Undang-Undang Republik Indonesia Nomor 10 Tahun 1998 tentang Perubahan atas Undang-Undang Nomor 7 Tahun 1992 tentang Perbankan (Law No. 10 of 1998 amending Law No. 7 of 1992 concerning Banking)

English translation of the Indonesian text from ojk.go.id (the Indonesian text is the official one). Retrieved 2026-10-26.

www.hukumonline.com www.hukumonline.com LAW OF THE REPUBLIC OF INDONESIA NUMBER 10 YEAR 1998 CONCERNING AMENDMENT TO LAW NUMBER 7 YEAR 1992 CONCERNING BANKING BY THE GRACE OF GOD THE ALMIGHTY PRESIDENT OF THE REPUBLIC OF INDONESIA, Considering:

a. that national development is a continuous development effort in order to realize an Indonesian society that is just and prosperous based on Pancasila and the 1945 Constitution;

b. that in facing the development of the national economy which is always moving fast, competitive, and integrated with increasingly complex challenges and an increasingly advanced financial system, adjustments to policies in the economic sector, including Banking, are necessary;

c. that in entering the era of globalization and with the ratification of several international agreements in the field of trade in goods and services, adjustments to laws and regulations in the economic sector, especially the Banking sector, are necessary;

d. that based on the considerations in letter a, letter b, and letter c above, it is deemed necessary to amend Law Number 7 Year 1992 concerning Banking with a Law.

In view of:

1. Article 5 paragraph (1), Article 20 paragraph (1), Article 23, and Article 33 of the 1945 Constitution;

2. Law Number 13 Year 1968 (State Gazette Year 1968 Number 63, Supplement to State Gazette Number 28651);

3. Law Number 7 Year 1992 (State Gazette Year 1992 Number 31, Supplement to State Gazette Number 34721).

With the Approval of:

THE HOUSE OF REPRESENTATIVES OF THE REPUBLIC OF INDONESIA, DECIDES:

To enact:

LAW CONCERNING AMENDMENT TO LAW NUMBER 7 YEAR 1992 CONCERNING BANKING

Article I To amend several provisions in Law Number 7 Year 1992 concerning Banking as follows:

Number 1 The provisions of Article 1 are amended, so that Article 1 in its entirety reads as follows:

"Article 1 In this Law what is meant by:

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1. Banking is everything relating to banks, including institutional aspects, business activities, as well as methods and processes in carrying out their business activities;

2. Bank is a business entity that collects funds from the public in the form of savings and distributes them to the public in the form of credit and or other forms in order to improve the standard of living of the people;

3. Commercial Bank is a bank that carries out business activities conventionally and or based on Sharia Principles which in its activities provides services in payment traffic;

4. Rural Credit Bank is a bank that carries out business activities conventionally or based on Sharia Principles which in its activities does not provide services in payment traffic;

5. Savings is funds entrusted by the public to a bank based on a fund deposit agreement in the form of demand deposits, time deposits, certificates of deposit, savings and or other equivalent forms;

6. Demand Deposit is a savings whose withdrawal can be made at any time using a cheque, bilyet giro, other payment order instruments, or by book transfer;

7. Time Deposit is a savings whose withdrawal can only be made at a certain time based on an agreement between the Depositor Customer and the bank;

8. Certificate of Deposit is a savings in the form of a time deposit whose certificate of deposit proof can be transferred;

9. Savings is a savings whose withdrawal can only be made according to certain agreed terms, but cannot be withdrawn by cheque, bilyet giro, and or other equivalent instruments;

10. Securities are letters of acknowledgment of debt, promissory notes, shares, bonds, credit securities, or any derivatives thereof, or other interests, or an obligation of the issuer, in forms commonly traded in the capital market and money market;

11. Credit is the provision of money or bills that can be equated with it, based on a loan agreement or agreement between a bank and another party that requires the borrowing party to repay its debt after a certain period of time with the provision of interest;

12. Financing based on Sharia Principles is the provision of money or bills equated with it based on an agreement or agreement between a bank and another party that requires the financed party to return the money or bill savings after a certain period of time with compensation or profit sharing;

13. Sharia Principles are rules of agreement based on Islamic law between a bank and another party for fund deposits and or financing of business activities, or other activities declared in accordance with sharia, among others financing based on the profit-sharing principle (mudharabah), financing based on the equity participation principle (musharakah), the principle of sale and purchase of goods with profit (murabahah), or financing of capital goods based on the principle of pure lease without option (ijarah), or with the option of transferring ownership of the leased goods from the bank to another party (ijarah wa iqtina);

