SEOJK on Fulfillment of Community Bank Regulations and Transformation of Village Credit Institutions Granted Status as Community Banks

To:
Village Credit Institutions
At your place.

COPY
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 19/SEOJK.03/2016 ON FULFILLMENT OF COMMUNITY BANK REGULATIONS AND TRANSFORMATION OF VILLAGE CREDIT INSTITUTIONS GRANTED STATUS AS COMMUNITY BANKS

In connection with the Financial Services Authority Regulation Number 10/POJK.03/2016 on Fulfillment of Community Bank Regulations and Transformation of Village Credit Institutions Granted Status as Community Banks (State Gazette of the Republic of Indonesia Year 2016 Number 24), hereinafter referred to as the POJK on BKD, the Financial Services Authority needs to regulate the implementation regarding Village Credit Institutions in this Financial Services Authority Circular Letter as follows:

I. GENERAL PROVISIONS

Based on Law Number 7 of 1992 on Banking as amended by Law Number 10 of 1998, Village Credit Institutions (BKD) are granted status as Community Banks (BPR) by meeting the requirements and procedures established by Government Regulations.
As a BPR, BKD is required to fulfill regulations regarding BPR, including among others institutional structure, prudential principles, reporting and financial transparency, and the application of accounting standards for BPR.
In practice, not all BKD are able to fulfill BPR regulations because BKD does not have legal entity status and has unique characteristics, namely simple management and operational hours not every working day. Legal entity status and the uniqueness of BKD cause BKD to be exempted from every regulation applicable to BPR.
In order to fulfill all BPR regulations as mentioned above, BKD needs to be given achievement stages with measurable timeframes, which are formulated in an action plan.
However, for BKD that based on its considerations cannot fulfill BPR regulations, it may choose to transform (transform) business activities into a Microfinance Institution (LKM) or transform the legal entity into a Village-Owned Enterprise (BUM Desa) or a business unit of BUM Desa, which is formulated in an action plan.
The action plan as mentioned in numbers 4 and 5 is prepared with systematic stages and submitted to the Financial Services Authority no later than December 31, 2016, and revision of the action plan no later than December 31, 2017, unless requested by the Financial Services Authority.

II. FULFILLMENT OF BPR REGULATIONS

BKD is required to fulfill BPR regulations, including among others institutional structure, prudential principles, reporting and financial transparency, and the application of accounting standards for BPR. The fulfillment of BPR regulations is implemented through steps referring to the following regulations:

A. Institutional Structure

As a BPR, BKD fulfills regulations regarding BPR institutional structure, which among others refers to:

Financial Services Authority Regulation Number 20/POJK.03/2014 on Community Banks, hereinafter referred to as the POJK on BPR, and Financial Services Authority Circular Letter Number 16/SEOJK.03/2015 on Community Banks, hereinafter referred to as the SEOJK on BPR, namely:

a. Legal Entity Form

The formation of a BPR legal entity by BKD can be in the form of a Limited Liability Company (PT), Cooperative, Regional Public Enterprise, or Regional Limited Liability Company. The procedure for forming the legal entity is as follows:

for BKD that chooses to have a Limited Liability Company legal entity, the formation of the Limited Liability Company legal entity refers to Laws regarding Limited Liability Companies;
for BKD that chooses to have a legal entity:
a) Regional Public Enterprise, the formation of the Regional Public Enterprise legal entity refers to Laws regarding Regional Government; b) Regional Limited Liability Company, the formation of the Regional Limited Liability Company legal entity refers to:
(1) Laws regarding Regional Government; and (2) Laws regarding Limited Liability Companies;
for BKD that chooses to have a Cooperative legal entity, the formation of the Cooperative legal entity refers to Laws regarding Cooperatives.

In order to form the legal entities mentioned above, in addition to referring to the POJK and SEOJK on BPR and legislation as mentioned in numbers 1), 2), and 3) above, the fulfillment of BPR legal entity requirements by BKD also follows the mechanism as regulated in Law Number 6 of 2014 on Villages and other implementing regulations.

b. Board of Directors Members and Board of Commissioners Members

The Board of Directors and Board of Commissioners members each must number at least 2 (two) persons.
One of the BPR Board of Directors members oversees the compliance function.
Candidates for BPR Board of Directors and Board of Commissioners members must obtain approval from the Financial Services Authority before carrying out their duties and functions in their positions.
Requirements and procedures for obtaining approval from the Financial Services Authority for candidates for BPR Board of Directors and Board of Commissioners refer to the POJK and SEOJK on BPR and regulations regarding the assessment of competence and propriety for key parties of financial service institutions, specifically for BPR, including among others as follows:

a) Board of Directors members must have:
(1) formal education at least at the diploma three level; (2) adequate and relevant knowledge in the banking field with their position; (3) experience and expertise in the banking and/or non-banking financial service institution field; (4) ability to conduct strategic management in the context of developing a healthy BPR; (5) a valid certificate of graduation issued by the Professional Certification Body; and (6) the ability to meet integrity, competence, and financial reputation requirements as mentioned in the regulations regarding the assessment of competence and propriety for key parties of financial service institutions, specifically for BPR.

b) Board of Commissioners members must have:
(1) adequate and relevant knowledge in the banking field with their position and/or experience in the banking and/or non-banking financial service institution field; (2) a valid certificate of graduation issued by the Professional Certification Body; and (3) the ability to meet integrity, competence, and financial reputation requirements as mentioned in the regulations regarding the assessment of competence and propriety for key parties of financial service institutions, specifically for BPR.
Requests to obtain approval for candidates for BPR Board of Directors and/or Board of Commissioners members are submitted via letter to the Financial Services Authority. An example of the request letter is as shown in Appendix I.1.
The request letter to obtain approval for candidates for BPR Board of Directors members as mentioned in number 4) is submitted by attaching supporting documents as shown in Appendix I.2, namely:
a) list of Board of Directors members; b) documents stating the identity of each candidate for BPR Board of Directors members, including:
(1) photocopy of identification, namely a valid Resident Identity Card (KTP); (2) curriculum vitae; (3) latest passport photo size 4x6 cm; and (4) family tree list in relationships up to the second degree or in-laws; c) example of signatures and initials of each candidate for BPR Board of Directors members; d) stamped declaration letter from each candidate for BPR Board of Directors members stating that the person concerned:
(1) is willing to comply with applicable laws and regulations, especially in the banking field; (2) has never been sentenced for being proven to have committed Specific Criminal Acts that have been decided by a court that has had permanent legal force within 20 (twenty) years prior to the date of the request submission; (3) is not currently subject to sanctions prohibiting them from becoming shareholders, Board of Directors members, Board of Commissioners members, and/or Executive Officials of Financial Institutions; (4) does not have non-performing loans and/or financing; (5) has never been declared bankrupt and has never been a shareholder, Board of Directors, or Board of Commissioners who were declared guilty causing a company to be declared bankrupt based on court decisions within 5 (five) years prior to the date of the request submission; (6) does not hold concurrent positions in banks, non-bank companies, and/or other institutions; (7) meets regulations governing that the majority of Board of Directors members do not have family or in-law relationships up to the second degree with other Board of Directors members or Board of Commissioners members; and (8) is not currently undergoing legal processes and/or competence and propriety assessment processes at a bank. e) photocopy of the highest education diploma three certificate legalized by the competent institution; f) letter/certificate stating adequate and relevant knowledge in the banking field with their position; g) letter/certificate stating experience and expertise in the banking and/or non-banking financial service institution field for at least 2 (two) years; and h) photocopy of a valid certificate of graduation from the Professional Certification Body.
Requests to obtain approval for candidates for BPR Board of Commissioners members as mentioned in number 4) are submitted by attaching supporting documents as shown in Appendix I.3, namely:
a) list of BPR Board of Commissioners members; b) documents stating the identity of each candidate for BPR Board of Commissioners members, including:
(1) photocopy of identification, namely a valid Resident Identity Card (KTP); (2) curriculum vitae; (3) latest passport photo size 4x6 cm; and (4) family tree list in relationships up to the second degree or in-laws; c) example of signatures and initials of each candidate for BPR Board of Commissioners members; d) letter/certificate stating adequate and relevant knowledge in the banking field with their position and/or experience in the banking and/or non-banking financial service institution field, for candidates for BPR Board of Commissioners members; e) stamped declaration letter from each candidate for BPR Board of Commissioners members stating that the person concerned:
(1) is willing to comply with applicable laws and regulations, especially in the banking field; and (2) has never been sentenced for being proven to have committed Specific Criminal Acts that have been decided by a court that has had permanent legal force within 20 (twenty) years prior to the date of the request submission; f) is not currently subject to sanctions prohibiting them from becoming shareholders, Board of Directors members, Board of Commissioners members, and/or Executive Officials of Financial Institutions; g) does not have non-performing loans and/or financing; h) has never been declared bankrupt and has never been a shareholder, Board of Directors, or Board of Commissioners who were declared guilty causing a company to be declared bankrupt based on court decisions within 5 (five) years prior to the date of the request submission; i) does not hold concurrent positions as:
(1) Board of Commissioners members exceeding what is permitted in applicable regulations; and/or (2) Board of Directors members or Executive Officials at BPR, Sharia Community Banks (BPRS), and/or Commercial Banks; j) meets regulations governing that the majority of Board of Commissioners members do not have family or in-law relationships up to the second degree with other Board of Commissioners members or Board of Directors members; k) is not currently undergoing legal processes and/or competence and propriety assessment processes at a bank; l) is willing to present supervision results regarding the BPR if requested by the Financial Services Authority; and m) photocopy of a valid certificate of graduation from the Professional Certification Body.

Financial Services Authority Regulation Number 4/POJK.03/2015 on the Application of Corporate Governance for Community Banks, as well as Financial Services Authority Circular Letter Number 5/SEOJK.03/2016 on the Application of Corporate Governance for Community Banks, Financial Services Authority Circular Letter Number 6/SEOJK.03/2016 on the Application of Compliance Functions for Community Banks, and Financial Services Authority Circular Letter Number 7/SEOJK.03/2016 on Standards for the Implementation of Internal Audit Functions for Community Banks, namely:

a. Corporate Governance is BPR corporate governance that applies principles of transparency, accountability, responsibility, independence, and fairness.

b. BPR is required to apply Corporate Governance in all business activities at all levels or organizational tiers, manifested at least in the following forms:

execution of duties and responsibilities of the Board of Directors;
execution of duties and responsibilities of the Board of Commissioners;
completeness and execution of committee duties or functions;
handling conflicts of interest;
application of compliance, internal audit, and external audit functions;
application of risk management, including internal control systems;
maximum limits for granting credit;
BPR business plan; and
transparency of financial and non-financial conditions.

c. The application of BPR compliance functions in the organizational structure includes obligations for BPR to:

form an independent compliance unit (compliance unit) from operational units; or
appoint Executive Officials independent from BPR operations to carry out compliance functions.

d. The application of internal audit functions for BPR includes among others:

fulfillment of organizational structure, standard guidelines for the implementation of internal audit functions, and reports related to the implementation of internal audit functions;
obligation to form an Internal Audit Unit (SKAI) or appoint 1 (one) Executive Official responsible for the implementation of internal audit functions, according to the needs and complexity of BPR business operations.

Other relevant legislation regarding BPR institutional structure includes among others:
a. Law Number 7 of 1992 on Banking as amended by Law Number 10 of 1998; b. Law Number 25 of 1992 on Cooperatives;
c. Law Number 40 of 2007 on Limited Liability Companies;
d. Law Number 23 of 2014 on Regional Government; e. Law Number 6 of 2014 on Villages; f. Bank Indonesia Regulation Number 14/9/PBI/2012 on Competence and Propriety Tests (Fit and Proper Test) for Community Banks or Financial Services Authority regulations regulating the assessment of competence and propriety for key parties of financial service institutions; g. Bank Indonesia Circular Letter Number 14/36/DKBU regarding Competence and Propriety Tests (Fit and Proper Test) for Community Banks or its amendments; h. Bank Indonesia Circular Letter Number 15/45/DPNP Regarding Amendments to Bank Indonesia Circular Letter Number 14/36/DKBU regarding Competence and Propriety Tests (Fit and Proper Test) for Community Banks as amended by Bank Indonesia Circular Letter Number 15/45/DPNP or its amendments;
i. Financial Services Authority Regulation Number 44/POJK.03/2015 on Professional Certification for Board of Directors and Board of Commissioners of Community Banks and Sharia Community Banks;
j. Financial Services Authority Regulation Number 12/POJK.03/2016 on Business Activities and Office Network Areas for Community Banks Based on Core Capital; k. Bank Indonesia Board of Directors Decision Number 31/60/KEP/DIR dated July 9, 1998, regarding BPR Work Plans and Reports on the Implementation of Work Plans or Financial Services Authority regulations regulating BPR Business Plans.

B. Prudential Principles

As a trust institution managing public funds, in conducting business activities, BKD is required to fulfill BPR prudential principles, including among others:

Risk Management Application

The fulfillment of BPR Risk Management regulations by BKD refers to Financial Services Authority Regulation Number 13/POJK.03/2015 on the Application of Risk Management for Community Banks and its implementing regulations, which among others regulate the following:

a. Risk Management is a series of methodologies and procedures used to identify, measure, monitor, and control risks arising from all BPR business activities.

b. BPR is required to apply Risk Management as mentioned in letter a, at least including:

Supervision by the Board of Directors and Board of Commissioners.
Adequacy of policies, procedures, and limits, namely:
a) Risk Management policies; b) Risk Management procedures; and c) Risk limit determination.
Adequacy of processes and systems, namely:
a) risk identification, measurement, monitoring, and control processes; and b) Risk Management information systems.
Comprehensive internal control systems.

c. Risks that must be managed in the application of Risk Management include:

Credit risk, namely risks due to debtor and/or other party failures in fulfilling obligations to the BPR;
Operational risk, namely risks caused by inadequacy and/or non-functioning of internal processes, human resource errors, system failures, and/or external issues affecting BPR operations;
Compliance risk, namely risks due to BPR not complying with and/or not implementing laws and regulations and other regulations, including risks due to weaknesses in legal aspects;
Liquidity risk, namely risks due to BPR's inability to fulfill obligations due from funding sources of cash flow and/or high-quality liquid assets that can be pledged, without disrupting BPR activities and/or financial conditions;
Reputation risk, namely risks due to declining levels of stakeholder trust stemming from negative perceptions regarding the BPR; and
Strategic risk, namely risks due to BPR's inappropriateness in making and/or implementing strategic decisions and BPR failures in anticipating changes in the business environment.

Minimum Capital Provision Requirements and Core Capital Fulfillment

The fulfillment of Minimum Capital Provision Requirements and Minimum Core Capital Fulfillment regulations for BPR by BKD refers to Financial Services Authority Regulation Number 5/POJK.03/2015 on Minimum Capital Provision Requirements and Minimum Core Capital Fulfillment for BPR, as well as Financial Services Authority Circular Letter Number 8/SEOJK.03/2016 on Minimum Capital Provision Requirements and Minimum Core Capital Fulfillment for BPR, which among others regulates the following:

a. Minimum Capital Provision Requirements, hereinafter abbreviated as KPMM, is the ratio of capital to Risk-Weighted Assets (RWA) that must be provided by BPR. Risk-Weighted Assets, hereinafter abbreviated as ATMR, is the total balance sheet assets of BKD given weights according to the risk levels attached to each asset position according to regulations.

b. BKD as a BPR is required to provide minimum capital calculated using the KPMM ratio of at least 12% (twelve percent) of ATMR.

c. BKD as a BPR is required to provide core capital of at least 8% (eight percent) of ATMR.

d. BKD as a BPR must have minimum core capital of IDR 6,000,000,000.00 (six billion rupiah) with the following provisions:

BKD with core capital less than IDR 3,000,000,000.00 (three billion rupiah) is required to fulfill minimum core capital of IDR 3,000,000,000.00 (three billion rupiah) no later than December 31, 2019.
BKD as mentioned in number 1) is required to fulfill minimum core capital of IDR 6,000,000,000.00 (six billion rupiah) no later than December 31, 2024.
BKD with 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) is required to fulfill minimum core capital of IDR 6,000,000,000.00 (six billion rupiah) no later than December 31, 2019.

e. Fulfillment of minimum core capital obligations as mentioned in letter d is implemented through among others profit growth, paid-in capital additions, BKD Mergers, or BKD Transfers.

Quality of Productive Assets of BPR

The fulfillment of regulations regarding the Quality of Productive Assets (KAP) of BPR by BKD refers to Bank Indonesia Regulation Number 8/19/PBI/2006 on the Quality of Productive Assets and the Formation of Provisions for Write-offs of Productive Assets for Community Banks, as amended by Bank Indonesia Regulation Number 13/26/PBI/2011, and its implementing regulations or amendments, which among others regulates the following:

a. Productive Assets are the provision of funds in Rupiah to obtain income, in the form of Loans, Bank Indonesia Certificates, and Interbank Fund Placements.

b. Provisions for Write-offs of Productive Assets, hereinafter referred to as PPAP, are reserves that must be formed at a certain percentage of the debit balance (balance) based on the classification of the Quality of Productive Assets.

c. The Quality of Productive Assets in the form of Loans is established in 4 (four) categories, namely Good, Substandard, Doubtful, and Loss.

d. The Quality of Productive Assets in the form of Bank Indonesia Certificates is established as Good.

e. The Quality of Productive Assets in the form of Interbank Fund Placements is established in 3 (three) categories, namely Good, Substandard, and Loss.

f. BPR is required to form PPAP in the form of general PPAP and special PPAP.

g. PPAP as mentioned in letter f is established at least at:

0.5% (zero point five percent) of Productive Assets with Good quality;
10% (ten percent) of Productive Assets with Substandard quality after deducting collateral values;
50% (fifty percent) of Productive Assets with Doubtful quality after deducting collateral values; and
100% (one hundred percent) of Productive Assets with Loss quality after deducting collateral values.

