mortgage binding is strong.
• Financing Documentation is incomplete and mortgage binding is weak.
• Financing Documentation is incomplete and mortgage binding is weak.
• Financing Documentation and/or mortgage binding does not exist. Compliance with Financing Agreements
• There are no
• Violations of
• Violations of
• Violations of
• Violations of

FACTOR ASSESSMENT L DPK KL D M with Financing Agreements violations of Financing Agreements. Financing Agreements that are not principled. core requirements in Financing Agreements that are fairly principled. core requirements in Financing Agreements that are principled. core requirements in Financing Agreements that are very principled. Appropriateness of fund usage

• Fund usage is in accordance with the Financing application.
• Fund usage is less in accordance with the Financing application, but the amount is not material.
• Fund usage is less in accordance with the Financing application with an amount that is fairly material.
• Fund usage is less in accordance with the Financing application with an amount that is material.
• Most fund usage is not in accordance with the Financing application.
• The amount and type of facilities provided are in accordance with needs.
• The amount and type of facilities provided are larger than needs, but the amount is not material.
• The amount and type of facilities provided are larger than needs with an amount that is fairly material.
• The amount and type of facilities provided are larger than needs with an amount that is material.
• The amount and type of facilities provided are larger than needs with an amount that is very material.
• Financing Extension is in accordance with the analysis of customer needs.
• Financing Extension is less in accordance with the analysis of customer needs.
• Financing Extension is not in accordance with the analysis of customer needs (Financing Extension
• Financing Extension is not in accordance with the analysis of customer needs (Financing Extension
• Financing Extension without analysis of customer needs. to...

FACTOR ASSESSMENT L DPK KL D M to conceal financial difficulties). to conceal financial difficulties) with deviations that are fairly material. 4. CLASSIFICATION OF QUALITY OF HAJJ FINANCING (TALANGAN HAJI) FACTOR ASSESSMENT L DPK KL D M REPAYMENT ABILITY Timeliness of principal payment - no principal installment payments Financing has not due. There are arrears on principal settlement that have not exceeded 30 (thirty) days after due date. There are arrears on principal settlement exceeding 30 (thirty) days up to 60 (sixty) days after due date. There are arrears on principal settlement exceeding 60 (sixty) days up to 90 (ninety) days after due date. There are arrears on principal settlement exceeding 90 (ninety) days after due date. Availability and accuracy of customer financial information

• Customers always submit financial information regularly and accurately.
• Customers submit financial information regularly and accurately.
• Customers submit financial information irregularly but still accurate.
• Customers submit financial information irregularly and doubtful.
• Customers do not submit financial information or cannot be trusted. Completeness of financing documentation
• Financing documentation is complete and mortgage binding is strong.
• Financing documentation is complete and mortgage binding is strong.
• Financing documentation is incomplete and mortgage binding is weak.
• Financing documentation is incomplete and mortgage binding is weak.
• Financing documentation and/or mortgage binding does not exist. Compliance with financing agreements
• There are no violations of financing agreements.
• Violations of financing agreements that are not principled.
• Violations of core requirements in financing agreements that are fairly principled.
• Violations of core requirements in financing agreements that are principled.
• Violations of core requirements in financing agreements that are very principled. Appropriateness of facility usage
• Fund usage is in accordance with the application of financing.
• Fund usage is less in accordance with the application of financing, but the amount is not material.
• Fund usage is less in accordance with the application of financing with an amount that is fairly material.
• Fund usage is less in accordance with the application of financing with an amount that is material.
• Most fund usage is not in accordance with the application of financing.
• The amount and type of facilities provided are in accordance with needs.
• The amount and type of facilities provided are larger than needs, but the amount is not material.
• The amount and type of facilities provided are larger than needs with an amount that is fairly material.
• The amount and type of facilities provided are larger than needs with an amount that is material.
• The amount and type of facilities provided are larger than needs with an amount that is very material.
• Financing Extension
• Financing Extension
• Financing Extension
• Financing Extension
• Financing Extension

FACTOR ASSESSMENT L DPK KL D M financing is in accordance with the analysis of customer needs. financing is less in accordance with the analysis of customer needs. financing is not in accordance with the analysis of customer needs (extension of financing to conceal financial difficulties). financing is not in accordance with the analysis of customer needs (extension of financing to conceal financial difficulties) with deviations that are fairly material. financing without analysis of customer needs. Fairness of source of payment of obligations

• Source of payment can be identified clearly and agreed upon by the bank and customer.
• Source of payment can be identified and agreed upon by the bank and customer.
• Payment comes from sources other than those agreed upon.
• Source of payment is unknown, while the agreed source is no longer possible.
• There are no possible sources of payment.
• Source of payment is in accordance with the structure/type of financing received.
• Source of payment is less in accordance with structure/type of financing received.
• Source of payment is less in accordance with structure/type of financing received fairly materially.
• Source of payment is less in accordance with structure/type of financing received materially.
• Source of payment is not in accordance with structure/type of financing received. Established in Jakarta On March 10, 2015 EXECUTIVE HEAD OF BANKING SUPERVISOR FINANCIAL SERVICES AUTHORITY, Signed, NELSON TAMPUBOLON SUPPLEMENT TO THE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2015 NUMBER Copy in accordance with the original Director of Legal Affairs I Legal Department, Signed, Sudarmaji

APPENDIX II CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 8/SEOJK.03/2015 REGARDING THE ASSESSMENT OF ASSET QUALITY FOR GENERAL ISLAMIC BANKS AND ISLAMIC BUSINESS UNITS

Table 1 Procedure for Financing Restructuring Type of Contract RSC RCD RST T-D/T-B Conversion of Contract to Other Type of Contract Conversion to PMS*) Murabahah and Istishna’ V*) V Qardh V V - - V Mudharabah and Musyarakah V - V Ijarah and IMBT V V - V) V Ijarah Multijasa V V - - - Note: *) = Converted to Mudharabah, Musyarakah, or IMBT contracts ) = Converted to Mudharabah or Musyarakah contracts *) = Temporary Capital Participation using Musyarakah contract RSC = Rescheduling RCD = Reconditioning RST = Restructuring T-D/T-B = Additional Funds/Additional Goods PMS = Temporary Capital Participation IMBT = Ijarah Muntahiya Bittamlik Established in Jakarta on March 10, 2015 EXECUTIVE HEAD OF BANKING SUPERVISOR FINANCIAL SERVICES AUTHORITY, Signed, NELSON TAMPUBOLON Copy in accordance with the original Director of Legal Affairs I Legal Department, Signed, Sudarmaji