14. Custody is the safekeeping of assets based on an agreement or contract between a Commercial Bank and a depositor, provided that the Commercial Bank concerned does not have ownership rights to the assets;

15. Trustee is a business activity that can be carried out by a Commercial Bank to represent the interests of holders of securities based on an agreement between the Commercial Bank and the issuer of the securities concerned;

16. Customer is a party that uses bank services;

17. Depositor Customer is a customer who places funds in a bank in the form of savings based on an agreement between the bank and the customer concerned;

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18. Debtor Customer is a customer who obtains a credit facility or financing based on Sharia Principles or equivalent based on an agreement between the bank and the customer concerned;

19. A Branch Office is a bank office that is directly responsible to the head office of the bank concerned, with a clear business address at which the branch office conducts its business;

20. Bank Indonesia is the Central Bank of the Republic of Indonesia as referred to in the applicable Law;

21. The Board of Governors of Bank Indonesia is the board of governors as referred to in the applicable Law;

22. An Affiliated Party is:

a. a member of the Board of Commissioners, supervisor, Board of Directors or their proxy, officer, or employee of the bank;

b. a member of the management, supervisor, manager or their proxy, officer, or employee of the bank, specifically for a bank in the legal form of a cooperative in accordance with the applicable laws and regulations;

c. a party providing services to the bank, including public accountants, appraisers, legal consultants and other consultants;

d. a party that according to Bank Indonesia's judgment participates in influencing the management of the bank, including shareholders and their families, families of Commissioners, families of supervisors, families of Directors, families of Management.

23. Collateral is additional security submitted by a Debtor Customer to a bank in the context of providing credit facilities or financing based on Sharia Principles;

24. The Deposit Insurance Corporation is a legal entity that carries out deposit insurance activities for Depositor Customers through an insurance scheme, a buffer fund, or other schemes;

25. Merger is the amalgamation of two or more banks, by maintaining the existence of one bank and dissolving the other banks with or without liquidation;

26. Consolidation is the amalgamation of two or more banks, by establishing a new bank and dissolving such banks, with or without liquidation;

27. Acquisition is the takeover of ownership of a bank;

28. Bank Secrecy is everything relating to information concerning depositor customers and their deposits.” Number 2 The provisions of Article 6 letter k are deleted Number 3 The provisions of Article 6 letter m are amended, so that Article 6 letter m reads as follows:

“Article 6 Providing financing and or conducting other activities based on Sharia Principles, in accordance with the provisions stipulated by Bank Indonesia.” Number 4 The provisions of Article 7 letter c are amended, so that Article 7 letter c reads as follows:

“Article 7 Conducting temporary equity participation activities to overcome the consequences of credit failure or financing failure based on Sharia Principles, with the condition that it must withdraw

www.hukumonline.com www.hukumonline.com its Participation, by complying with the provisions stipulated by Bank Indonesia;

and” Number 5 The provisions of Article 8 are amended, so that Article 8 in its entirety reads as follows:

“Pasal 8

(1) In providing credit or financing based on Sharia Principles, a Commercial Bank must have confidence based on in-depth analysis of the good faith and ability as well as the capability of the Debtor Customer to repay its debt or return the said financing in accordance with what was agreed.

(2) A Commercial Bank must have and apply credit and financing guidelines based on Sharia Principles, in accordance with the provisions stipulated by Bank Indonesia.” Number 6 The provisions of Article 11 paragraph (1) and paragraph (3) are amended, and a new paragraph is added between paragraph (4) and paragraph (5) which is made paragraph (4A), so that Article 11 paragraph (1), paragraph (3), and paragraph (4A) read as follows:

“Pasal 11

(1) Bank Indonesia stipulates provisions regarding the maximum limit for granting credit or financing based on Sharia Principles, providing guarantees, placement of investment in securities or other similar matters. which may be carried out by a bank to a borrower or a group of related borrowers, including to companies within the same group as the bank concerned.

(3A) Bank Indonesia stipulates provisions regarding the maximum limit for granting credit or financing based on Sharia Principles, providing guarantees, placement of investment in securities or other similar matters which may be carried out by a bank to:

a. Shareholders who own 10% (ten per hundred) or more of the bank's paid-up capital;

b. Members of the Board of Commissioners;

c. Anggota Direksi;

d. Family of the parties as referred to in letter a, letter b, and letter c;

e. Other bank officials; and f. Companies in which there are interests of the parties as referred to in letter a, letter b, letter c, letter d, and letter e.