Maximum Limits for Granting Credit of BPR

The fulfillment of regulations regarding the Application of Maximum Limits for Granting Credit of BPR by BKD refers to the regulations of Bank Indonesia Regulation Number 11/13/PBI/2009 on Maximum Limits for Granting Credit for Community Banks and Bank Indonesia Circular Letter Number 11/21/DKBU on Maximum Limits for Granting Credit for Community Banks, and its implementing regulations or amendments, which among others regulates the following:

a. Maximum Limits for Granting Credit, hereinafter referred to as BMPK, is the maximum percentage of realization of fund provision permitted against capital.

b. Fund Provision is the investment of funds in the form of loans and/or interbank fund placements.

c. Fund Provision to all Related Parties is established at a maximum of 10% (ten percent) of Capital.

d. Fund Provision in the form of Interbank Fund Placements to other BPR/BKD that are Unrelated Parties is established at a maximum of 20% (twenty percent) of Capital.

e. Fund Provision in the form of Loans to 1 (one) Unrelated Borrower is established at a maximum of 20% (twenty percent) of Capital.

f. Fund Provision in the form of Loans to 1 (one) group of Unrelated Borrowers is established at a maximum of 30% (thirty percent) of Capital.

g. BKD is prohibited from providing Fund Provision that results in Violations of BMPK in letters c through f above.

Health Level Assessment

BPR is required to maintain health levels always in good condition. In maintaining health levels, BPR is required to assess BPR health levels every month. The assessment refers to Bank Indonesia Board of Directors Decision...

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Indonesia Number 30/12/KEP/DIR regarding the Procedure for Assessing the Health Level of Rural Credit Banks or Financial Services Authority regulations regarding the assessment of BPR health levels.
C. Financial Reporting and Transparency
In the implementation of good governance, BKDs as BPRs are required to submit and announce financial reports in the form of balance sheets, income statements, and explanations, as well as other periodic reports prepared in accordance with accounting standards and recording and reporting guidelines applicable to BPRs, within the time and format stipulated by the Financial Services Authority. Reports that BKDs as BPRs must submit to the Financial Services Authority and announce to the public include:

Monthly Reports
BKDs as BPRs are required to prepare and submit Monthly Reports referring to Bank Indonesia Regulation Number 7/51/PBI/2005 regarding Monthly Reports of Rural Credit Banks and Bank Indonesia Circular Letter Number 15/20/DKBU concerning Monthly Reports of Rural Credit Banks as amended by Bank Indonesia Circular Letter Number 15/39/DKBU, which establishes the following:
a. Monthly BPR Reports, hereinafter referred to as Monthly Reports, are financial reports prepared and presented according to the systematics determined by Bank Indonesia in uniform formats and definitions, and reported using codes and figures. b. Reporting BPRs are required to prepare and submit Monthly Reports to Bank Indonesia/Financial Services Authority online every month, correctly, completely, and on time, covering all financial aspects including balance sheets, administrative accounts, and detailed lists of specific balance sheet items, referring to the preparation guidelines for Monthly Reports regulated by Bank Indonesia.
c. Monthly Reports as referred to in letter b must be submitted by BPRs no later than the 14th

Reports ...
(fourteen) of the following month after the end of the reporting month concerned.

Work Plan and Implementation of Work Plan Reports
BKDs as BPRs are required to prepare and submit Work Plan and Realization of Work Plan Reports referring to Bank Indonesia Board of Directors Decision Number 31/60/KEP/DIR dated July 9, 1998 regarding Work Plans and Reports on the Implementation of Work Plans for BPRs or Financial Services Authority regulations regarding BPR Business Plans, which establishes the following:
a. Work Plan Reports

Work Plans are written documents describing BPR business activities plans within a certain period, including plans to improve business performance, and strategies to realize these plans in accordance with targets and times set, while still paying attention to the fulfillment of prudential regulations and risk management application.
Work Plans must be prepared realistically and must contain at least:
a) plans for fund collection and distribution accompanied by explanations of efforts to achieve established targets; b) projected balance sheets and income statements detailed in 2 (two) semesters; c) human resource development plans; and d) efforts to be made to improve/enhance BPR performance. b. Implementation of Work Plan Reports
Implementation of Work Plan Reports or Business Plan Realization Reports are reports from the BPR Board of Directors regarding the realization of Work Plans/Business Plans up to a certain period.
Reports ...
Supervision Implementation Reports by the Board of Commissioners or Business Plan Supervision Reports are reports from the BPR Board of Commissioners regarding the results of supervision concerning the implementation of Work Plans/Business Plans up to a certain period.
Implementation of Work Plan Reports or Business Plan Realization Reports include:
a) Assessment of Work Plan implementation accompanied by explanations of factors affecting target achievement; and b) Description of problems that may disrupt BPR operational smoothness and efforts that have been and will be taken to overcome them.

Published Financial Reports and Annual Financial Reports
BKDs as BPRs are required to prepare and announce Published Financial Reports and Annual Financial Reports referring to Bank Indonesia Regulation Number 15/3/PBI/2013 dated May 21, 2013 regarding Transparency of Rural Credit Bank Financial Conditions and its implementing regulations, which establishes the following:
a. Published Financial Reports

Published Financial Reports are BPR financial reports prepared based on Accounting Standards applicable to BPRs and published every quarter in accordance with Financial Services Authority regulations;
BKDs as BPRs are required to announce Quarterly Published Financial Reports for the end positions of March, June, September, and December according to the format and procedures stipulated by the Financial Services Authority;
Published Financial Reports for the month of December are prepared based on Annual Financial Reports;

attaching them ...
4) Published Financial Reports must contain at least:
a) financial reports consisting of Balance Sheets, Income Statements, Commitments and Contingency Reports; b) other information consisting of:
(1) Productive Asset Quality (KAP) for placements in other banks, credits granted, both to related parties and unrelated parties.
(2) financial ratios, consisting of Minimum Capital Requirement Obligations, Non-Performing Loans (NPL) and Provisions for Write-offs, Productive Assets, Return on Asset (ROA) and Operating Expenses against Operating Income (BOPO), Cash Ratio, and Loan to Deposit Ratio (LDR). (3) Management structure and composition of Shareholders, including Controlling Shareholders.
5) Quarterly Published Financial Reports as referred to in number 2) must be presented in comparison with Quarterly Published Financial Reports of the previous year;
6) BKDs as BPRs with total assets less than Rp10,000,000,000.00 (ten billion rupiah) are required to announce Published Financial Reports for the end positions of March, June, September, and December in local newspapers or by attaching them to bulletin boards or other media easily readable by the public;
7) BKDs as BPRs with total assets greater than or equal to Rp10,000,000,000.00 (ten billion rupiah) are required:
a) to announce Published Financial Reports for the end positions of March, June, and September in local daily newspapers or by attaching them to bulletin boards or other media easily readable by the public; and b) to announce Published Financial Reports for the end position of December in local daily newspapers and by attaching them to bulletin boards or other media easily readable by the public.
8) Announcements of Published Financial Reports as referred to in numbers 6) and 7) must be done no later than:
a) the end of the following month after the end of the reporting month for Published Financial Reports for the end positions of March, June, and September; and b) the end of the fourth month of the following year after the end of the reporting month for Published Financial Reports for the end position of December. b. Annual Financial Reports

Annual Financial Reports are end-of-year BPR financial reports prepared based on Accounting Standards applicable to BPRs.
BKDs as BPRs are required to prepare and present annual financial reports in the format and scope as stipulated by the Financial Services Authority, consisting of Balance Sheets, Income Statements, Statements of Changes in Equity, Cash Flow Statements, and notes to financial reports, including information on Commitments and Contingencies.
Annual Financial Reports as referred to in letter b must be prepared for 1 (one) Fiscal Year and presented with a comparison of 1 (one) previous Fiscal Year.
For BPRs with total assets greater than or equal to Rp10,000,000,000.00 (ten billion rupiah), Annual Financial Reports submitted in Annual Reports must first be audited by a Public Accountant.

amount ...
D. Action Plans and Reports on the Progress of Realization of Action Plans in the Framework of Fulfilling BPR Requirements In order to fulfill the BPR requirements mentioned above, BKDs must prepare and submit action plans and report on the progress of the realization of action plans in the framework of fulfilling BPR requirements as follows:

Action Plans
a. Action plans must contain at least:

plans for the formation of a legal entity by choosing one of the forms of legal entity such as Limited Liability Company (Perseroan Terbatas), Cooperative, Regional Public Enterprise (Perusahaan Umum Daerah), or Regional Owned Enterprise (Perusahaan Perseroan Daerah). In the formation of the legal entity, BKD ownership must be established first.
plans for the appointment of Board of Directors members and Board of Commissioners members. Proposed candidates for Board of Directors and Board of Commissioners members must meet the requirements as referred to in point II.A.1.b above, which include meeting integrity, competence, and financial reputation requirements;
plans to fulfill BPR core capital amounting to Rp6,000,000,000.00 (six billion rupiah) with the following provisions:
a) BKDs with core capital less than Rp3,000,000,000.00 (three billion rupiah) are required to fulfill minimum core capital of Rp3,000,000,000.00 (three billion rupiah) no later than December 31, 2019. b) BKDs as referred to in letter a) are required to fulfill minimum core capital of Rp6,000,000,000.00 (six billion rupiah) no later than December 31, 2024. c) BKDs with core capital of at least Rp3,000,000,000.00 (three billion rupiah) but less than Rp6,000,000,000.00 (six billion rupiah) are required to fulfill minimum core capital of Rp6,000,000,000.00 (six billion rupiah) no later than December 31, 2019. The calculation of core capital refers to Financial Services Authority Regulation Number 5/POJK.03/2015 regarding Minimum Capital Requirement Obligations and Fulfillment of Minimum Core Capital for BPRs, which includes paid-up capital, additional capital reserves such as share premium, capital contribution funds, donation capital, general reserves, specific reserves, prior year profits, current year profits, and is calculated with deferred tax calculations, goodwill, disagio, collateral taken over that has exceeded a period of 1 (one) year since takeover at the recorded value on the BPR balance sheet, prior year losses, and current year losses;
plans to fulfill infrastructure including information technology to support operational activities and reporting, for example, fulfilling infrastructure including information technology to support operational activities and reporting, providing reporting applications, telephone connections enabling connections to the Bank Indonesia/Financial Services Authority extranet or virtual private network, including the human resources needed to operate the applications and prepare such reports, and BPR work systems and procedures;
plans for operational working days, namely the application of operational working days to be at least 5 (five) days in 1 (one) week or from Monday to Friday (except national holidays). If BKDs operate outside the determined working days, BKDs are required to report this to the Financial Services Authority;
plans for BKD Merger or BKD Transfer included in the action plan, in the event that based on considerations BKDs must conduct BKD Merger or BKD Transfer to fulfill BPR requirements.

Finance ... based on considerations that BKDs must conduct BKD Merger or BKD Transfer to fulfill BPR requirements. b. The plans must be accompanied by steps to be taken regarding the fulfillment of BPR requirements, as well as implementation time targets with a deadline no later than December 31, 2019.
c. The Financial Services Authority may request BKDs to revise the action plans submitted by BKDs if, in the opinion of the Financial Services Authority, the steps and/or implementation time targets are inconsistent with this Financial Services Authority Circular Letter or cannot be achieved.
d. Action plans to fulfill BPR requirements are submitted to the Financial Services Authority. Example letters and action plan formats as Appendix II.1.

Reports on the Progress of Realization of Action Plans
a. BKDs are required to implement action plans submitted to the Financial Services Authority as referred to in number 1. b. BKDs are required to submit Reports on the Progress of Realization of Action Plans to fulfill BPR requirements accompanied by supporting evidence/documents to the Financial Services Authority every 6 (six) months for reporting periods ending on June 30 and December 31. Reports for the June 30 period must be submitted no later than July 31 of the same year, and for the December 31 period no later than January 31 of the following year. If these dates are holidays, reports are submitted on the next working day.
c. Progress reports on the realization of action plans as referred to in letter b for the first time, namely the June 30, 2017 period, must be submitted no later than July 31, 2017.
d. Progress reports on the realization of action plans to fulfill BPR requirements are submitted to the Financial Services Authority. Example letters and example reports as Appendix II.2.
Submission of Business License Transfer Requests
BKDs that have obtained approval for the articles of incorporation formation from the competent authority are required to submit requests for business license transfer to the Financial Services Authority, accompanied by:
a. the deed of establishment of the legal entity containing articles of incorporation approved by the competent authority; b. ownership data consisting of:

a list of shareholders including details of the amount of share ownership by BKDs choosing to form a Limited Liability Company or Regional Owned Enterprise; or
a list of members including details of the amount of principal savings and mandatory savings by BKDs choosing to form a Cooperative;
c. a list of Board of Directors members and Board of Commissioners members;
d. plans for organizational structure and personnel numbers; and e. plans for work systems and procedures.
Example letters for business license transfer requests as Appendix II.3.

III. BKD MERGER AND BKD TRANSFER
In order to fulfill BPR requirements as referred to in number II above, BKDs may conduct BKD Merger or BKD Transfer. BKD Merger and BKD Transfer must first obtain approval from the Financial Services Authority. A. BKD Merger BKD Merger can be conducted in 2 (two) ways, namely through the merger process or the absorption process.

BKD Merger through Merger Process
BKD Merger through the merger process is the process of merging 1 (one) or more BKDs into a BPR owned by the Regional Government, resulting in the transfer of assets and obligations of BKDs by dissolving the BKDs conducting the merger without a settlement process. The procedure to conduct BKD Merger through the merger process is as follows:
a. BKD Merger policy through the merger process is agreed upon through village deliberations and subsequently established in Village Regulations; b. Each BKD Operational Executor and the Board of Directors of the Regional Government-owned BPR to be merged, jointly prepare a draft BKD merger plan containing at least:

names and locations of BKDs and Regional Government-owned BPRs to be merged;
reasons and explanations from each BKD Operational Executor and the Board of Directors of the Regional Government-owned BPR to be merged;
procedures for converting ownership from each BKD and Regional Government-owned BPR to be merged;
draft articles of incorporation changes for the Regional Government-owned BPR after the merger;
work plans for the Regional Government-owned BPR after the merger for 12 (twelve) months, including its health level;
plans for the status of BKD and Regional Government-owned BPR offices after the merger;
names and locations of the merged BPR resulting from BKD merger;
names of shareholders or owners of BKDs, candidates for Board of Directors and Board of Commissioners members of the Regional Government-owned BPR resulting from BKD merger.
confirmation from the Regional Government-owned BPR regarding its willingness to accept the transfer of rights and obligations from BKDs conducting the merger; and

e. Announcement ...
10) other matters to be known by each BKD owner and shareholder of the Regional Government-owned BPR, including:
a) estimated balance sheet of the Regional Government-owned BPR resulting from the merger according to applicable Accounting Standards; b) methods for resolving the status of BKD employees to be merged; c) methods for resolving the rights and obligations of BKDs to be merged, to debtors and creditors; d) methods for resolving minority owner rights, if any; e) estimated duration of merger implementation; and f) reports on conditions and problems during the current fiscal year affecting the activities of the Regional Government-owned BPR after the merger.
c. The draft BKD merger plan as referred to in letter b must receive approval from each BKD Supervisory Board and the Board of Commissioners of the Regional Government-owned BPR, and subsequently draft merger deeds are prepared;
d. BKD Operational Executors and members of the Board of Directors of the Regional Government-owned BPR to be merged announce summaries of the draft merger plan as referred to in letter b, containing at least:

names and locations of BKDs and Regional Government-owned BPRs to be merged;
plans for the status of BKD and Regional Government-owned BPR offices resulting from the merger; and
names of owners/shareholders, candidates for Board of Directors and Board of Commissioners members of the Regional Government-owned BPR resulting from BKD merger.
directors ...
e. Announcements as referred to in letter d are done by attaching them to bulletin boards at each BKD office and Regional Government-owned BPR office before the implementation of village deliberations and General Meetings of Shareholders regarding the approval of the draft BKD merger plan and draft merger deeds as referred to in letter g; f. If there are objections to the implementation of BKD merger by creditors and/or minority owners/shareholders of BKDs or Regional Government-owned BPRs, they are resolved in village deliberations and/or General Meetings of Shareholders regarding the approval of the draft BKD merger plan and draft merger deeds; g. Until the resolution of objections by creditors and/or minority owners/shareholders of BKDs or Regional Government-owned BPRs regarding the implementation of the merger process as referred to in letter f is reached, BKD merger cannot be implemented; h. Draft BKD merger plans and draft merger deeds as referred to in letters b and c are requested for approval from village deliberations and Regional Regulations/General Meetings of Shareholders of each BKD or Regional Government-owned BPR to be merged in accordance with applicable legislation;
i. Draft merger deeds approved by village deliberations and General Meetings of Shareholders as referred to in letter h are formulated into merger deeds and articles of incorporation amendment deeds for the Regional Government-owned BPR resulting from the merger, which have been notarized;
j. Requests to obtain approval for BKD merger and revocation of BKD business licenses are submitted to the Financial Services Authority by:
The Chairman of the Operational Executor of one of the BKDs; and

structure ...
2) the Board of Directors of the Regional Government-owned BPR to receive the merged BKD,
submitted after village deliberations and General Meetings of Shareholders of the Regional Government-owned BPR as referred to in letter h; k. Requests as referred to in letter j are submitted to the Financial Services Authority. Example request letters as Appendix III.1 and accompanied by documents:

draft BKD merger plan as referred to in letter b above;
approval from BKD owners conducting BKD merger in accordance with applicable legislation, including minutes of village deliberations/owners of each BKD approving the draft and draft merger deeds as referred to in letter h;
draft balance sheets and income statements of the merged BPR according to applicable Accounting Standards;
merger deeds and articles of incorporation amendment deeds for the merged BPR as referred to in letter i;
proof of announcement of the summary of the draft merger plan as referred to in letter e;
l. Approval or rejection of merger license requests is given in writing by the Financial Services Authority within 30 (thirty) working days from the date the complete request and supporting documents are received.
m. In granting approval or rejection of merger license requests as referred to in letter l, the Financial Services Authority conducts:
Research on the completeness and correctness of documents; and
Assessment of capability and propriety, in case of changes or additions to the

changes ... composition of Board of Directors members, Board of Commissioners members, and Controlling Shareholders in the Regional Government-owned BPR resulting from the merger. n. In the event that merger license requests submitted to the Financial Services Authority are deemed incomplete or additional/corrected documents are needed to conduct research on BKD requests, then:

The Financial Services Authority has the authority to request BKDs and/or Regional Government-owned BPR applicants to complete or submit additional/corrected documents;
if BKDs and/or Regional Government-owned BPR applicants do not complete or submit the requested additional/corrected documents and have received 3 (three) warning letters from the Financial Services Authority to submit such additional/corrected documents with a validity period of 15 (fifteen) working days for each warning letter, the merger approval request for BKDs is declared rejected; and
the time given to BKDs and/or Regional Government-owned BPRs to complete or submit additional/corrected documents as referred to in number 1) is not included in the 30 (thirty) working day period to complete the entire licensing process until the issuance of approval or rejection of requests as referred to in letter l.
o. Merger license approvals as referred to in letter l are valid:
for BPRs with Limited Liability Company or Regional Owned Enterprise legal entities since:
a) the date of approval of BPR Articles of Incorporation changes by the Minister of Law and Human Rights; or b) the date of notification of BPR Articles of Incorporation changes by the Minister of Law and Human Rights if

a) estimated ... the amendment of the Articles of Association of a BPR does not require the approval of the Minister of Law and Human Rights.
2) for BPRs with the legal status of Regional Public Enterprises, from the date the Regional Regulation approving the amendment of the Articles of Association takes effect;

Merger of BKD through the Merger Process
The merger of BKD through the merger process is the process of merging 2 (two) or more BKDs into 1 (one) BPR without a liquidation process. The procedures for carrying out the Merger of BKD through the merger process are as follows:
a. The policy for the Merger of BKD through the merger process is agreed upon through village deliberations and subsequently established in Village Regulations and Regional Regulations. b. Each Operational Executor of the BKD to be merged jointly prepares a draft merger of the BKD containing at least:

the name and domicile of the BKD to be merged;
the reasons and explanations of each Operational Executor of the BKD to be merged;
the method of conversion of ownership from each BKD to be merged;
the draft Articles of Association of the BPR resulting from the merger;
the work plan of the BPR resulting from the merger for the first 12 (twelve) months;
the plan for the status of the BKD offices after the merger;
the name and domicile of the BPR resulting from the merger of the BKD;
the name of shareholders or owners, prospective Directors, and prospective Commissioners of the Board of Commissioners resulting from the merger; and
other matters that need to be known by each owner of the BKD, including:

balance sheet ... a) the estimated balance sheet and income statement of the BPR resulting from the merger in accordance with the applicable Financial Accounting Standards; b) the method for resolving the status of employees/managers of the BKD to be merged; c) the method for resolving the rights and obligations of the BKD to debtors and creditors; d) the method for resolving the rights of minority owners, if any; e) the estimated duration of the merger implementation; and f) a report on the condition and problems of each BKD during the current fiscal year that affects BPR activities.
c. The draft merger of the BKD as referred to in letter b must receive approval from each Supervisory Board of the BKD and subsequently a draft deed of merger is prepared;
d. The Operational Executor of the BKD to be merged is required to announce a summary of the draft merger as referred to in letter b which contains at least:

the name and domicile of the BKD to be merged;
the plan for the status of the BKD office resulting from the merger; and
the name of owners/shareholders, prospective Directors, and prospective Commissioners of the Board of Commissioners of the BPR resulting from the merger.
e. The announcement as referred to in letter d is carried out by posting on the announcement board at each BKD office before the village deliberation regarding the approval of the draft merger of the BKD and the draft deed of merger; f. If there are objections to the implementation of the merger of the BKD by creditors or minority owners/shareholders of the BKD, it can be resolved in the village deliberation in
deed ...
the framework of approving the draft merger of the BKD and the draft deed of merger; g. During the resolution of objections to the implementation of the merger of the BKD by creditors and/or minority owners/shareholders of the BKD as referred to in letter f has not been achieved, the Merger of BKD through the merger process cannot be implemented; h. The draft merger of the BKD and the draft deed of merger as referred to in letters b and c are requested for approval from the village deliberation and owners of each BKD to be merged in accordance with applicable legislation;
i. The draft deed of merger which has been approved by the village deliberation as referred to in letter h is formulated into a deed of merger and a deed of establishment of the BPR resulting from the merger which has been notarized;
j. The application to obtain approval for the merger of the BKD and the revocation of the business license of the BKD is submitted to the Financial Services Authority (OJK) by the Chairman of the Operational Executor of one of the BKDs to be merged after the village deliberation as referred to in letter h. k. The application as referred to in letter j is submitted to the Financial Services Authority. An example of the application letter as in Appendix III.2 and attached with documents:
the draft merger of the BKD as referred to in letter b above.
the approval of the BKD owners who carry out the Merger of the BKD in accordance with applicable legislation, including minutes of village deliberations/owners of each BKD approving the draft and draft deed of merger of the BKD as referred to in letter h;
the draft balance sheet and income statement of the BPR resulting from the merger in accordance with the applicable Financial Accounting Standards;

o. License ...
4) the deed of merger and deed of establishment of the BPR resulting from the merger as referred to in letter i;
5) proof of announcement of the summary of the draft merger as referred to in letter e;
l. Approval or rejection of the application for merger license is given in writing within a period of 30 (thirty) working days after the application along with documents is received completely.
m. In giving approval or rejection of the application for merger license as referred to in letter l, the Financial Services Authority conducts:

Research on the completeness and truthfulness of documents;
Assessment of competence and propriety regarding prospective Directors, prospective Commissioners of the Board of Commissioners, and Controlling Shareholders of the BPR resulting from the merger.
n. In the event that the application for merger license submitted to the Financial Services Authority is assessed as incomplete or additional/corrected documents are needed to conduct research on the BKD application, then:
The Financial Services Authority is authorized to request the BKD to complete or submit additional/corrected documents;
if the applicant BKD does not complete or submit additional/corrected documents requested and has received 3 (three) warning letters from the Financial Services Authority to submit the additional/corrected documents with the validity period of each warning letter being 15 (fifteen) working days, then the application for approval of the BKD merger is declared rejected; and
the time given to complete or submit additional/corrected documents in item 1) is not included in the 30 (thirty) working day period to complete the entire licensing process until the issuance of approval or rejection of the application as referred to in letter l.
report ...
o. The merger license as referred to in letter l is valid:
for BPRs with the legal status of Limited Liability Companies and Regional Limited Liability Companies, from the date of issuance of the Decision of the Minister of Law and Human Rights regarding the approval of the deed of establishment of the BPR;
for BPRs with the legal status of Regional Public Enterprises, from the date the Regional Regulation establishing/approving the deed of establishment takes effect; or
for BPRs with the legal status of Cooperatives, from the date of approval of the deed of establishment by the competent authority.

Report on the Implementation of BKD Merger to the Financial Services Authority
a. The BPR resulting from the Merger of BKD is required to report the implementation of the Merger of BKD at the latest 20 (twenty) working days after:

the date of receipt of the approval or notification of the amendment of the Articles of Association as referred to in item 1 letter o; or
the date of receipt of the approval of the deed of establishment of the BPR as referred to in item 2 letter o.
b. The report on the implementation of the Merger of BKD as referred to in letter a is submitted via letter to the Financial Services Authority. An example of the letter submitting the report as in Appendix III.3 and accompanied by documents:
photocopy of the Articles of Association or deed of establishment of the BPR resulting from the Merger of BKD which has been approved or authenticated by the competent authority as referred to in letter a;
the organizational structure and management of the BPR resulting from the Merger of BKD, data on Directors and Commissioners of the Board of Commissioners, and data on shareholders or owners of the BPR resulting from the Merger of BKD;
name ...
the balance sheet and income statement report of the BPR resulting from the Merger of BKD; and
the complete address of the BPR resulting from the Merger of BKD.

B. Transfer of BKD
The Transfer of BKD is the takeover of assets and liabilities of 1 (one) or more BKDs by a Local Government that does not yet have a BPR, followed by the dissolution of the taken-over BKD without a liquidation process and continued with the establishment of a new BPR. The Transfer of BKD is submitted by the Local Government to the Financial Services Authority with requirements and procedures as follows:

The Plan for the Transfer of BKD must be completed with:
a. Approval from the BKD owner or village deliberation; and b. Regional Regulation regarding the Plan for the Transfer of BKD;
The application for the Plan for the Transfer of BKD is submitted by the Local Government to the Financial Services Authority. An example of the application letter format as in Appendix III.4 and accompanied by documents:
a. the draft Transfer of BKD containing at least:

the name and domicile of the Local Government that will take over the BKD;
the number and nominal value of assets and liabilities to be taken over along with the composition of shareholders or owners after the Transfer of BKD; and
the plan for the status of the BKD office resulting from the Transfer of BKD.
b. approval from the BKD owners who carry out the Transfer of BKD in accordance with applicable legislation, for example, letters or minutes of BKD owners or village deliberations as referred to in item 1.a;
c. the draft balance sheet and income statement after the Transfer of BKD prepared in accordance with accounting standards and recording and reporting guidelines applicable to BPRs; and
d. the draft announcement of the Transfer of BKD containing at least:

resolve ...

the name and domicile of the Local Government that will take over the BKD;
the plan for the status of the BKD office to be taken over;
the method for resolving the rights and obligations of the BKD to be taken over, to debtors and creditors; and
the estimated duration of the implementation of the Transfer of BKD;

Approval or rejection of the submission of the application for the Plan for the Transfer of BKD as referred to in item 2 is given in writing within a maximum period of 20 (twenty) working days since the application along with documents is received completely.
In giving written approval or rejection of the submission of the Plan for the Transfer of BKD as referred to in item 3, the Financial Services Authority conducts research on the completeness and truthfulness of documents;
In the event that based on the research by the Financial Services Authority in item 4, the documents for the Plan for the Transfer of BKD submitted to the Financial Services Authority are declared incomplete, or additional/corrected documents are needed to conduct research on the Transfer of BKD application, then:
a. The Financial Services Authority is authorized to request the Local Government as the applicant to complete or submit additional/corrected documents; b. if the Local Government does not complete or submit additional/corrected documents requested and has received 3 (three) warning letters from the Financial Services Authority to submit the additional/corrected documents with the validity period of each warning letter being 15 (fifteen) working days, then the application for the Transfer of BKD is declared rejected; and
c. the time given to complete or submit additional/corrected documents as referred to in letter a is not included in the 20 (twenty) working day period to

except ... complete the entire approval process for the Transfer of BKD as referred to in item 3.
6. The Local Government that has obtained approval for the Transfer of BKD submits an application for a BPR business license via letter to the Financial Services Authority. An example of the letter as in Appendix III.5 and completed with proof of fulfillment of minimum core capital as referred to in item II.D.1.a.3) and accompanied by documents:
a. the deed of establishment of the legal entity containing the Articles of Association of the legal entity which has been authenticated by the competent authority, namely;

in the event that the BPR to be established has the legal status of a Regional Public Enterprise, the deed of establishment of the BPR in question has been established through a Regional Regulation; and
in the event that the BPR to be established has the legal status of a Regional Limited Liability Company, the deed of establishment of the BPR in question has obtained approval through a decision of the Minister of Law and Human Rights.
b. Regional Regulation regarding the establishment of the BPR;
c. proof of operational readiness in the form of documents including:
list of fixed assets and inventory;
photos of the office building, room layout, and adequate building security facilities; and
documents showing readiness of information system technology in the form of infrastructure supporting operational activities and reporting, for example, provision of computers used to prepare reports, provision of reporting applications, telephone connections enabling connection to the Bank Indonesia/Financial Services Authority extranet or virtual private network network including the human resources needed for the operation of the applications and preparation of the reports;
d. ownership data in the form of a list of shareholders along with details of each share ownership

liquidation ... except for BPRs with the legal status of Regional Public Enterprises; e. prospective Directors and prospective Commissioners of the Board of Commissioners who meet the requirements as referred to in item II.A.1.b above; f. organizational structure and work systems and procedures, including personnel structure; and g. decision letter of the Head of the Region stating that the source of capital deposit funds has been budgeted in the Regional Revenue and Expenditure Budget (APBD) and has been approved by the local Regional House of Representatives (DPRD), as referred to in the provisions regarding BPR institutions.

IV. TRANSFORMATION OF VILLAGE CREDIT INSTITUTIONS
BKDs are required to meet BPR requirements which include, among others, institutional matters, prudential principles, financial reporting and transparency, and the application of accounting standards for BPRs. Regarding this matter, based on the POJK on BKDs, every BKD is required to meet BPR requirements with a deadline of at the latest December 31, 2019. However, for BKDs that based on considerations are unable to meet BPR requirements, may choose to change their business activities into a Micro Finance Institution which is hereinafter referred to as LKM, or a Village-Owned Enterprise, which is hereinafter referred to as BUM Desa, or a BUM Desa business unit, with the following provisions and procedures:
A. The change of business activities (transformation) of BKDs into LKMs or BUM Desas/business units of BUM Desas can only be carried out with the permission of the Financial Services Authority. B. The decision-making regarding the transformation of BKDs into LKMs or BUM Desas/business units of BUM Desas must be carried out through a meeting of BKD owners or village deliberations which is then established in Village Regulations and/or Regional Regulations.
C. In the framework of transformation into LKMs as referred to in letter A, BKDs can carry out a merger, namely the process of merging 2 (two) or more BKDs into 1 (one) LKM without a

Draft ...
liquidation process. The procedures for carrying out the merger of BKDs into LKMs are as follows:
The policy for the merger of BKDs into LKMs is agreed upon through village deliberations and subsequently established in Village Regulations.
Each Operational Executor of the BKD to be merged jointly prepares a draft merger of the BKD containing at least:
a. the name and domicile of the BKD to be merged; b. the reasons and explanations of each Operational Executor of the BKD to be merged;
c. the method of conversion of ownership from each BKD to be merged;
d. the draft Articles of Association of the LKM resulting from the merger; e. the work plan of the LKM resulting from the merger for the first 12 (twelve) months; f. the plan for the status of the BKD offices after the merger; g. the name and domicile of the LKM resulting from the merger of the BKD; h. data on shareholders, prospective Directors, and prospective Commissioners of the Board of Commissioners of the LKM resulting from the merger; and
i. other matters that need to be known by each owner of the BKD, including:

the estimated balance sheet and income statement of the LKM resulting from the merger in accordance with the applicable Financial Accounting Standards;
the method for resolving the status of employees/managers of the BKD to be merged;
the method for resolving the rights and obligations of the BKD to debtors and creditors;
the method for resolving the rights of minority owners, if any;
the estimated duration of the merger implementation; and
a report on the condition and problems of each BKD during the current fiscal year that affects LKM activities.

Finance ...
3. The draft merger of the BKD as referred to in item 2 must receive approval from each Supervisory Board of the BKD and subsequently a draft deed of merger is prepared;
4. The Operational Executor of the BKD to be merged is required to announce a summary of the draft merger as referred to in item 2 which contains at least:
a. the name and domicile of the BKD to be merged; b. the plan for the status of the BKD office resulting from the merger; and
c. data on shareholders, prospective Directors, and prospective Commissioners of the Board of Commissioners of the LKM resulting from the merger.
5. The announcement as referred to in item 4 is carried out by posting on the announcement board at each BKD office before the village deliberation regarding the approval of the draft merger of the BKD and the draft deed of merger;
6. If there are objections to the implementation of the merger of the BKD by creditors or minority owners/shareholders of the BKD, it can be resolved in the village deliberation in the framework of approving the draft merger of the BKD and the draft deed of merger;
7. During the resolution of objections to the implementation of the merger of the BKD by creditors and/or minority owners/shareholders of the BKD as referred to in item 6 has not been achieved, the merger of BKDs into LKMs cannot be implemented;
8. The draft merger of the BKD and the draft deed of merger as referred to in items 2 and 3 are requested for approval from the village deliberation and owners of each BKD to be merged in accordance with applicable legislation;
9. The draft deed of merger which has been approved by the village deliberation as referred to in item 8 is formulated into a deed of merger and a deed of establishment of the LKM resulting from the merger which has been notarized;
10. The application to obtain approval for the merger of the BKD and the revocation of the business license of the BKD is submitted to the Financial Services

a. Authority ...
Authority by the Chairman of the Operational Executor of one of the BKDs to be merged after the village deliberation as referred to in item 8.
11. The application as referred to in item 10 is submitted to the Financial Services Authority. An example of the application letter as in Appendix IV.1 and attached with documents:
a. the draft merger of the BKD as referred to in item 2 above. b. approval from the BKD owners who carry out the merger of the BKD in accordance with applicable legislation, including minutes of village deliberations/owners of each BKD approving the draft and draft deed of merger of the BKD as referred to in item 8;
c. the draft balance sheet and income statement of the LKM resulting from the merger in accordance with the applicable Financial Accounting Standards;
d. the deed of merger and deed of establishment of the legal entity of the LKM resulting from the merger including the Articles of Association as referred to in item 9; e. proof of announcement of the summary of the draft deed of merger as referred to in item 5;
12. Approval or rejection of the application for merger license is given in writing within a period of 30 (thirty) working days after the application along with documents is received completely.
13. In giving approval or rejection of the application for merger license as referred to in item 12, the Financial Services Authority conducts:
a. research on document completeness; and b. analysis of compliance with legislation in the field of LKMs.
14. In the event that the application for merger license submitted to the Financial Services Authority is assessed as incomplete or additional/corrected documents are needed to conduct research on the BKD application, then:

E. Plan ... a. The Financial Services Authority is authorized to request the BKD to complete or submit additional/corrected documents; b. if the applicant BKD does not complete or submit additional/corrected documents requested and has received 3 (three) warning letters from the Financial Services Authority to submit the additional/corrected documents with the validity period of each warning letter being 15 (fifteen) working days, then the application for approval of the merger of the BKD is declared rejected; and
c. the time given to complete or submit additional/corrected documents in item 1) is not included in the 30 (thirty) working day period to complete the entire licensing process until the issuance of approval or rejection of the application as referred to in item 12.
15. The merger license as referred to in item 12 is valid:
a. for LKMs with the legal status of Limited Liability Companies, from the date of issuance of the Decision of the Minister of Law and Human Rights regarding the approval of the deed of establishment of the LKM; and b. for LKMs with the legal status of Cooperatives, from the date of approval of the deed of establishment by the competent authority.