(4A) In providing credit or financing based on Sharia Principles, a bank is prohibited from exceeding the maximum limit for granting credit or financing based on Sharia Principles as stipulated in paragraph (1), paragraph (2), paragraph (3), and paragraph (4).” Number 7 The provisions of Article 12 are amended, so that Article 12 in its entirety reads as follows:

“Pasal 12

(1) To support the implementation of the program to improve the standard of living of the general public through the empowerment of cooperatives, small and medium enterprises, the Government together with Bank Indonesia may carry out cooperation with Commercial Banks.

(2) Provisions regarding cooperation with Commercial Banks as referred to in paragraph (1) are further regulated by Government Regulation.”

www.hukumonline.com www.hukumonline.com Number 8 Adding a new provision between Article 12 and Article 13 which is made Article 12A, which reads as follows:

“Pasal 12A

(1) A Commercial Bank may purchase part or all of the collateral, either through auction or outside auction based on voluntary submission by the owner of the collateral or based on a power to sell outside auction from the owner of the collateral in the event that the Debtor Customer does not fulfill its obligations to the bank, provided that the purchased collateral must be liquidated as soon as possible.

(2) Provisions regarding the procedure for purchasing collateral and its liquidation as referred to in paragraph (1) are further regulated by Government Regulation.” Number 9 The provisions of Article 13c are amended, so that Article 13c reads as follows:

"Article 13 Providing financing and placement of funds based on Sharia Principles, in accordance with the provisions stipulated by Bank Indonesia." Number 10 The provisions of Article 16 are amended, so that Article 16 in its entirety reads as follows:

"Article 16

(1) Every party conducting activities to collect funds from the public in the form of deposits must first obtain a business license as a Commercial Bank or Rural Bank from the Board of Bank Indonesia, unless the activity of collecting funds from the public is regulated by a separate law.

(2) To obtain a business license for a Commercial Bank and Rural Bank as referred to in paragraph (1), requirements must be fulfilled at least regarding:

a. organizational structure and management;

b. capital;

c. ownership;

d. expertise in the Banking sector;

e. Feasibility of the work plan.

(3) The requirements and procedures for bank licensing as referred to in paragraph (2)

are stipulated by Bank Indonesia." Number 11 The provisions of Article 17 are deleted.

Number 12 The provisions of Article 18 are amended, so that Article 18 in its entirety reads as follows:

"Article 18

(1) The opening of a branch office of a Commercial Bank may only be done with the license of the Board of Bank Indonesia.

(2) The opening of branch offices, representative offices, and other types of offices abroad by a Commercial Bank may only be done with the license of the Board of Bank Indonesia.

(3) The opening of an office under a branch office of a Commercial Bank must first be reported to Bank Indonesia.

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(4) The requirements and procedures for the opening of a Commercial Bank office as referred to in paragraph (1), paragraph (2), and paragraph (3) are stipulated by Bank Indonesia." Number 13 The provisions of Article 19 are amended, so that Article 19 in its entirety reads as follows:

"Article 19

(1) The opening of a branch office of a Rural Bank may only be done with the license of the Board of Bank Indonesia.

(2) The requirements and procedures for the opening of a Rural Bank office as referred to in paragraph (1) are stipulated by Bank Indonesia." Number 14 The provisions of Article 20 paragraph (1) are amended, so that Article 20 paragraph (1) reads as follows:

"Article 20

(1) The opening of a branch office, sub-branch office, and representative office of a bank domiciled abroad may only be done with the license of the Board of Bank Indonesia." Number 15 The provisions of Article 21 paragraph (1) are amended, so that Article 21 paragraph (1) reads as follows:

"Article 21

(1) The legal form of a Commercial Bank may be:

a. Limited Liability Company;

b. Cooperative; or

c. Regional Company." Number 16 The provisions of Article 22 are amended, so that Article 22 in its entirety reads as follows:

"Article 22

(1) A Commercial Bank may only be established by:

a. Indonesian citizens and or Indonesian legal entities; or b. Indonesian citizens and or Indonesian legal entities with foreign citizens and or foreign legal entities in a partnership.

(2) Provisions regarding the establishment requirements that must be fulfilled by the parties as referred to in paragraph 11/are stipulated by Bank Indonesia." Number 17 The provisions of Article 26 are amended, so that Article 26 in its entirety reads as follows:

"Article 26

(1) A Commercial Bank may issue shares through the stock exchange.

(2) Indonesian citizens, foreign citizens, Indonesian legal entities and or foreign legal entities may purchase shares of a Commercial Bank, either directly and or through the stock exchange.