D. Application for permission for the transformation of BKDs into LKMs or BUM Desas/business units of BUM Desas to the Financial Services Authority is submitted by the Chairman of the Operational Executor of the BKD or one of the Chairmen of the Operational Executor of BKDs if there are several BKDs carrying out mergers and changing business activities into LKMs or changing business entities into BUM Desas/business units of BUM Desas. An example of the application letter as in Appendix IV.2 and accompanied by:

documents of approval for the transformation of BKDs in the form of minutes of BKD owner meetings or village deliberations and Village Regulations and/or Regional Regulations approving the plan for the transformation of BKDs into LKMs or BUM Desas/business units of BUM Desas; and
an action plan for the implementation of the transformation of BKDs.

for ...
E. The action plan for the transformation of BKDs as referred to in letter D.2 contains at least:

Action plan for the transformation of BKDs into LKMs:
a. Determination of business activities as an LKM. b. Formation of a legal entity suitable for LKM business activities.
c. Appointment of Directors and Commissioners of the Board of Commissioners of the LKM with reference to POJK Number 12/POJK.05/2014 as amended by POJK Number 61/POJK.05/2015 regarding Business Licensing and Institutions of Micro Finance Institutions which is hereinafter referred to as the POJK on Business Licensing and Institutions of LKMs.
d. Application for business license for BKDs as LKMs with reference to the POJK on Business Licensing and Institutions of LKMs which among others contains:

the deed of establishment of the legal entity including the Articles of Association and its amendments;
projections of financial position reports and annual financial performance reports starting from when the LKM resulting from the transformation of the BKD carries out operational activities for the first 2 (two) years.
annual financial reports consisting of at least financial position reports and financial performance reports for the last 2 (two) years;
financial position reports for the closure of the BKD and financial position reports for the opening of the LKM resulting from the transformation of the BKD;
list of BKD Loans/Financing for the last 2 (two) years;
data on Directors, Commissioners of the Board of Commissioners, shareholders, and Sharia Supervisory Board (DPS) for LKMs carrying out business activities based on Sharia Principles; and
recommendation letter for the appointment of DPS from the National Sharia Council of the Indonesian Ulema Council (DSN MUI)

letter ... for LKMs that conduct business activities based on Sharia Principles. e. A merger plan for BKDs contained in the action plan, in the event that based on BKD considerations, a merger must be conducted to meet LKM requirements. f. Submission of an application for revocation of business license as a BPR. g. An example of a BKD transformation action plan into an LKM as per Appendix IV.3, which is an integral part of this SEOJK.
2. BKD transformation action plan into a BUM Desa or BUM Desa business unit
a. A plan to establish a BUM Desa or BUM Desa business unit; b. Implementation of village deliberations and issuance of a Village Regulation regarding the establishment of a BUM Desa or BUM Desa business unit, which contains the location and domicile of the BUM Desa or BUM Desa business unit and the management organization of the BUM Desa or BUM Desa business unit in accordance with applicable laws and regulations.
c. Submission of an application for revocation of business license as a BPR.
d. An example of a BKD transformation action plan into a BUM Desa or BUM Desa business unit as per Appendix IV.4, which is an integral part of this SEOJK.
3. The action plans referred to in numbers 1 and 2 must be accompanied by steps to be taken and implementation time targets with a latest deadline of December 31, 2019.
4. The Financial Services Authority may require BKDs to revise/adjust the action plans submitted by such BKDs if, in the opinion of the Financial Services Authority, the steps and/or implementation time targets are not in line with this SEOJK or cannot be achieved.
F. BKDs submit reports on the progress of the realization of the BKD transformation action plan into an LKM as referred to in

B. Management ... letter E.1 to the Financial Services Authority. Example of the letter and format for the progress report of the realization of the action plan as per Appendix IV.5. G. BKDs submit reports on the progress of the realization of the BKD transformation action plan into a BUM Desa or BUM Desa business unit as referred to in letter E.2 to the Financial Services Authority. Example of the letter and example of the progress report of the action plan as per Appendix IV.6. H. BKDs are required to submit progress reports on the realization of the transformation action plan every 6 (six) months for periods ending on June 30 and December 31.
V. REGULATIONS FOR BKDS DURING THE TRANSITION PERIOD
In accordance with regulations, to meet BPR requirements or to choose to change business activities (transformation) into an LKM or BUM Desa/BUM Desa business unit, BKDs are given a deadline of December 31, 2019. In light of this, to fill the regulatory gap until December 31, 2019, regulations for BKDs during the transition period are as follows:
A. Capital
In order to enhance BKD's capacity to perform its function as an intermediary institution and support the future development of BKDs, BKDs must have a strong capital structure so that it can support BKD's efforts to meet BPR capital requirements by December 31, 2019. One way to strengthen this capital structure is through new capital contributions sourced from:

investments by villages originating from separated village wealth referring to Law Number 6 of 2014 on Villages and its implementing regulations;
donations from villagers, including from village community savings; and/or
other sources in accordance with applicable laws and regulations.
Report ...
B. Management
As a BPR, BKDs must be managed by a Board of Directors and Board of Commissioners who meet the integrity, competence, and financial reputation requirements as referred to in the assessment of suitability and propriety for key parties of financial service institutions, specifically for BPRs which will take effect on December 31, 2019. Nevertheless, during the transition period until December 31, 2019, BKD management is as follows:
BKD management consists of Operational Executives and a Supervisory Board, each consisting of at least 2 (two) persons.
BKDs cannot have a management structure other than as referred to in number 1.
Operational Executives and the Supervisory Board must have independence, considering the following:
a. Operational Executives and the Supervisory Board are prohibited from using BKDs for personal, family, and/or third-party interests that can harm or reduce BKD profits. b. Operational Executives and the Supervisory Board are prohibited from taking and/or receiving personal benefits from BKDs, other than wages and other facilities established by the Owners of BKDs considering fairness.
During the Transition Period, BKD owners must appoint managers as referred to in number 1 and are required to form a BKD organizational structure separate from the Village Government organizational structure.
The initial composition of managers and organizational structure as referred to in number 1 must be reported to the Financial Services Authority by December 31, 2016, accompanied by proof of appointment and photocopies of the managers' identity cards.
Changes to BKD management composition must be reported by 30 (thirty) days after the effective date of the management change, accompanied by photocopies of appointment, dismissal, and/or management change documents and photocopies of the new managers' identity cards.

c) Transition ...
7. Reports on management composition and changes, as well as the BKD organizational structure as referred to in numbers 3 and 4, are submitted to the Financial Services Authority. Example format of the letter and report as per Appendix V.1.
C. Application of BKD Prudential Principles
As a BPR, BKDs are required to apply prudential principles in their operations. During the transition period, the prudential principles that BKDs must always apply are as follows:

BKD Productive Assets
a. Quality of Productive Assets

General Provisions
a) Productive Assets are BKD fund provisions to obtain income, in the form of loans, inter-BKD loans, and placements in other banks. b) Loans are the provision of money or receivables that can be equated with them, based on mutual agreement between BKDs and borrowers, obligating borrowers to repay their debts after a certain period with interest. c) Provisions for Write-off of Productive Assets, hereinafter referred to as PPAP, are reserves that must be formed at a certain percentage of the debit balance based on the classification of the quality of Productive Assets.
Quality of Productive Assets
a) The quality of BKD Productive Assets is established in 4 (four) categories, hereinafter referred to as Credit Collectibility, namely: Current, Substandard, Doubtful, and Loss. b) Assessment of Productive Assets as referred to in letter a) is conducted based on the timeliness of payment and/or the ability to meet obligations by the debtor.

(a) Current ... c) Credit installment periods are classified into 3 (three) types, namely:
(1) weekly (time period 1 week);
(2) monthly (time period 1 month) and selapan (time period 35 days); and (3) seasonal (time period 6 months). d) Credit collectibility (1) Weekly Credit Installments, credit collectibility is established as follows:
(a) Current, if there are no arrears of principal and/or interest installments, or if there are arrears of principal and/or interest installments not exceeding 4 (four) installments and the Loan has not yet matured. (b) Substandard, if there are arrears of principal and/or interest installments exceeding 4 (four) installments up to 12 (twelve) installments, or the loan has matured for not more than 1 (one) month. (c) Doubtful, if there are arrears of principal and/or interest installments exceeding 12 (twelve) installments and not exceeding 24 (twenty-four) installments, or the Loan has matured for more than 1 (one) month but not more than 2 (two) months. (d) Loss, if there are arrears of principal and/or interest installments exceeding 24 (twenty-four) installments, or the Loan has matured for more than 2 (two) months since maturity. (2) Monthly and Selapan Credit Installments, credit collectibility is established as follows:

(d) Loss ...
(a) Current, if there are no arrears of principal and/or interest; or if there are arrears of principal and/or interest not exceeding 3 (three) installments and the Loan has not yet matured. (b) Substandard, if there are arrears of principal and/or interest installments exceeding 3 (three) installments but not exceeding 6 (six) installments; and/or the Loan has matured for not more than 1 (one) month. (c) Doubtful, if there are arrears of principal and/or interest installments exceeding 6 (six) installments but not exceeding 12 (twelve) installments; and/or the Loan has matured for more than 1 (one) month but not more than 2 (two) months. (d) Loss, if there are arrears of principal and/or interest installments exceeding 12 (twelve) installments, or the loan has matured for more than 2 (two) months. (3) Seasonal Credit Installments, credit collectibility is established as follows:
(a) Current, if the Loan has not yet matured.
(b) Substandard, if the Loan has passed maturity, there are arrears of principal and/or interest installments but not more than 1 (one) month.
(c) Doubtful, if the Loan that has matured has arrears of principal and/or interest installments exceeding 1 (one) month but not more than 2 (two) months.

BKD ...
(d) Loss, if the Loan that has passed maturity has arrears of principal and/or interest installments exceeding 2 (two) months.
In the event that between BKD and the debtor there is an agreement regarding a grace period for payment, arrears of principal and/or interest installments are calculated after the aforementioned grace period ends. b. Credit Restructuring
Credit Restructuring is an improvement effort conducted by BPRs in lending activities towards debtors experiencing difficulties in meeting their obligations, conducted through:
a) rescheduling, namely changes to the debtor's payment schedule or term; b) reconditioning, namely changes to part or all of the loan requirements, not limited to changes in payment schedule, term, and/or other requirements as long as they do not involve changes to the maximum credit limit; c) reorganization, namely changes to loan requirements involving the addition of credit facilities and conversion of all or part of the arrears of interest installments into new principal loans, which may be accompanied by rescheduling and/or reconditioning.
BKDs may conduct Credit Restructuring towards debtors meeting the following criteria:
a) the debtor experiences difficulties in paying principal and/or interest of the Loan; and b) the debtor has good business prospects and is estimated to be able to meet obligations after Credit Restructuring.

Maximum ...

BKDs are prohibited from conducting Credit Restructuring if the purpose is to avoid:
a) a decrease in Credit quality; b) an increase in the formation of PPAP.
The quality of restructured Credit is as follows:
a) Substandard at most for loans that had Doubtful or Loss quality before restructuring. b) For loans that had Current or Substandard quality before restructuring, the quality remains unchanged.
c. Formation of Provisions for Write-off of Productive Assets (PPAP)
BKDs are required to form PPAP consisting of General PPAP and Specific PPAP.
General PPAP is established at least 0.5% (zero point five percent) of Productive Assets with Current quality.
Specific PPAP is established at least:
a) 10% (ten percent) of Productive Assets with Substandard quality after deducting collateral value. b) 50% (fifty percent) of the value of Productive Assets with Doubtful quality after deducting collateral value. c) 100% (one hundred percent) of Productive Assets with Loss quality after deducting collateral value.
Excess PPAP calculation due to the improvement of restructured credit quality, after being calculated with losses arising from credit restructuring, can only be recognized as income if there have been 3 (three) principal installment receipts for the restructured loan.

date ...
2. Maximum Limit for BKD Credit Provision
a. The Maximum Limit for BKD Credit Provision, hereinafter referred to as BMPK BKD, is the maximum limit of fund provision permitted against BKD capital. b. BKD capital is the amount of BKD assets (assets) minus total liabilities and BKD profit/loss.
c. BMPK BKD is established as follows:

BKDs with capital below Rp100,000,000.00 (one hundred million rupiah) may provide loans with a maximum ceiling per person of Rp5,000,000.00 (five million rupiah) in accordance with the applicable loan type and term.
BKDs with capital from Rp100,000,000.00 (one hundred million rupiah) to Rp500,000,000.00 (five hundred million rupiah) may provide loans with a maximum ceiling per person of Rp10,000,000.00 (ten million rupiah) in accordance with the applicable loan type and term.
BKDs with capital above Rp500,000,000.00 (five hundred million rupiah) may provide loans with a maximum ceiling per person of Rp20,000,000.00 (twenty million rupiah) in accordance with the applicable loan type and term.
D. Financial Reports and Announcement of Financial Reports In order to obtain accurate, correct, and timely information regarding BKD's financial condition and business activities, and to be comparable with other BKDs, BKDs are required to prepare financial reports for the Financial Services Authority. The Financial Reports consist of the Balance Sheet, Profit/Loss, and Loan Collectibility as follows:

Period for Preparation and Submission of Financial Reports to the Financial Services Authority
a. BKD financial reports during the transition period are prepared quarterly for periods ending on March 31, June 30, September 30, and December 31. b. The reports must be submitted by 1 (one) month after the end of the reporting period, namely on

d. Announcement ...
April 30 for reporting periods ending March 31, on July 31 for reporting periods ending June 30, on October 31 for reporting periods ending September 30, and on January 31 of the following year for reporting periods ending December 31.
c. If the final date for submission of reports as referred to in letter b falls on a holiday, the reports are submitted on the next working day.
d. Specifically, financial reports consisting of the balance sheet, profit/loss, loan collectibility, and detailed savings list for periods ending on March 31, June 30, September 30, and December 31, 2016, are submitted to the Financial Services Authority by 1 (one) year after the implementation of the POJK on BKDs or February 2, 2017.
2. BKDs that do not submit financial reports consisting of the balance sheet and profit/loss as referred to in number 1 letter d are declared as BKDs that are not actively operating.
3. Financial Report Format
BKD financial reports are prepared with reference to the report format as per Appendix V.2, which is an integral part of this SEOJK.
4. Announcement
a. BKDs are required to announce financial reports for reporting periods ending on December 31 by posting them on an announcement board that is easily known or read by the public at the BKD office and/or the Village office where the BKD is located. b. The announcement must contain at least:

financial reports consisting of the Balance Sheet and Profit/Loss;
Quality of Productive Assets (QPA) for loans provided and placements in other banks.
c. Announcements as referred to in letter a are conducted by February 1 of the following year.

f. Proof ... d. The first announcement of BKD financial reports and QPA for the December 31, 2016 period is conducted by February 1, 2017.
VI. REVOCATION OF BKD BUSINESS LICENSE AS A BPR

The Financial Services Authority revokes the business license of BKDs in the event:
a. The Financial Services Authority approves the BKD's application for BKD Merger. b. The Financial Services Authority approves the BKD's application to be taken over by the Regional Government.
c. The Financial Services Authority approves the BKD's application to change its business activities into an LKM or BUM Desa/BUM Desa business unit.
d. BKDs, on their own initiative, submit an application for license revocation if, for certain considerations, they do not continue business activities as a BPR. e. BKDs cannot meet BPR requirements or cannot implement the action plan until December 31, 2019. f. BKDs are not actively operating, i.e., do not submit information regarding BKD activity status and BKD financial reports quarterly for periods ending on March 31, 2016, June 30, 2016, September 30, 2016, and December 31, 2016.
Applications for revocation of business license as a BPR as referred to in number 1 letter d above are submitted via letter to the Financial Services Authority. Example of the application letter as per Appendix VI, accompanied by documents:
a. Minutes of the meeting of BKD owners or village deliberation; b. Reasons for revocation of business license;
c. Draft settlement of all BKD rights and obligations to customers, creditors, employees, and other related parties;
d. Latest financial report; e. Proof of tax settlement and other obligations to the state, if any;

charged ... f. Proof of announcement of the plan to dissolve the legal entity and the plan to settle BKD obligations; and g. A stamped statement letter from the BKD owner stating that all BKD obligations have been settled and if claims arise in the future, they become the responsibility of the BKD owner.
VII. LIQUIDATION OF BKDS WITH REVOKED BUSINESS LICENSE AS A BPR

BKD owners form a Liquidation Team to conduct the liquidation process for BKDs with revoked business licenses if:
a. BKDs cannot meet BPR requirements by December 31, 2019. b. BKDs do not implement the action plan by December 31, 2019.
c. BKDs submit an application for revocation of business license as a BPR on their own initiative, as referred to in item VI.1.d.
The Liquidation Team must be formed by 3 (three) months from the date of license revocation.
With the formation of the Liquidation Team, the authority and responsibility for managing BKDs in Liquidation become the authority and responsibility of the Liquidation Team.
The Liquidation of BKDs must be completed within a maximum period of 6 (six) months from the date the Liquidation Team is formed. If the Liquidation Team cannot be formed, the Liquidation of BKDs becomes the responsibility of the BKD owners.
BKD Liquidation is conducted by:
a. liquidation of BKD assets through the sale of BKD assets; b. collection of receivables from BKD Debtor Customers;
c. payment of BKD obligations to depositors and/or other creditors from the proceeds of asset liquidation and/or collection. Payment of obligations to creditors is conducted after deducting payments of owed employee salaries, manager salaries except Ex-Officio Village Heads, court case costs, auction costs owed, owed taxes including BKD taxes and taxes collected by BKDs as tax withholdors or collectors, and office costs; and/or
d. transfer of all BKD assets and obligations to other parties approved by the BKD owners.
All costs related to BKD Liquidation become the burden of the assets of BKDs in Liquidation and are paid out first from any proceeds thereof.
If, after the BKD Liquidation process, there is an excess of assets, the Liquidation Team transfers the excess assets to the BKD owners.
Claims arising after the BKD Liquidation process become the responsibility of the BKD owners.
The Liquidation Team submits a report on the implementation of BKD Liquidation to the BKD owners, attached with the following documents:
a. Final Balance Sheet Report; and b. Documents related to BKD Liquidation.
BKD owners submit a report on the implementation of BKD Liquidation to the Financial Services Authority. Example format of the submission letter as per Appendix VII, accompanied by documents:
a. Final Balance Sheet Report; b. Statement letter from the BKD owner that BKD obligations to customers and other parties have been settled in accordance with applicable regulations. If claims arise in the future from customers and other related parties regarding the settlement of claims and obligations, such matters become the responsibility of the BKD owners; and
c. Documents related to the dissolution of the Liquidation Team.
VIII. OVERSIGHT OF BKDS
Oversight of BKDs is conducted by the Financial Services Authority. In conducting oversight, the Financial Services Authority has the authority to conduct examinations of BKDs. In conducting oversight, the Financial Services Authority may coordinate with relevant agencies, including the Ministry of Villages, Development of Disadvantaged Regions, and Transmigration, and the Ministry of Home Affairs.

X. CLOSURE ...
2. In the course of examinations, BKDs are required to provide:
a. information and data requested; b. the opportunity to view all account books, documents, and physical facilities related to their business activities; and
c. other necessary matters.
3. The Financial Services Authority may assign third parties to act on behalf of the Financial Services Authority to conduct examinations of BKDs.
4. Third parties assigned to conduct examinations must meet at least the following requirements:
a. must keep confidential information and data obtained; b. be willing to conduct BKD examinations in accordance with Financial Services Authority Regulations and Financial Services Authority Circulars;
c. have knowledge and understanding of BKD operations.
5. Examinations by third parties can be conducted independently or jointly with examiners from the Financial Services Authority.
6. Third parties conducting BKD examinations must report the results of BKD examinations to the Financial Services Authority by 15 (fifteen) working days after all examinations are completed. The Financial Services Authority evaluates the implementation of BKD examinations conducted by assigned third parties.
IX. CORRESPONDENCE ADDRESSES RELATED TO APPLICATIONS, SUBMISSION OF REPORTS, AND OTHERS
Submissions of applications, submission of reports, and other correspondence are submitted to the address of the Regional Office or the local Financial Services Authority office covering the respective BKD as per Appendix VIII.

X. CLOSURE
Provisions in this Financial Services Authority Circular take effect on the date of establishment.
Thus, let you be informed.
Established in Jakarta on June 10, 2016
EXECUTIVE HEAD OF BANKING SUPERVISOR
FINANCIAL SERVICES AUTHORITY, sd
NELSON TAMPUBOLON
Copy matches the original
Legal Director 1
Legal Department sd
Yuliana

APPENDIX I
FINANCIAL SERVICES AUTHORITY CIRCULAR
NUMBER 19 /SEOJK.03/2016
REGARDING
FULFILLMENT OF REQUIREMENTS FOR RURAL CREDIT BANKS AND TRANSFORMATION OF VILLAGE CREDIT INSTITUTIONS GRANTED STATUS AS RURAL CREDIT BANKS

Appendix ... Appendix I.1
(City), (date, month, year)
No. :
Attach :
To
Financial Services Authority
Attn: 1)
Subject: Request for Approval of Proposed Directors and Proposed Commissioners of PT/State-Owned Enterprise/Regional Corporation/Cooperative 2) BPR BKD………

Hereby we submit a request for approval of the proposed directors and proposed commissioners 2) of PT/State-Owned Enterprise/Regional Corporation/Cooperative 2) BPR BKD ……… as follows:

Proposed Directors:
Name Position
............................. .............................
............................. .............................
Proposed Commissioners:
Name Position
............................. .............................
............................. .............................

Attached are the supporting documents required as per the attached checklist.

This is our request.
Owner of BPR BKD

Notes:

Regional Office or local Financial Services Authority office covering the relevant Village Credit Institution (BKD).
Strike out what is not applicable.
*) The submission of this request can be combined in one letter with other request submissions.

d. not ...
Appendix I.2
DOCUMENT CHECKLIST FOR THE REQUEST FOR APPROVAL OF PROPOSED DIRECTORS OF BPR BKD

No. Document Check Description
1 List of BPR BKD Board of Directors members;
2 Documents stating the identity of each proposed Director consisting of:
a. photocopy of identification, namely a valid Resident Identity Card (KTP); b. curriculum vitae;
c. recent 4x6 cm passport photo; and
d. family tree list up to the second degree or in-laws; 3 Sample signature and initial of each proposed Director; 4 Notarized statement letter from each proposed Director stating that the person concerned:
a. is willing to comply with applicable laws and regulations, particularly in the banking sector; b. has never been sentenced for proven commission of Specific Criminal Acts decided by a court that has acquired permanent legal force within the last 20 (twenty) years prior to the date of the request submission;
c. is not currently subject to sanctions prohibiting them from becoming a shareholder, Director, Commissioner, and/or Executive Officer of a Financial Institution;

d. does not have non-performing loans and/or financing; e. has never been declared bankrupt and has never been a shareholder, Director, or Commissioner who was found guilty of causing a company to be declared bankrupt based on a court decision within the last 5 (five) years prior to the date of the request submission; f. does not hold concurrent positions at banks, non-bank companies, and/or other institutions; g. meets the provisions regulating that the majority of Directors do not have family or in-law relationships up to the second degree with other Directors or Commissioners; h. is not undergoing legal proceedings and/or competency and propriety testing at a bank. 5 Photocopy of the highest educational diploma, at minimum a Diploma Three (D3), legalized by a competent institution; 6 Letter of certificate/written proof regarding adequate and relevant banking knowledge for their position; 7 Letter of certificate/written proof regarding banking and/or non-bank financial services institution experience and expertise for at least 2 (two) years; 8 Photocopy of a valid graduation certificate from a Professional Certification Institution.

Appendix ...
This checklist is compiled completely and correctly to be submitted to the Financial Services Authority in the context of the request for approval of proposed Directors. (Place), (date, month, year) Signed 1) (……………) Notes:

Signed by the Owner of BPR BKD

doing ...
Appendix I.3
DOCUMENT CHECKLIST FOR THE REQUEST FOR APPROVAL OF PROPOSED COMMISSIONERS OF BPR BKD

No. Document Check Description
1 List of BPR BKD Board of Commissioners members; 2 Documents stating the identity of each proposed Commissioner consisting of:
a. photocopy of identification, namely a valid Resident Identity Card (KTP); b. curriculum vitae;
c. recent 4x6 cm passport photo; and
d. family tree list up to the second degree or in-laws; 3 Sample signature and initial of each proposed Commissioner; 4 Letter of certificate/written proof regarding adequate and relevant banking knowledge for their position and/or experience in banking and/or non-bank financial services institutions, for proposed Commissioners; 5 Notarized statement letter from each proposed Commissioner stating that the person concerned:
a. is willing to comply with applicable laws and regulations, particularly in the banking sector; b. has never been sentenced for proven commission of Specific Criminal Acts decided by a court that has acquired permanent legal force within the last 20 (twenty) years prior to the date of the request submission;
c. is not currently subject to sanctions prohibiting them from becoming a shareholder, Director, Commissioner, and/or Executive Officer of a Financial Institution;
d. does not have non-performing loans and/or financing; e. has never been declared bankrupt and has never been a shareholder, Director, or Commissioner who was found guilty of causing a company to be declared bankrupt based on a court decision within the last 5 (five) years prior to the date of the request submission; f. does not hold concurrent positions as:

Commissioner exceeding the allowance in applicable regulations; and/or
Director or Executive Officer at a BPR, BPRS, and/or Commercial Bank;
g. meets the provisions regulating that the majority of Commissioners do not have family or in-law relationships up to the second degree with other Commissioners or Directors; h. is not undergoing legal proceedings and/or competency and propriety testing at a bank.
i. is willing to present supervision results against the BPR BKD when requested by the Financial Services Authority;
6 Photocopy of a valid graduation certificate from a Professional Certification Institution.

This checklist is compiled completely and correctly to be submitted to the Financial Services Authority in the context of the request for approval of proposed Commissioners. (Place), (date, month, year) Signed 1) (……………) Notes:

Signed by the Owner of BPR BKD.

Established in Jakarta on June 10, 2016
EXECUTIVE HEAD OF BANKING SUPERVISOR
FINANCIAL SERVICES AUTHORITY, ttd
NELSON TAMPUBOLON

Copy matches the original
Legal Director 1
Legal Department ttd
Yuliana

APPENDIX II
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 19 /SEOJK.03/2016 REGARDING COMPLIANCE BY RURAL BANKS AND TRANSFORMATION OF VILLAGE CREDIT INSTITUTIONS GRANTED STATUS AS RURAL BANKS

EXAMPLE ...
Appendix II.1
(City), (date, month, year)
No. :
Attach :
To
Financial Services Authority
Attn: 1)
Subject: Submission of Action Plan for Compliance with Rural Bank Provisions by Village Credit Institution ……

Referring to Article 3 of Financial Services Authority Regulation Number 10/POJK.03/2016 regarding Compliance with Rural Bank Provisions and Transformation of Village Credit Institutions Granted Status as Rural Banks, we hereby submit the attached action plan for the fulfillment of all BPR provisions by BKD …… located in Village/Sub-district 2) ………, District ………, Regency/City ……….

Operational Executive Chairman of BKD
Notes:

Regional Office or local Financial Services Authority office covering the relevant Village Credit Institution (BKD).
Strike out what is not applicable.

EXAMPLE OF ACTION PLAN FOR COMPLIANCE WITH RURAL BANK PROVISIONS AND APPLICATION FOR TRANSFER OF BUSINESS LICENSE BY VILLAGE CREDIT INSTITUTION ……

No. Provision Description of Activities Implementation Target Notes
I. ACTION PLAN FOR COMPLIANCE WITH BPR PROVISIONS
A. Institutional Structure

Legal Entity Formation of Legal Entity with steps including:
Determination of BKD ownership, including:
Filled according to implementation target a. Village deliberation. sda. Agenda of village deliberation includes:
Determination of BKD ownership including the party representing the village.
Determination of planned business activities.
Determination of legal entity form.
Formation of working team.
Determination of proposed Directors and Commissioners.
Plan for unification of BKD or transfer of BKD (if necessary).
Implementation ...
name ...
No. Provision Description of Activities Implementation Target Notes Village deliberation implementation refers to the Minister of Village, Development of Disadvantaged Areas, and Transmigration Regulation Number 2 of 2015 regarding Guidelines for Village Deliberation Procedures and Decision-Making Mechanisms. b. Issuance of Village Regulation regarding the policy for forming a BPR legal entity as determined in the village deliberation. sda. Issuance refers to Law Number 6 of 2014 regarding Villages and its implementing regulations.
Drafting the deed of establishment of the legal entity in accordance with what was determined in the village deliberation.
sda. The draft deed of establishment includes the articles of association containing:
name, place of domicile, and complete address;
business activities as a BPR;
full name, place and date of birth, occupation, residence, nationality of the first appointed Directors and Commissioners;
authority, responsibility, term of office, and procedures for appointment, replacement, dismissal, and resignation of Directors and Commissioners, including the requirement that the appointment of proposed Directors and proposed Commissioners requires OJK approval;
capital, including a clause that any additional paid-up capital must go through OJK approval; and
Submission ...
No. Provision Description of Activities Implementation Target Notes
name of shareholders who have taken shares, details of the number of shares, and nominal value of shares placed and paid up.
Submission of approval for the draft deed of establishment of the legal entity to the village deliberation to become the deed.
sda. Determination of approval refers to the Minister of Village, Development of Disadvantaged Areas, and Transmigration Regulation Number 2 of 2015 regarding Guidelines for Village Deliberation Procedures and Decision-Making Mechanisms.
The concept of the deed of establishment of the legal entity approved by the village deliberation is written into the notarized deed of establishment of the legal entity, except if BKD chooses the legal entity form of Regional State-Owned Enterprise.
sda.
Submission of the draft deed of establishment of the legal entity to OJK for approval.
sda. Submission of the draft deed of establishment is accompanied by supporting documents including documents related to village deliberation and Village Regulation.
Submission ...
No. Provision Description of Activities Implementation Target Notes
Submission of determination of the deed of establishment of the legal entity to the relevant agency, in accordance with applicable legislation.
sda.
For BKDs choosing the PT legal entity, the legal entity registration is submitted to the Ministry of Law and Human Rights (Kemenkumham).
For BKDs choosing the Cooperative legal entity, the legal entity registration is submitted to the Ministry of Cooperatives and Small and Medium Enterprises/Local Cooperative Office.
For BKDs choosing the Regional Corporation (Perseroan Daerah) legal entity, approval is submitted to the Regional Government and registration to Kemenkumham.
For BKDs choosing the Regional State-Owned Enterprise (Perusahaan Umum Daerah) legal entity, approval is submitted to the Regional Government according to the procedures for drafting Regional Regulations.
B. Appointment of Directors and Commissioners
The number of Directors and Commissioners must consist of at least 2 (two) persons each.
Determination of proposed Directors and proposed Commissioners.
sda. Determination of proposed Directors and proposed Commissioners can be done simultaneously with the village deliberation when determining BKD ownership as per item A.1.a.
Proposed Directors and proposed Commissioners undergo competency testing to obtain work competency certificates from the Professional Certification Institution.
sda. Competency testing is conducted for proposed Directors and proposed Commissioners who do not yet have work competency certificates.
Preparation ...
No. Provision Description of Activities Implementation Target Notes
Submission of request for approval of proposed Directors and proposed Commissioners to the Financial Services Authority.
sda. Submission is done simultaneously with the submission of the draft deed of establishment of the legal entity to the Financial Services Authority for approval.
Holding the General Meeting of Shareholders (GMS) to appoint Directors and Commissioners who have been approved by the Financial Services Authority, except if BKD chooses the legal entity form of Regional State-Owned Enterprise.
sda. The GMS for appointment must be held no later than 90 (ninety) days from the date of Financial Services Authority approval.
C. Infrastructure Fulfillment
Infrastructure fulfillment includes:
Preparation of office building including security facilities.
sda. Accompanied by proof of office building control, for example:
a. Proof of ownership (SHM/SHGB) if the building is owned independently; b. Office building lease agreement or note of agreement on the use of the office building;
c. Business Domicile Letter from the competent agency.
Preparation of office equipment, such as office furniture, safes, forms, or documents.

Rp3,000,000,000.00 ...
No. Provision Description of Activities Implementation Target Notes
3. Preparation of information technology, such as computers, applications, telephones that allow connection to the Bank Indonesia/Financial Services Authority extranet or virtual private network network (for reporting purposes).
4. Preparation of human resources. BPR human resources ideally consist of at least 11 (eleven) people comprising:

2 (two) Commissioners;
2 (two) Directors;
1 (one) each for Accounting, customer service, marketing, admin & general, cashier, credit analyst, and security officer.
Drafting work systems and procedures. Work systems and procedures include:
Policies and procedures in the field of fund mobilization.
Policies and procedures in the field of lending.
Operational policies and procedures, including accounting guidelines and procedures in accordance with BPR accounting guidelines.
D. Fulfillment of BPR Core Capital
BKD must fulfill a minimum core capital of
In the event that additional capital comes from: sda. Additional paid-up capital can be done in stages to meet the target of Rp3,000,000,000.00 (three billion rupiah) by the end of 2019.
Unification ...
No. Provision Description of Activities Implementation Target Notes Rp3,000,000,000.00 (three billion rupiah) no later than December 31, 2019
Village participation, contained with steps in accordance with applicable legislation, including:
sda. a. Determination of village funds is done through village deliberation; and sda. Village deliberation can be done simultaneously with the village deliberation for determining ownership and/or forming a legal entity as per item A.1.a. b. Issuance of Village Regulation regarding capital deposit. sda. Determination of capital deposit can be simultaneous with the Village Regulation for forming a legal entity, referring to Law Number 6 of 2014 regarding Villages and its implementing regulations.
Village resident donations accompanied by efforts to mobilize village donations, including:
sda. a. Direct donations by the community (self-initiated); sda. b. Fundraising events. sda.
Other sources in accordance with legislation provisions.
In the event that BKD is estimated unable to fulfill the above minimum core capital obligation, BKD can do:
list ...
No. Provision Description of Activities Implementation Target Notes
Unification through merger and absorption or transfer;
Transformation into LKM or Village Enterprise/Business Unit of Village Enterprise.
E. Operational Working Days
BKD as a BPR must conduct operational activities for at least 5 (five) working days in 1 (one) week Stages of BKD operations as a BPR to increase operational time to 5 (five) working days, for example:
Ensuring availability of office facilities and infrastructure;
sda. BKD as a BPR operates from Monday to Friday (except national holidays). If BKD operates outside the determined working days, BKD must report this to the Financial Services Authority. Availability of office facilities also refers to infrastructure preparation.
Adjustment of the number of human resources.
II. APPLICATION FOR TRANSFER OF BUSINESS LICENSE
Application for transfer of business license to the Financial Services Authority.
The application is accompanied by:
Deed of establishment of the legal entity containing articles of association approved by the competent agency;
Ownership data consisting of:
a. list of shareholders including details of each share ownership by BKD choosing PT or Regional Corporation legal entity; b. list of members including details of principal savings and mandatory savings by BKD choosing Cooperative legal entity;

each ...
No. Provision Description of Activities Implementation Target Notes
3. list of Directors and Commissioners;
4. planned organizational structure and number of personnel; and
5. planned work systems and procedures.
F. Unification of BKD or Transfer of BKD (If Fulfillment of BPR Capital Requirements Requires Unification or Transfer)

Unification:
a. through the process of BKD merger
Determination to unify BKD through the BKD merger process by village deliberation.
sda. Determination can be done during the village deliberation to determine ownership/legal entity as per item A.1.a.
Issuance of Village Regulation regarding BKD merger policy. sda. Procedures for issuing Village Regulation refer to Law Number 6 of 2014 regarding Villages and its implementing regulations and amendments.
Drafting the BKD merger plan.
sda. The merger plan is drafted jointly by each Operational Executive of BKD assisted by a working team (if formed) and the BPR Board of Directors of the Regional Government that will participate in the merger process.
Submitting the merger plan to the BKD Supervisory Board and the BPR Board of Commissioners of the Regional Government for approval.
sda.
Operational Executive of BKD submits the merger plan to the BKD Supervisory Board;
BPR Board of Directors of the Regional Government submits the merger plan to the BPR Board of Commissioners.
Announcing a summary of the merger plan.
sda. Announcement is done by posting the summary of the merger plan on the notice board at the offices of each BKD and the Regional Government-owned BPR.
Issuance ...
No. Provision Description of Activities Implementation Target Notes at each BKD and Regional Government-owned BPR office.
Holding village deliberation and GMS/Regional Regulation to approve the merger plan along with the merger deed.
sda. a. If there are objections, they are resolved during the village deliberation and GMS. b. Procedures for issuing Regional Regulation refer to Law Number 23 of 2014 regarding Regional Government and its implementing regulations and amendments.
Making the merger deed and the deed of amendment of the articles of association of the Regional Government-owned BPR, notarized.
sda.
Submitting application for merger license to the Financial Services Authority and application for revocation of BKD business license.
sda. The license application is submitted by the Operational Executive Chairman of one of the BKDs and the BPR Board of Directors of the Regional Government.
Submission of approval/notification of articles of association change to the competent agency.
sda. Submission of approval/notification of articles of association change is done after obtaining merger license from the Financial Services Authority. b. through the process of BKD absorption
Determination to unify BKD through the BKD absorption process by village deliberation.
sda. Determination can be done during the village deliberation to determine ownership/legal entity as per item A.1.a.