(3) The implementation of the provisions as referred to in paragraph (2) is further regulated by Government Regulation." Number 18 The provisions of Article 27 are amended, so that Article 27 in its entirety reads as follows:

www.hukumonline.com www.hukumonline.com "Article 27 Changes in bank ownership must:

a. comply with the provisions as referred to in Article 16 paragraph (3), Article 22, Article 23,

Article 24, Article 25, and Article 26; and b. be reported to Bank Indonesia." Number 19 The provisions of Article 28 paragraph (1) are amended, so that Article 28 paragraph (1) reads as follows:

"Article 28

(1) Merger, consolidation, and acquisition must first obtain the license of the Board of Bank Indonesia." Number 20 The provisions of Article 29 are amended, so that Article 29 in its entirety reads as follows:

"Article 29

(1) The fostering and supervision of banks is carried out by Bank Indonesia.

(2) Banks must maintain the soundness level of the bank in accordance with the provisions on capital adequacy, asset quality, management quality, liquidity, profitability, solvency, and other aspects related to bank business, and must conduct business activities in accordance with the prudential principle.

(3) In providing credit or financing based on Sharia Principles and conducting other business activities, banks must take measures that do not harm the bank and the interests of customers who entrust their funds to the bank.

(4) For the benefit of customers, banks must provide information regarding the possibility of loss risk in connection with customer transactions conducted through the bank.

(5) The provisions that must be fulfilled by banks as referred to in paragraph (2), paragraph (3), and paragraph (4) are stipulated by Bank Indonesia." Number 21 The provisions of Article 31 are amended, so that Article 31 in its entirety reads as follows:

"Article 31 Bank Indonesia conducts examinations of Banks, both periodically and at any time if necessary." Number 22 Adding a new provision between Article 31 and Article 32 which is made Article 31A, which reads as follows:

"Article 31A Bank Indonesia may assign a Public Accountant for and on behalf of Bank Indonesia to carry out an examination of a bank as referred to in Article 31." Number 23 The provisions of Article 32 are deleted.

Number 24 The provisions of Article 33 are amended, so that Article 33 in its entirety reads as follows:

"Article 33

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(1) The bank examination report as referred to in Article 31 and Article 31A is confidential.

(2) The requirements and procedures for examination as referred to in Article 31 and

Article 31A are determined by Bank Indonesia." Number 25 The provisions of Article 37 are amended, so that Article 37 in its entirety reads as follows:

"Article 37

(1) In the event that a bank experiences difficulties that endanger the continuation of its business, Bank Indonesia may take action so that:

a. shareholders increase capital;

b. shareholders replace the Board of Commissioners and or the Board of Directors of the bank;

c. the bank writes off non-performing credits or financing based on Sharia Principles and offsets the bank's losses against its capital;

d. the bank merges or consolidates with another bank;

e. the bank is sold to a buyer willing to take over all liabilities;

f. the bank hands over the management of all or part of the bank's activities to another party;

g. the bank sells part or all of the bank's assets and or liabilities to a bank or another party.

(2) If:

a. the actions referred to in paragraph (1) are not sufficient to overcome the difficulties faced by the bank; and or b. in the assessment of Bank Indonesia, the condition of a bank may endanger the Banking System, the Leadership of Bank Indonesia may revoke the bank's business license and order the bank's Board of Directors to immediately convene a General Meeting of Shareholders to dissolve the bank's legal entity and form a liquidation team.

(3) In the event that the bank's Board of Directors does not convene a General Meeting of Shareholders as referred to in paragraph (2), the Leadership of Bank Indonesia requests the court to issue a decree containing the dissolution of the bank's legal entity, the appointment of a liquidation team, and an order for the implementation of liquidation in accordance with the applicable laws and regulations.” Number 26 Adds 2 (two new provisions between Article 37 and Article 38, proposed as Article 37A and

Article 37B, each of which reads as follows:

“Article 37A

(1) If, in the assessment of Bank Indonesia, a Banking difficulty occurs that endangers the national economy, upon the request of Bank Indonesia, the Government, after consulting with the People's Representative Council of the Republic of Indonesia, may form a special body of a temporary nature in the context of Banking rehabilitation.

(2) The special body referred to in paragraph (1) carries out a rehabilitation program for the banks designated and handed over by Bank Indonesia to the said body.