business ...
No. Provision Description of Activities Implementation Target Notes
2. Issuance of Village Regulation and Regional Regulation regarding BKD absorption policy.
sda. Procedures for issuing Village Regulation refer to Law Number 6 of 2014 regarding Villages and its implementing regulations and amendments.
3. Drafting the BKD absorption plan.
sda. The absorption plan is drafted jointly by each operational executive of BKD assisted by a working team (if formed) that will participate in the absorption process.
4. Submitting the absorption plan to the BKD Supervisory Board for approval.
sda.
5. Drafting the concept of the absorption deed. sda.
6. Announcing a summary of the absorption plan. sda. Announcement is done by posting the summary of the absorption plan on the notice board at each BKD office.
7. Holding village deliberation to request approval from the BKD owner for the absorption plan along with the absorption deed.
sda. If there are objections, they are resolved during the village deliberation.
8. Making the absorption deed and the deed of establishment of the BPR resulting from the absorption, notarized.
sda.
9. Submitting application for BKD absorption license and revocation of BKD business license to the Financial Services Authority.
sda. The application is submitted by the Operational Executive Chairman of one of the BKDs.

taking ...
No. Provision Description of Activities Implementation Target Notes
10. Submission of approval for the deed of establishment of the BPR resulting from the absorption to the competent agency.
sda. Submission of approval is done after obtaining absorption license from the Financial Services Authority.
2. Transfer of BKD 1. Determination to transfer BKD is done during the village deliberation to obtain owner approval.
sda. Approval is evidenced by a letter of approval from the BKD owner or minutes of the village deliberation. This approval can be done during the village deliberation as per item A.1.a.
2. Issuance of Village Regulation and Regional Regulation regarding BKD transfer policy.
sda. a. Procedures for issuing Village Regulation refer to the Minister of Village, Development of Disadvantaged Areas, and Transmigration Regulation Number 6 of 2014 regarding Villages and its implementing regulations and amendments. b. Procedures for issuing Regional Regulation refer to Law Number 23 of 2014 regarding Regional Government and its implementing regulations and amendments.
3. Drafting the BKD transfer plan.
sda. The BKD transfer plan is drafted by the Regional Government together with BKD.
4. Drafting the balance sheet and profit and loss report after transfer.
sda. The draft balance sheet and profit and loss report after transfer are drafted by the Regional Government together with BKD.
5. Announcing the BKD transfer plan.
sda. The announcement of the BKD transfer plan must contain at least:
a. name and place of domicile of the Regional Government that will

Appendix ...
No. Regulation Activity Description
Implementation Target
Remarks taking over BKD; b. plan for the status of the BKD office to be taken over;
c. method for settling the rights and obligations of the BKD to be taken over, towards debtors and creditors;
d. estimated duration for the implementation of the transfer.
6. Submitting an application for approval of the BKD transfer plan to OJK. sda.
The application is submitted by the Regional Government and accompanied by documents as regulated in Article 8 Paragraph (2) of POJK regarding BKD.
7. Submitting an application for a BPR business license to OJK. sda.
The application is submitted by the Regional Government and accompanied by documents as regulated in Article 8 Paragraph (4) of POJK regarding BKD.

EXAMPLE ...
Appendix II.2
(City), (date, month, year)
No. :
Attachment :
To
Financial Services Authority
Attn: 1)
Subject: Submission of Report on the Progress of Realization of the Action Plan of the Village Credit Institution Referring to our letter number ……… dated ……… regarding the submission of the action plan of the Village Credit Institution, we hereby report the progress of realization of the action plan of the Village Credit Institution ……… for the reporting period ending on date ……… as attached in the progress report of the action plan realization. To complete the aforementioned report, we attach the following supporting documents:

...
...
Etc.
Thus let it be known.
Operational Chairman of the BPR BKD
Remarks:

Regional Office or local Financial Services Authority office that covers the relevant BPR BKD.

G. Unification ...
EXAMPLE REPORT ON THE PROGRESS OF REALIZATION OF THE ACTION PLAN IN THE FRAMEWORK OF FULFILLING BPR REQUIREMENTS BY VILLAGE CREDIT INSTITUTION …… No. Regulation Activity Description 1) Implementation Target 2) Implementation Date 3) Remarks 4) A. Institutional

....
Etc.
B. Appointment of Board of Directors Members and Board of Commissioners Members
....
Etc.
C. Fulfillment of Infrastructure
....
Etc.
D. Fulfillment of BPR Core Capital
....
Etc.
E. Operational Working Days
....
Etc.
F. Submission of Application for Transfer of Business License
....
Etc.

Appendix ...
No. Regulation Activity Description 1)
Implementation Target 2)
Implementation Date 3)
Remarks 4)
G. Unification of BKD or Transfer of BKD (If Fulfillment of BPR Capital Requirements Requires Unification or Transfer)

....
Etc.
Remarks:

Follow the steps listed in the action plan.
Fill in with the implementation target listed in the action plan.
Fill in with the implementation date.
Attach supporting documents proving the implementation of activities.

Appendix II.3
(City), (date, month, year)
No. :
Attachment :
To
Financial Services Authority
Attn: 1)
Subject: Application for Transfer of Business License Referring to our letter number ……… dated ……… regarding the submission of the progress of realization of the action plan of the Village Credit Institution, we hereby:
BPR Name : ………………
Address : ……………… submit an application for the transfer of the business license from the Minister of Finance Decree Number …… to the business license from the Financial Services Authority. To complete the aforementioned application, we hereby attach supporting documents 2) accompanied by a checklist of document completeness. Thus this application. BPR BOARD OF DIRECTORS Remarks:

Regional Office or local Financial Services Authority office that covers the relevant BPR BKD.
In 2 (two) copies.
CHECKLIST ...

CHECKLIST OF DOCUMENTS FOR APPLICATION FOR TRANSFER OF BUSINESS LICENSE No. Document Check Remarks 1 Deed of establishment of the legal entity containing the articles of association that have been approved by the competent authority; 2 Ownership data consisting of:
a. list of shareholders along with details of each share ownership held by the BKD choosing PT legal entity or State-Owned Enterprise; or b. list of members along with details of principal savings and mandatory savings held by the BKD choosing Cooperative legal entity; 3 List of Board of Directors members and Board of Commissioners members; 4 Organizational structure plan and personnel count; 5 Work system and procedure plan. This checklist is drawn up completely and correctly to be submitted to the Financial Services Authority in the framework of the application for transfer of business license. (Place), (date, month, year) Signed 1) (……………) Remarks:

Signed by the BPR Board of Directors
Established in Jakarta on June 10, 2016
EXECUTIVE HEAD OF BANKING SUPERVISOR
FINANCIAL SERVICES AUTHORITY, sign
NELSON TAMPUBOLON
Copy matches the original
Legal Director 1
Legal Department sign
Yuliana

APPENDIX III
FINANCIAL SERVICES AUTHORITY CIRCULAR LETTER
NUMBER 19 /SEOJK.03/2016
REGARDING
FULFILLMENT OF RURAL BANK REQUIREMENTS AND
TRANSFORMATION OF VILLAGE CREDIT INSTITUTIONS GRANTED STATUS AS RURAL BANKS

Appendix III.1
(City), (date, month, year)
No. :
Attachment :
To
Financial Services Authority
Attn: 1)
Subject: Application for Unification of BKD Through Merger Process Referring to Article 6 paragraph (1) of Financial Services Authority Regulation Number 10/POJK.03/2016 regarding Fulfillment of Rural Bank Requirements and Transformation of Village Credit Institutions Granted Status as Rural Banks, we hereby submit an application to obtain approval for the Unification of BKD through the merger process of BPR owned by Regional Government ...... and simultaneously revoke the BKD business license as follows:
No. BKD Name
Business License No. from Menkeu
Address
Operating Time
Phone No. Email
3 Etc.
To complete the aforementioned application, we hereby submit the required documents as per the attached checklist.
Thus this application.
Operational Chairman of the BKD Board of Directors of the BPR owned by Regional Government Remarks:

Regional Office or local Financial Services Authority office that covers the relevant BKD.
*) The submission of the merger application for BKD can be combined in one letter with other applications.
CHECKLIST ...

CHECKLIST OF DOCUMENTS FOR APPLICATION FOR APPROVAL OF UNIFICATION OF VILLAGE CREDIT INSTITUTION THROUGH MERGER PROCESS No. Document Check Remarks 1 Draft BKD Merger according to item III.A.1.k.1) SEOJK regarding BKD. 2 Approval from the owners of BKD conducting the BKD Merger. 3 Draft Balance Sheet and Profit/Loss Report resulting from BKD Merger with BPR owned by regional government. 4 Merger Deed and Establishment Deed of BPR resulting from BKD Merger. 5 Proof of announcement of the summary draft of BKD Merger. This checklist is drawn up completely and correctly to be submitted to the Financial Services Authority in the framework of the application for approval of unification of Village Credit Institution through merger process. (Place), (date, month, year) Signed 1) Operational Chairman of the BKD Board of Directors of the BPR owned by Regional Government Remarks:

Signed by the Operational Chairman of the BKD and the Board of Directors of the BPR owned by Regional Government.
Board of Directors of the BPR owned by Regional Government
Appendix ...

Appendix III.2
(City), (date, month, year)
No. :
Attachment :
To
Financial Services Authority
Attn: 1)
Subject: Application for Unification of BKD Through Absorption Process Referring to Article 6 paragraph (2) of Financial Services Authority Regulation Number 10/POJK.03/2016 regarding Fulfillment of Rural Bank Requirements and Transformation of Village Credit Institutions Granted Status as Rural Banks, we hereby submit an application to obtain approval for the unification of BKD through the absorption process and simultaneously revoke the BKD business license as follows:
No. BKD Name
Business License No. from Menkeu
Address
Operating Time
Phone No. Email
3 Etc.
To complete the aforementioned application, we hereby submit the required documents as per the attached checklist.
Thus this application.
Operational Chairman of the BKD
Remarks:

Regional Office or local Financial Services Authority office that covers the relevant BKD.
*) The submission of the absorption application for BKD can be combined in one letter with other applications.
CHECKLIST ...

CHECKLIST OF DOCUMENTS FOR APPLICATION FOR APPROVAL OF UNIFICATION OF VILLAGE CREDIT INSTITUTION THROUGH ABSORPTION PROCESS No. Document Check Remarks 1 Draft BKD Absorption according to item III.A.2.k.1) SEOJK regarding BKD. 2 Approval from the owners of BKD conducting the BKD Absorption. 3 Draft Balance Sheet and Profit/Loss Report of BPR resulting from BKD Absorption. 4 Absorption Deed and Establishment Deed of BPR resulting from BKD Absorption. 5 Proof of announcement of the summary draft of BKD Absorption. This checklist is drawn up completely and correctly to be submitted to the Financial Services Authority in the framework of the application for approval of unification of Village Credit Institution through absorption process. (Place), (date, month, year) Signed 1) (……………) Remarks:

Signed by the Operational Chairman of the BKD.
Appendix ...

Appendix III.3
(City), (date, month, year)
No. :
Attachment :
To
Financial Services Authority
Attn: 1)
Subject: Report on Implementation of BKD Unification Referring to Article 7 of Financial Services Authority Regulation Number 10/POJK.03/2016 regarding Fulfillment of Rural Bank Requirements and Transformation of Village Credit Institutions Granted Status as Rural Banks, we hereby report that the BKD unification process through merger/absorption 2) has been implemented on date ...... . In relation to this matter, we submit the following supporting documents:

Photocopy of the articles of association or deed of establishment of the BPR resulting from BKD Unification which has been approved or certified by the competent authority.
Organizational structure and management of the BPR resulting from BKD Unification, data of Directors and Board of Commissioners as well as data of shareholders or owners of the BPR resulting from BKD Unification;
Balance Sheet and Profit/Loss Report of the BPR resulting from BKD Unification; and
Complete address of the BPR resulting from BKD Unification.
Thus let it be known.
Board of Directors of BPR BKD
Remarks:

Regional Office or local Financial Services Authority office that covers the relevant BKD.
Cross out what is not needed.
Appendix ...

Appendix III.4
(City), (date, month, year)
No. :
Attachment :
To
Financial Services Authority
Attn: 1)
Subject: Application for Approval of BKD Transfer Plan Referring to Article 8 paragraph (2) of Financial Services Authority Regulation Number 10/POJK.03/2016 regarding Fulfillment of Rural Bank Requirements and Transformation of Village Credit Institutions Granted Status as Rural Banks, we hereby submit an application to obtain approval for the BKD Transfer plan and simultaneously revoke the BKD business license as follows:
No. BKD Name
Business License No. from Menkeu
Work Area Address Phone No. Email
3 Etc.
The transfer of the above BKD is carried out by:
Regional Government of District/City *)
.....
Address
Phone No.
Email
Furthermore, we plan to establish a BPR named ....... located in District/City ...... .
To complete the application for approval of the BKD transfer plan, we hereby attach the required supporting documents according to item III.B.2 SEOJK regarding BKD and accompanied by a document completeness checklist. Thus this application. Regional Government Remarks:

Regional Office or local Financial Services Authority office that covers the relevant BKD.
*) The submission of the BKD transfer plan application can be combined in one letter with other applications.
CHECKLIST ...

CHECKLIST OF DOCUMENTS FOR APPLICATION FOR APPROVAL OF TRANSFER OF VILLAGE CREDIT INSTITUTION No. Document Check Remarks

Draft BKD Transfer containing at least:
a. name and domicile of the Regional Government that will take over the BKD; b. name and domicile of the BKD to be taken over;
c. quantity and nominal value of assets and liabilities to be taken over along with the composition of shareholders or owners after the BKD Transfer is conducted; and
d. plan for the status of the BKD office resulting from the BKD Transfer.
2 Approval from the owners of BKD conducting the BKD Transfer.
3 Draft Balance Sheet and Profit/Loss Report after BKD Transfer.
4 Draft announcement of BKD Transfer.
This checklist is drawn up completely and correctly to be submitted to the Financial Services Authority in the framework of the application for approval of the transfer plan of the Village Credit Institution. (Place), (date, month, year) Signed 1) (……………) Remarks:

Signed by the Regional Government official.
Appendix ...

Appendix III.5
(City), (date, month, year)
No. :
Attachment :
To
Financial Services Authority
Attn: 1)
Subject: Application for Business License of BPR Resulting from BKD Transfer Referring to Financial Services Authority Letter Number ……… dated ……… regarding ……… we hereby:
BPR Name : ………………
Address : ……………… submit an application to obtain a business license as a Rural Bank.
To complete the aforementioned application, we hereby attach supporting documents 1) accompanied by a document completeness checklist.
Thus this application.
Regional Government
Remarks:

Regional Office or local Financial Services Authority office that covers the relevant BPR BKD.
In 2 (two) copies.
CHECKLIST ...

CHECKLIST OF DOCUMENTS FOR APPLICATION FOR BUSINESS LICENSE OF RURAL BANK RESULTING FROM TRANSFER OF VILLAGE CREDIT INSTITUTION No. Document Check Remarks 1 Proof of fulfillment of minimum core capital; 2 Deed of establishment of the legal entity containing the articles of association of the legal entity that has been approved by the competent authority; 3 Regional Regulation regarding the establishment of BPR; 4 Proof of operational readiness; 5 Ownership data in the form of a share list along with details of each share ownership, except for BPR with Public Enterprise legal entity; 6 Candidates for Board of Directors members and candidates for Board of Commissioners members; 7 Organizational structure and work systems and procedures, including personnel structure; and 8 Decision letter of the Head of Region stating that the source of capital contribution funds has been budgeted in the APBD and has been approved by the local DPRD. This checklist is drawn up completely and correctly to be submitted to the Financial Services Authority in the framework of the application for business license of the Rural Bank resulting from the Transfer of the Village Credit Institution. (Place), (date, month, year) Signed 1) (……………) Remarks:

Signed by the Regional Government official.
Established in Jakarta on June 10, 2016
EXECUTIVE HEAD OF BANKING SUPERVISOR
FINANCIAL SERVICES AUTHORITY, sign
NELSON TAMPUBOLON
Copy matches the original
Legal Director 1
Legal Department sign
Yuliana

APPENDIX IV
FINANCIAL SERVICES AUTHORITY CIRCULAR LETTER
NUMBER 19 /SEOJK.03/2016
REGARDING
FULFILLMENT OF RURAL BANK REQUIREMENTS AND
TRANSFORMATION OF VILLAGE CREDIT INSTITUTIONS GRANTED STATUS AS RURAL BANKS

Appendix IV.1
(City), (date, month, year)
No. :
Attachment :
To
Financial Services Authority
Attn: 1)
Subject: Application for Absorption of BKD into LKM Referring to Financial Services Authority Circular Letter Number …/SEOJK.03/2016 regarding Fulfillment of Rural Bank Requirements and Transformation of Village Credit Institutions Granted Status as Rural Banks, we hereby submit an application to obtain approval for the absorption of BKD into LKM and simultaneously revoke the BKD business license as follows:
No. BKD Name
Business License No. from Menkeu
Address
Operating Time
Phone No. Email
3 Etc.
To complete the aforementioned application, we hereby submit the required documents as per the attached checklist.
Thus this application.
Operational Chairman of the BKD
Remarks:

Regional Office or local Financial Services Authority office that covers the relevant BKD.
*) The submission of the BKD absorption application can be combined in one letter with the application for LKM business license.
CHECKLIST ...

CHECKLIST OF DOCUMENTS FOR APPLICATION FOR APPROVAL OF ABSORPTION OF VILLAGE CREDIT INSTITUTION INTO MICRO FINANCE INSTITUTION No. Document Check Remarks

Draft BKD absorption according to item IV.C.2 SEOJK regarding BKD.
2 Approval from the owners of BKD conducting the BKD absorption.
3 Draft balance sheet and profit/loss report of LKM resulting from BKD absorption.
4 Absorption deed and establishment deed of LKM resulting from BKD absorption.
5 Proof of announcement of the summary draft of BKD absorption.
This checklist is drawn up completely and correctly to be submitted to the Financial Services Authority in the framework of the application for approval of absorption of Village Credit Institution into Micro Finance Institution. (Place), (date, month, year) Signed 1) (……………) Remarks:

Signed by the Operational Chairman of the BKD.
Appendix ...

Appendix IV.2
(City), (date, month, year)
No. :
Attachment :
To
Financial Services Authority
Attn: 1)
Subject: Application for License for Transformation of Village Credit Institution into Micro Finance Institution/Village-Owned Enterprise (BUM Desa)/BUM Desa business unit 2) Referring to Article 8 paragraph (2) of Financial Services Authority Regulation Number 10/POJK.03/2016 regarding Fulfillment of Rural Bank Requirements and Transformation of Village Credit Institutions Granted Status as Rural Banks, we hereby submit an application for license for transformation of Village Credit Institution into Micro Finance Institution/BUM Desa/BUM Desa business unit. 2) To complete the aforementioned application, we hereby submit documents accompanied by a document completeness checklist. Thus this application. Operational Chairman of the BKD Remarks:

Regional Office or local Financial Services Authority office that covers the relevant BKD.
Cross out what is not needed.
CHECKLIST ...

Appendix ...
CHECKLIST OF DOCUMENTS FOR APPLICATION FOR LICENSE FOR TRANSFORMATION OF VILLAGE CREDIT INSTITUTION INTO MICRO FINANCE INSTITUTION/VILLAGE-OWNED ENTERPRISE No. Document Check Remarks

BKD transformation approval document (in the form of BKD Owner Meeting Minutes or Village Deliberation and Village Regulation and/or Regional Regulation approving the BKD transformation plan into LKM or BUM Desa/BUM Desa business unit);
Action plan in the framework of implementing BKD transformation;
Other supporting documents (if any).
This Checklist has been drawn up completely and correctly to be submitted to the Financial Services Authority in the framework of the application for license for transformation of Village Credit Institution into Micro Finance Institution/Village-Owned Enterprise 2). (Place), (date, month, year) Signed 1) (……………) Remarks:

Signed by the Manager/one of the Managers
Choose one

Appendix IV.3
EXAMPLE ACTION PLAN FOR TRANSFORMATION OF VILLAGE CREDIT INSTITUTION …… INTO MICRO FINANCE INSTITUTION No. Regulation Activity Description Target Completion Remarks A. Institutional

Deed of Establishment of Legal Entity
Determination of BKD ownership, among others through:
a. Village Deliberation Agenda of village deliberation among others:
Determination of BKD ownership, including the party representing the village.
Determination of business activities as LKM.
Formation of working team (which is the team compiling the draft establishment of LKM).
Determination of legal entity form.
Determination of organizational structure and candidates for Directors, Board of Commissioners members, and Sharia Supervisory Board (DPS) if choosing as Sharia LKM.
Implementation of village deliberation refers to the Minister of Villages, Development of Disadvantaged Regions, and Transmigration Regulation Number 2 of 2015 regarding Guidelines for Rules of Procedure and Mechanism for Decision Making in Village Deliberations. b. Issuance of Village Regulation regarding choice of business Refer to Law Number 6 of 2014 regarding Villages and its implementing regulations. activities ...

in ...
No. Regulation Activity Description
Target Completion
Remarks activities and formation of legal entity that has been determined in the village deliberation.
2. Compiling draft deed of establishment of legal entity.
The draft deed of establishment includes articles of association among others containing:

name and domicile;
business activities as conventional LKM or based on Sharia Principles;
capital;
ownership; and
authority, responsibility, term of office of Directors, Board of Commissioners, and DPS if choosing as Sharia LKM;
as stipulated in Article 5 letter a POJK Number 12/POJK.05/2014 regarding Licensing and Institutional Framework of LKM as amended by POJK Number 61/POJK.05/2015.
Submission of approval for draft deed of establishment of legal entity to village deliberation to become deed.
Refer to the Minister of Villages, Development of Disadvantaged Regions, and Transmigration Regulation Number 2 of 2015 regarding Guidelines for Rules of Procedure and Mechanism for Decision Making in Village Deliberations.
Concept of deed of establishment of legal entity that has been approved by village deliberation is written
Commissioner ...
No. Regulation Activity Description
Target Completion
Remarks into deed of establishment of legal entity that is notarized.
Submission of approval for deed of establishment of legal entity to related agency, according to applicable legislation.
Approval of deed of establishment of legal entity is submitted to the Ministry of Law and Human Rights (Kemenkumham) or related agency.
Submission of draft deed of establishment of legal entity to Financial Services Authority and application for revocation of business license as BPR BKD.
a. Submitted in one letter together with application for business license to Financial Services Authority. b. Revocation of license from Minister of Finance by Financial Services Authority.
Directors, Board of Commissioners, and DPS
Compiling organizational structure and management.
The organizational structure and management mentioned must at least have credit decision-making, collection, and administration functions, which are determined in the village deliberation as per item A.1.
Request recommendation letter for candidate DPS to National Sharia Council MUI or local MUI, if applying for business license as Sharia LKM.
Determine candidates for Board of Directors members and candidates for Board of Commissioners members, and DPS if applying for business license as Sharia LKM.
Determination of candidates for Board of Directors members and candidates for Board of Commissioners members and DPS if applying for business license as Sharia LKM can be done together with village deliberation when determining BKD ownership as per item A.1
Submission of data of Board of Directors members and Board of Commissioners members to Financial Services Authority accompanied by documents as stipulated in Article 5A POJK Number 61/POJK.05/2015 regarding Amendment to POJK Number 12/POJK.05/2014 regarding Licensing and Institutional Framework of LKM.
Shareholders 1. Compiling list of shareholders. Submission of shareholder data to Financial Services Authority accompanied by documents as stipulated in Article 5 letter c POJK Number 12/POJK.05/2014 regarding Licensing and Institutional Framework of LKM as amended by POJK Number 61/POJK.05/2015.
Submitting data of shareholders to Financial Services Authority.
Submitted in one letter together with application for business license to Financial Services Authority.
B. Fulfillment of Capital
BKD must fulfill minimum paid-up capital as LKM according to the scope of business area.
In case additional capital comes from:
Village participation, carried out according to the procedures established in legislation
Minimum paid-up capital amount for LKM is at least:
a. Rp50,000,000.00 (fifty million rupiah), for village/village unit business area scope; b. Rp100,000,000.00 (one hundred million rupiah), for sub-district business area scope; or
c. Rp500,000,000.00 (five hundred million rupiah), for

C. Fulfillment of ...
No. Regulation Description of Activities Target Completion Remarks ... valid decrees, among others:
work area coverage at the regency/city level.
2. The aforementioned capital is an absolute requirement that must be met by the BKD if it transforms into an LKM.
a. Determination of village funds is carried out through Village Deliberations.
Referring to the Minister of Villages, Development of Disadvantaged Regions, and Transmigration Regulation Number 2 of 2015 concerning Guidelines for Order and Mechanism of Decision Making in Village Deliberations. b. Issuance of Village Regulations regarding the deposit of capital. Referring to Law Number 6 of 2014 concerning Villages and its implementing regulations.
2. Contributions from villagers are accompanied by efforts made to gather village contributions, among others:
a. Direct community contributions (self-initiated); b. Fundraising events.
3. Other sources in accordance with applicable legislation.

Submission of ...
No. Regulation Description of Activities Target Completion Remarks
C. Infrastructure Fulfillment
Fulfillment of infrastructure and operational readiness of the LKM.
Drafting systems and work procedures for the LKM.
Systems and work procedures include among others:
granting loans or financing;
accepting deposits;
collection from borrowers or parties receiving Financing;
procedures for resolving bad debts; and
procedures for closing deposits;
Fulfillment of infrastructure includes among others:
a. Preparation of office buildings including security facilities; Accompanied by proof of control over the office building, for example:
Proof of ownership (SHM/SHGB) if the building is owned independently.
Office building lease agreement, note of agreement on use of office building, or permit letter for use of the building.
Other proofs of control.
b. Preparation of office equipment and facilities, for example office furniture, forms;
c. Preparation of human resources.
Drafting a work plan for the first 2 (two) years.

E. Merger ...
No. Regulation Description of Activities Target Completion Remarks
4. Submitting systems and work procedures, infrastructure readiness documents, and work plans to the Financial Services Authority.
Submitted in one letter together with the business license application to the Financial Services Authority accompanied by supporting documents.
D. Application for Business License
Submitting application for business license for BKD as an LKM.
The submission of the business license application as an LKM is attached with:
a. deed of establishment of the legal entity including articles of association including amendments; b. projection of financial position reports and annual financial performance reports starting from when the LKM conducts operational activities for the first 2 (two) years;
c. annual financial reports consisting of at least financial position reports and financial performance reports for the last 2 (two) years;
d. closing financial position reports and opening financial position reports from the LKM; e. list of LKM Loans/Financing for the last 2 (two) years; and f. data of Directors, Board of Commissioners, DPS, shareholders or members.

each ...
No. Regulation Description of Activities Target Completion Remarks E. Merger of BKD into LKM

Determination to carry out the merger of BKD into 1 (one)
LKM by village deliberation. sda.
Determination can be made during the village deliberation to determine ownership/legal entity as per item A.1.
Issuance of Village Regulations
regarding merger policy of BKD and/or Regional Regulations if involving Government Capital Participation. sda. a. Procedure for issuing Village Regulations refers to Law Number 6 of 2014 concerning Villages and its implementing regulations and amendments. b. Procedure for issuing Regional Regulations refers to Law Number 23 of 2014 concerning Regional Government and its implementing regulations and amendments.
c. Shares of the LKM with PT legal status must be at least 60% (sixty percent) owned by the Regency/City Government or village/village unit-owned enterprises.
Drafting the merger plan of BKD.
sda.
The merger draft is prepared jointly by each operational executor of the BKD assisted by a working team (if formed) which will participate in the merger process.
Submitting the merger draft to the BKD Supervisory Board for approval.
sda.
Drafting the concept of the merger deed.
sda.
Announcing the summary of the merger draft.
sda.
Announcement is done by posting the summary of the merger draft on the announcement board at the office

Appendix ...
No. Regulation Description of Activities Target Completion Remarks of each BKD
7. Holding village deliberation to seek approval from BKD owners regarding the merger draft along with the merger deed.
sda.
If there are objections, they are resolved during the implementation of the village deliberation.
8. Making the merger deed and the deed of establishment of the resulting LKM from the merger, notarized.
sda.
9. Submitting application for merger permission of BKD and revocation of business license of BKD to the Financial Services Authority.
sda.
The merger permission application submitted by the Operational Executive Head of one of the BKDs can be done simultaneously with the business license application as referred to in letter D.
10. Submission of approval for the deed of establishment of the resulting LKM from the merger to the competent authority.
sda.
Submission of approval is done after obtaining merger permission from the Financial Services Authority.

agreement ...
Appendix IV.4
EXAMPLE OF ACTION PLAN FOR TRANSFORMATION OF VILLAGE CREDIT INSTITUTION …… INTO VILLAGE-OWNED ENTERPRISE (BUM DESA)/BUM DESA BUSINESS UNIT No. Activity Description of Activities Target Completion Remarks

Implementation
Village Deliberation
Determine BKD ownership.
Agree on the establishment of BUM Desa/BUM Desa business unit.
Referring to the Minister of Villages, Development of Disadvantaged Regions, and Transmigration Regulation Number 4 of 2015 concerning Establishment, Management and Administration, and Dissolution of Village-Owned Enterprises.
Form a management organization for BUM Desa/BUM Desa business unit.
Agree on the business capital of BUM Desa/BUM Desa business unit.
The procedure for determining the business capital of BUM Desa/BUM Desa business unit refers to Law Number 6 of 2014 concerning Villages and its implementing regulations and amendments.
Draft Articles of Association and Bylaws of BUM Desa/BUM Desa business unit.
BUM Desa can conduct financial business that meets the needs of micro-scale businesses conducted by rural economic actors. Business units within BUM Desa can provide easy-to-access credit and loan access for rural community members.
Determination of Village
Regulation
Determine Village Regulation on the establishment of BUM Desa or BUM Desa business unit based on the result of Agreeing on Village Deliberation Referring to Law Number 6 of 2014 concerning Villages and its implementing regulations and amendments. Village Regulations contain among others:

Appendix ...
No. Activity Description of Activities
Target Completion Remarks village deliberation 1. Location and domicile of BUM Desa/BUM Desa business unit;
2. Management organization personnel of BUM Desa consisting of:
a. Advisors; b. Operational Executors; and
c. Supervisors.
3. Management organization personnel of BUM Desa business unit refers to applicable regulations.
3. Submission of application for revocation of business license as BPR to
the Financial Services Authority.

EXAMPLE ...
Appendix IV.5
(City), (date, month, year)
No. :
Attach :
To
Financial Services Authority
Attn: 1)
Subject: Submission of Report on Progress of Realization of Action Plan for Transformation of Village Credit Institution into Microfinance Institution Referencing our letter Number ............ dated .................... regarding application for permission for transformation of Village Credit Institution into Microfinance Institution, we hereby report the progress of realization of the action plan for transformation of Village Credit Institution ........ for the reporting period ending on date ……… as per the attached format for progress report of realization of action plan. To complete the aforementioned report, we attach the following supporting documents:

...
...
Etc.
Thus for your information.
Operational Executor of BKD
Remarks:

Regional Office or local Financial Services Authority Office covering the relevant BKD.

Appendix ...
EXAMPLE REPORT ON PROGRESS OF REALIZATION OF ACTION PLAN IN THE FRAMEWORK OF TRANSFORMATION OF VILLAGE CREDIT INSTITUTION …… INTO MICROFINANCE INSTITUTION No. Regulation Description of Activities 1) Target Implementation 2) Date Implementation 3) Remarks 4) A. Institutional

....
Etc.
B. Capital Fulfillment
....
Etc.
C. Infrastructure Fulfillment
....
Etc.
D. Business License Application
....
Etc.
E. Merger of BKD into LKM (if carried out)
....
Etc.
Remarks:

Follow the steps in the action plan.
Filled with the implementation target stated in the action plan.
Filled with the implementation date.
Attached with supporting documents proving implementation of activities.

EXAMPLE ...
Appendix IV.6
(City), (date, month, year)
No. :
Attach :
To
Financial Services Authority
Attn: 1)
Subject: Submission of Report on Progress of Realization of Action Plan for Transformation of Village Credit Institution into Village-Owned Enterprise (BUM Desa)/BUM Desa Business Unit 2) Referencing our letter Number ............ dated .................... regarding application for permission for transformation of Village Credit Institution into BUM Desa/BUM Desa business unit 2), we hereby report the progress of realization of the action plan for transformation of Village Credit Institution ........ for the reporting period ending on date ……… as per the attached format for progress report of realization of action plan. To complete the aforementioned report, we attach the following supporting documents:

...
...
Etc.
Thus for your information.
Operational Executor of BKD
Remarks:

Regional Office or local Financial Services Authority Office covering the relevant BKD.

Strike what is not needed.

EXAMPLE REPORT ON PROGRESS OF REALIZATION OF ACTION PLAN IN THE FRAMEWORK OF TRANSFORMATION OF VILLAGE CREDIT INSTITUTION …… INTO BUM DESA/BUM DESA BUSINESS UNIT No. Activity Description of Activities 1) Target Implementation 2) Date Implementation 3) Remarks 4)

Implementation of Village
Deliberation
....
Etc.
Determination of Village Regulation 1. ....
Etc.
Submission of application for
revocation of business license as BPR
....
Etc.
Etc.
Remarks:

Follow the steps in the action plan.
Filled with the implementation target stated in the action plan.
Filled with the implementation date.
Attached with supporting documents proving implementation of activities.
Established in Jakarta on June 10, 2016
EXECUTIVE HEAD OF BANKING SUPERVISOR
FINANCIAL SERVICES AUTHORITY, sd
NELSON TAMPUBOLON
Copy matches the original
Legal Director 1
Legal Department sd
Yuliana

APPENDIX V
FINANCIAL SERVICES AUTHORITY CIRCULAR LETTER
NUMBER 19 /SEOJK.03/2016
CONCERNING
FULFILLMENT OF RURAL CREDIT BANK REGULATIONS AND TRANSFORMATION OF VILLAGE CREDIT INSTITUTIONS GRANTED STATUS AS RURAL CREDIT BANKS

Appendix ...
Appendix V.1
(City), (date, month, year)
No. :
Attach :
To
Financial Services Authority
Attn: 1)
Subject: Submission of Report on Composition of Management and Organizational Structure of Village Credit Institution Referencing Article 25 of Financial Services Authority Regulation Number 10/POJK.03/2016 concerning Fulfillment of Rural Credit Bank Regulations and Transformation of Village Credit Institutions Granted Status as Rural Credit Banks, we hereby report the composition/change 2) of management and organizational structure of BKD……… located in Village/Sub-district, District, Regency/City 2)………, becoming as follows:
No. Name Position Date of Appointment
1.
2.
Etc.
To complete the aforementioned report, we submit photocopies of management documents and identity cards of the respective managers as well as the organizational structure of BKD ....... period ........ until December 31, 2019. Thus our submission. Head of Operational Executor of BKD Remarks:

Regional Office or local Financial Services Authority Office covering the relevant BKD.
Strike what is not needed.

Appendix V.2
FORMAT OF BKD FINANCIAL REPORT
QUARTERLY REPORT .....
VILLAGE CREDIT INSTITUTION .....
YEAR .....
OPERATIONAL EXECUTIVE

Name
Phone/Mobile No
:
:
Name
Phone/Mobile No
Etc. ....
SUPERVISORY BOARD
Name
Phone/Mobile No
Name
Phone/Mobile No
Etc. ....
:
:
:
:
:
:
:
:
FINANCIAL DATA
Total loans given :
Total assets :
Total savings :
Capital :
Profit/Loss :
NPL :
Number of Customers :
(Place), (date, month, year)
Sd
Head of Operational Executor of BKD
REPORT ...

a. Funds ...

BALANCE SHEET REPORT
Village : ………
District : ………
Regency :………
In Rupiah
No. Description
Quarter...
Previous Year
Quarter...
Current Year
% Increase/
Decrease
A. ASSETS
1 Cash
2 Interbank Assets:
a. Banks:

Current Accounts
Savings
Others
b. BKD
3 Loans Given:
a. Weekly b. Monthly
c. Seasonal/Agricultural
4 Provision for Impairment -/-
5 Fixed Assets and Inventory:
a. Land and Buildings b. Equipment and Supplies
c. Others
6 Accumulated Depreciation -/-
7 Miscellaneous:
a. Cases b. Others
Total Assets
B. LIABILITIES
1 Savings:
a. Tabanas b. Mandatory Deposits
2 Interbank Liabilities:
a. Banks b. BKD
3 Loans Received:
a. Local Government b. Others
4 Miscellaneous Liabilities

EXPLANATION ...
No. Description
Quarter...
Previous Year
Quarter...
Current Year
% Increase/
Decrease a. Education Funds (Funds for
Development of BKD Human Resources) b. Other – others Total Liabilities (1+2+3+4) 5 Capital 6 Profit/Loss Current Year Total Equity (5+6) Total Liabilities

b. other ...
BALANCE SHEET EXPLANATION
The Balance Sheet is assets and liabilities owned by BKD at the reporting date position. The details of the BKD balance sheet consist of the following items:
A. Assets

Cash
What is reported in this item is currency (cash) existing in the cash box in the form of banknotes and coins issued by Bank Indonesia.
Interbank Assets
a. Banks
What is reported in this item is the amount of BKD funds in other banks in the form of current accounts, savings, or time deposits. b. BKD What is reported in this item is the amount of BKD funds placed in other BKDs in the form of credits or savings.
Loans Given
What is reported in this item is loans given by BKD to BKD customers in the form of credits at the debit balance size.
Provision for Impairment
What is reported in this item is the Provision for Write-off of Productive Assets, which is a reserve that must be formed at a certain percentage of the debit balance (balance) based on the classification quality of Productive Assets.
Fixed Assets and Inventory
What is reported in this item is fixed assets and inventory owned by BKD in the form of land and buildings, equipment or furniture supplies, computers, vehicles, and similar equipment.
Accumulated Depreciation
What is reported in this item is the total accumulated depreciation and impairment of fixed assets and inventory owned by BKD.
Miscellaneous
a. Cases
What is reported in this item is BKD assets that have problems (fraud) still in the process of resolution.
REPORT ...
b. Others
What is reported in this item is BKD assets that cannot be classified into any of the above asset items.
B. Liabilities and Capital (Liabilities Side)
Savings
a. Tabanas
What is reported in this item is customer deposits belonging to BKD customers (other than banks or other BKDs). b. Mandatory Deposits What is reported in this item is deposits that must be fulfilled by every BKD debtor (BKD credit customers).
Interbank Liabilities
a. Banks
What is reported in this item is all BKD liabilities in the form of savings or credits from other banks. b. BKD What is reported in this item is all BKD liabilities in the form of savings or credits from other BKDs.
Loans Received
a. Local Government
What is reported in this item is all BKD liabilities in the form of savings or credits from the Local Government. b. Others What is reported in this item is all BKD liabilities in the form of savings or credits from parties other than banks, other BKDs, or the Local Government.
Miscellaneous Liabilities (RRP)
What is reported in this item is all BKD liabilities that cannot be classified into any of the above liability items.
Capital
What is reported in this item is the total assets (assets) of BKD minus total liabilities and profit/loss of BKD.
Profit/Loss Current Year
What is reported in this item is the profit or loss of BKD for the current fiscal year period.

EXPLANATION ...
2. PROFIT/LOSS STATEMENT REPORT
Village : ………
District : ………
Regency :………
In Rupiah
No. Description
Quarter...
Previous Year
Quarter...
Current Year
% Increase/
Decrease
A. Revenue

Operational Revenue
a. Loan Interest b. Current Account Interest
c. Savings Interest
d. Miscellaneous
Total Revenue
Non-operational Revenue
TOTAL (A)
B. Expenditure
Operational Costs
a. Interest Costs:

Savings
Loans
Others
b. Provision Costs
c. Labor Costs
Operational Executors
Supervisory Board
Other Employees
d. General Costs
Depreciation of Fixed Assets
and Inventory
Provision for Write-off
Loans e. Miscellaneous
Total Expenditure

Non-operational Costs
TOTAL (B)
C.
Profit/Loss Current Year
(A-B)

Other ...
PROFIT/LOSS EXPLANATION
Profit/Loss is cumulative figures of revenue and expenses of BKD since the beginning of the fiscal year until the reporting date. The Profit/Loss items of BKD are as follows:
A. Revenue

Operational Revenue
a. Loan Interest
What is reported in this item is interest revenue from loans given by BKD to debtors (credit customers). b. Current Account Interest What is reported in this item is all interest revenue received by BKD from placing current accounts in other banks.
c. Savings Interest
What is reported in this item is all interest revenue received by BKD from placing savings in banks/BKDs. d. Miscellaneous What is reported in this item is all operational revenue that cannot be classified into any of the above operational revenue items.
Non-operational Revenue
What is reported in non-operational revenue is all revenue originating from activities that are not the main activities of BKD (other than credits or other than placements in Banks/other BKDs). B. Expenditure
Operational Costs
a. Interest Costs

Savings
What is reported in this item is interest costs on savings fund gathering activities (tabanas, BKD savings from other BKDs).
Loans
What is reported in this item is interest costs on loans received by BKD from other parties.

LOAN COLLECTIBILITY ...

Others
What is reported in this item is interest costs other than those that cannot be reported in one of the savings or loan interest cost items. b. Provision Costs What is reported in this item covers costs incurred by BKD in obtaining loans from other parties.
c. Labor Costs
Operational Executors
What is reported in this item is wages/honorariums of operational executors of BKD.
Supervisory Board
What is reported in this item is wages/honorariums of the Supervisory Board of BKD.
Other Employees
What is reported in this item is wages/honorariums of other employees. d. General Costs
Depreciation of Fixed Assets Inventory
What is reported in this item is depreciation costs of Fixed Assets Inventory.
Provisions
What is reported in this item is costs for provisions for write-off of productive assets (reserves). e. Miscellaneous What is reported in this item is all operational costs that cannot be classified into any of the above operational cost items.

Non-operational Costs
What is reported in non-operational costs is costs incurred for activities that are not the main activities of BKD.
C. Profit/Loss Current Year
What is reported in this item is the profit or loss of BKD for the current fiscal year period.
LIST ...
LOAN COLLECTIBILITY
No. CLASSIFICATION
GOOD LESS GOOD DOUBTFUL BAD TOTAL
Org Rp % Org Rp % Org Rp % Org Rp % Org Rp %
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
1 WEEKLY
2 MONTHLY/LAPANAN
3 SEASONAL/AGRICULTURAL
TOTAL 0
NPL (7+10+13)
% NPL (7+10+13)/16
DETAIL LIST OF SAVINGS
NO. DESCRIPTION
TOTAL SAVINGS
PEOPLE
(CUSTOMERS)
RUPIAH
1 Mandatory Deposits
2 BKD Tabanas
3 Other Savings
TOTAL
Established in Jakarta on June 10, 2016
EXECUTIVE HEAD OF BANKING SUPERVISOR
FINANCIAL SERVICES AUTHORITY, sd
NELSON TAMPUBOLON
Copy matches the original
Legal Director 1
Legal Department sd
Yuliana

APPENDIX VI
FINANCIAL SERVICES AUTHORITY CIRCULAR LETTER
NUMBER 19 /SEOJK.03/2016
CONCERNING
FULFILLMENT OF RURAL CREDIT BANK REGULATIONS AND TRANSFORMATION OF VILLAGE CREDIT INSTITUTIONS GRANTED STATUS AS RURAL CREDIT BANKS

CHECKLIST ...
Appendix VI
(City), (date, month, year)
No. :
Attach :
To
Financial Services Authority
Attn: 1)
Subject: Request for Revocation of Business License of Village Credit Institution as Rural Credit Bank Initiated by BKD Referencing Article 15 of Financial Services Authority Regulation Number 10/POJK.03/2016 concerning Fulfillment of Rural Credit Bank Regulations and Transformation of Village Credit Institutions Granted Status as Rural Credit Banks, we hereby apply for revocation of business license of Village Credit Institution ............. Number ……… dated ……… located in Village ……… To complete the aforementioned application, we attach herewith documents accompanied by a checklist of document completeness. Thus our request. Owner of BKD Remarks:

Regional Office or local Financial Services Authority Office covering the relevant BKD.

DOCUMENT CHECKLIST IN THE FRAMEWORK OF APPLICATION FOR REVOCATION OF BUSINESS LICENSE OF VILLAGE CREDIT INSTITUTION AS RURAL CREDIT BANK INITIATED BY VILLAGE CREDIT INSTITUTION No. Document Check Remarks 1 Minutes of meeting results of owners or Village Deliberation; 2 Reasons for revocation of business license; 3 Draft settlement of all rights and obligations of BKD to customers, creditors, employees, and other related parties; 4 Latest financial report; 5 Proof of tax settlement and other obligations to the state, if any; 6 Proof of announcement of dissolution plan of legal entity and plan for settlement of BPR obligations; and 7 Notarized statement letter from BKD Owner stating that all obligations of BKD have been settled and if claims arise later they become the responsibility of the owner. Thus this checklist is compiled completely and correctly to be submitted to the Financial Services Authority in the framework of application for revocation of business license upon request of BKD owner. (City), (date, month, year) Sd 1) (………………) Remarks:

Signed by the BKD Owner.
Established in Jakarta on June 10, 2016
EXECUTIVE HEAD OF BANKING SUPERVISOR
FINANCIAL SERVICES AUTHORITY, sd
NELSON TAMPUBOLON
Copy matches the original
Legal Director 1
Legal Department sd
Yuliana

APPENDIX VII
FINANCIAL SERVICES AUTHORITY CIRCULAR LETTER
NUMBER 19 /SEOJK.03/2016
CONCERNING
FULFILLMENT OF RURAL CREDIT BANK REGULATIONS AND TRANSFORMATION OF VILLAGE CREDIT INSTITUTIONS GRANTED STATUS AS RURAL CREDIT BANKS

BALANCE SHEET ...
Appendix VII
(City), (date, month, year)
No. :
Attachment :
To
Financial Services Authority
Attn: 1)
Subject: Submission of Report on the Liquidation of Village Credit Institutions

Referring to Article 23 of the Financial Services Authority Regulation Number 10/POJK.03/2016 concerning the Fulfillment of Requirements for Rural Credit Banks and the Transformation of Village Credit Institutions Granted Status as Rural Credit Banks, we hereby submit the report on the liquidation of BKD ……… in Village/Sub-district 2) ………, District ………, Regency/City 2) ………....

To complete the aforementioned report, we hereby attach the supporting documents as follows:

Final Balance Sheet Report;
Statement Letter from the BKD Owner confirming that the BKD’s obligations to customers and other parties have been settled in accordance with applicable regulations. If claims arise later from customers and other parties regarding the settlement of such debts and obligations, such matters shall become the responsibility of the BKD Owner; and
Documents related to the dissolution of the Liquidation Team.

This is for your information.

BKD Owner

Notes:

Regional Office or local Financial Services Authority Office covering the respective BKD.
Strike out what is not needed.

Profit/Loss ...
FINAL BALANCE SHEET OF BKD .......
AS OF (DATE, MONTH, YEAR)
Village : ………
District : ………
Regency :………
In Rupiah

No. Description Nominal
A. ASSETS/ACTIVES

Cash
Interbank Assets:
a. Banks:

Current Accounts
Savings
Others
b. BKD

Loans Granted:
a. Weekly b. Monthly
c. Seasonal/Farming
Impairment Reserves -/-
Fixed Assets and Inventories:
a. Land and Buildings b. Equipment and Supplies
c. Others
Accumulated Depreciation -/-
Other Assets:
a. Cases b. Others
Total
B. LIABILITIES
Savings:
a. Tabanas b. Mandatory Savings
Interbank Liabilities:
a. Banks b. BKD
Loans Received:
a. Regional Government b. Others
Other Liabilities
Net Worth (Capital)

SURAT ...
No. Description Nominal
6. Profit/Loss
a. Prior Years' Profits b. Prior Years' Losses
c. Current Year's Profit/Loss
Total

STATEMENT LETTER

In connection with the liquidation process as regulated in Article 23 of the Financial Services Authority Regulation Number 10/POJK.03/2016 concerning the Fulfillment of Requirements for Rural Credit Banks and the Transformation of Village Credit Institutions Granted Status as Rural Credit Banks, and the Financial Services Authority Circular Letter Number …/SEOJK.03/2016 concerning the Fulfillment of Requirements for Rural Credit Banks and the Transformation of Village Credit Institutions Granted Status as Rural Credit Banks, we, the undersigned below as the BKD owner ......:

Name : .......
Full Address : .......
Identity Number (ID Card, Driver's License, etc.) : .......
Name : .......
Full Address : .......
Identity Number (ID Card, Driver's License, etc.) : .......
Etc. : .......

hereby state that we have settled the obligations of BKD ……… in ……… to customers and other parties in accordance with applicable regulations.
If claims arise later from customers and other parties regarding the settlement of such debts and obligations, such matters shall become the responsibility of the BKD Owner.

This statement is made truthfully.
(Place), (Date, Month, Year)
Stamp Duty Rp6,000.00
BKD Owner BKD Owner

Established in Jakarta on 10 June 2016
EXECUTIVE HEAD OF BANKING SUPERVISOR
FINANCIAL SERVICES AUTHORITY, signed
NELSON TAMPUBOLON

Copy consistent with the original
Legal Director 1
Legal Department signed
Yuliana

APPENDIX VIII
FINANCIAL SERVICES AUTHORITY CIRCULAR LETTER
NUMBER 19 /SEOJK.03/2016
CONCERNING
FULFILLMENT OF REQUIREMENTS FOR RURAL CREDIT BANKS AND TRANSFORMATION OF VILLAGE CREDIT INSTITUTIONS GRANTED STATUS AS RURAL CREDIT BANKS

City ...
Appendix VIII
LIST OF ADDRESSES OF REGIONAL OFFICES (KR) AND FINANCIAL SERVICES AUTHORITY OFFICES (KOJK) BASED ON THE REGENCY/CITY OF THE BKD'S LOCATION

NO. ADDRESS KR/KOJK BKD LOCATION

Regional Office 2
West Java
Address:
Bank Indonesia Building
Braga Street Number 108
Bandung 40111
Phone No. (022) 426 8709, 426 8711
Fax No. (022) 420 1169
West Java Province excluding City and Regency of Cirebon, Kuningan Regency, Indramayu Regency, and Majalengka Regency, City and Regency of Tasikmalaya, Ciamis Regency, Banjar Regency, Pangandaran Regency, Sukabumi Regency and City.
OJK Office Cirebon
Address:
Yos Sudarso Street Number 5-7
Cirebon
Phone No. (0231) 202 864, 202 685
City and Regency of Cirebon, Kuningan Regency, Indramayu Regency, and Majalengka Regency.
OJK Office Tasikmalaya
Address:
HZ. Mustofa Street Number 339A
Tasikmalaya
Phone No. (0265) 729 6009
Fax No. (0265) 729 6057
Tasikmalaya City, Tasikmalaya Regency, Ciamis Regency, Banjar Regency, and Pangandaran Regency.
Regional Office 3
Central Java and Special Region of Yogyakarta
Address:
Imam Bardjo SH Street Number 4
Semarang
Phone No. (024) 8644 9030-31
Fax No. (024) 831 0323
Central Java Province excluding Banjarnegara Regency, Banyumas Regency, Cilacap Regency, Purbalingga Regency, Boyolali Regency, Karang Anyar Regency, Klaten Regency, Sragen Regency, Sukoharjo Regency, Wonogiri Regency, Surakarta City, Batang Regency, Brebes Regency, Pekalongan Regency and City, Pemalang Regency, and
Office ...
NO. ADDRESS KR/KOJK BKD LOCATION
Tegal City.
OJK Office Special Region of Yogyakarta Province
Address:
Ipda Tut Harsono (Timoho) Street No.12,
Muja-muju, Umbulharjo,
Yogyakarta 55165
Phone No. (0274) 642 9170-71
Fax No. (0274) 642 9890
Special Region of Yogyakarta Province.
OJK Office Purwokerto
Address:
Gerilya Street Number 365
Purwokerto 53144
Phone No. (0281) 657 8041
Fax No. (0281) 657 8042
Banjarnegara Regency, Banyumas Regency, Cilacap Regency, and Purbalingga Regency.
OJK Office Tegal
Address:
Dr. Sutomo Street Number 55
Tegal
Phone No. (0283) 350 500, 356 560
Batang Regency, Brebes Regency, Pekalongan Regency and City, Pemalang Regency, and Tegal Regency and City.
Regional Office 4
East Java
Address:
c/o Bank Indonesia Building 4th Floor,
Pahlawan Street Number 105
Surabaya 60174
Phone No. (031) 355 1721, 355 1733,
353 6839
East Java Province excluding Lumajang Regency, Banyuwangi Regency, Bondowoso Regency, Jember Regency, Situbondo Regency, Blitar Regency and City, Kediri Regency and City, Madiun Regency and City, Magetan Regency, Nganjuk Regency, Ngawi Regency, Pacitan Regency, Ponorogo Regency, Trenggalek Regency, Tulungagung Regency, Malang Regency and City, Pasuruan Regency and City, Probolinggo Regency and City, and Batu City.

NO. ADDRESS KR/KOJK BKD LOCATION
9. OJK Office Malang
Address:
Kawi Street Number 17
Malang 65166
Phone No. (0341) 363 150-51
Fax No. (0341) 357 177
Malang Regency and City, Pasuruan Regency and City, Probolinggo Regency and City, and Batu City.
10. OJK Office Jember
Address:
Hayam Wuruk Street Number 41
Jember 68133
Phone No. (0331) 483 859, 483 941,
413 200, 413 400
Fax No. (0331) 486 800
Lumajang Regency, Banyuwangi Regency, Bondowoso Regency, Jember Regency, and Situbondo Regency.
11. OJK Office Kediri
Address:
Brawijaya Street Number 3
Kediri
Phone No. (0354) 741 8058, 684 448
Fax No. (0354) 741 8700
Blitar Regency and City, Kediri Regency and City, Madiun Regency and City, Magetan Regency, Nganjuk Regency, Ngawi Regency, Pacitan Regency, Ponorogo Regency, Trenggalek Regency, and Tulungagung Regency.

Established in Jakarta on 10 June 2016
EXECUTIVE HEAD OF BANKING SUPERVISOR
FINANCIAL SERVICES AUTHORITY, signed
NELSON TAMPUBOLON

Copy consistent with the original
Legal Director 1
Legal Department signed
Yuliana

SEOJK on Fulfillment of Community Bank Regulations and Transformation of Village Credit Institutions Granted Status as Community Banks

Lineage: In force