(3) In carrying out the rehabilitation program for the banks, the special body referred to in paragraph (1) has the authority referred to in Article 37 paragraph (1) as well as other authorities, namely:

a. taking over and exercising all rights and authorities of shareholders, including the rights and authorities of the General Meeting of Shareholders;

www.hukumonline.com www.hukumonline.com b. Taking over and exercising all rights and authorities of the bank's Board of Directors and Commissioners;

c. taking control of, managing, and performing ownership actions over assets owned by or becoming the right of the bank, including the bank's assets held by any party, both domestically and abroad;

d. reviewing, revoking, terminating, and or amending contracts binding the bank with third parties, which in the consideration of the special body are detrimental to the bank;

e. selling or transferring the assets of the bank, the Board of Directors, Commissioners, and certain shareholders domestically or abroad, either directly or through a public offering; selling or transferring the bank's receivables and or handing over their management to another party, without requiring the consent of the Debtor Customer;

f. transferring the management of assets and or the bank's management to another party;

g. making temporary capital participation in the bank, directly or by converting the special body's receivables into capital participation in the bank;

h. collecting the bank's confirmed receivables by issuing a Forced Letter;

i. carrying out the vacating of land and or buildings owned by or becoming the right of the bank that are controlled by another party, either independently or with the assistance of the state apparatus of law enforcement officers who have the authority;

j. conducting research and examination to obtain all necessary information from and about the bank in the rehabilitation program, and any party involved or reasonably suspected of being involved, or knowing of activities detrimental to the bank in the said rehabilitation program;

k. calculating and determining the losses suffered by the bank in the rehabilitation program and charging those losses to the capital of the bank concerned, and if the losses occur due to the fault or negligence of the Board of Directors, Commissioners, and or shareholders, then the losses will be charged to the parties concerned;

l. determining the amount of additional capital that must be paid in by the bank's shareholders in the rehabilitation program;

m. taking other necessary actions to support the implementation of the authority referred to in letters a through m.

(4) Banking rehabilitation actions by the special body referred to in paragraph (3) are valid based on this Law.

(5) Upon the request of the special body referred to in paragraph (1), the bank in the rehabilitation program must provide all information and explanations regarding its business, including providing the opportunity for the examination of books and files in its possession, and must provide the necessary assistance in the context of obtaining information, documents, and explanations obtained by the said bank.

(6) The parties referred to in paragraph (3) letter k must provide information and explanations requested by the special body.

(7) The special body referred to in paragraph (1) must submit an activity report to the Minister of Finance.

(8) If, in the assessment of the Government, the special body has completed its duties, the Government declares the termination of the special body.

(9) The provisions necessary for the implementation of this Article are further regulated by Government Regulation.

Article 37B

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(1) Every bank must guarantee public funds deposited in the bank concerned.

(2) To guarantee public deposits in the bank as referred to in paragraph

(1) a Deposit Insurance Institution is formed.

(3) The Deposit Insurance Institution referred to in paragraph (2) is in the form of an Indonesian legal entity.

(4) Provisions concerning the guarantee of public funds and the Deposit Insurance Corporation shall be further regulated by Government Regulation.” Number 27 The provisions of Article 40 are amended, so that Article 40 in its entirety reads as follows:

“Article 40

(1) A Bank shall keep confidential information regarding Depositor Customers and their deposits, except in the cases referred to in Article 41, Article 41A,

Article 42, Article 43, Article 44, and Article 44A.

(2) The provisions referred to in paragraph (1) shall also apply to Affiliated Parties.” Number 28 The provisions of Article 41 paragraph (1) are amended, so that Article 41 paragraph (1) reads as follows:

“Article 41

(1) For tax purposes, the Head of Bank Indonesia, at the request of the Minister of Finance, is authorized to issue a written order to a bank to provide information and present written evidence and letters regarding the financial condition of certain Depositor Customers to tax officials.” Number 29 Adding a new provision between Article 41 and Article 42, which becomes Article 41A, reading as follows:

“Article 41A

(1) For the settlement of bank receivables that have been handed over to the State Receivables and Auction Affairs Agency/State Receivables Affairs Committee, the Head of Bank Indonesia grants permission to officials of the State Receivables and Auction Affairs Agency/State Receivables Affairs Committee to obtain information from the bank regarding the deposits of Debtor Customers.

(2) The permission referred to in paragraph (1) shall be granted in writing upon a written request from the Head of the State Receivables and Auction Affairs Agency/Chairman of the State Receivables Affairs Committee.

(3) The request referred to in paragraph (2) must state the name and position of the official of the State Receivables and Auction Affairs Agency/State Receivables Affairs Committee, the name of the Debtor Customer concerned, and the reason why the information is required.” Number 30 The provisions of Article 42 are amended, so that Article 42 in its entirety reads as follows:

“Article 42

(1) For the purposes of the judiciary in criminal cases, the Head of Bank Indonesia may grant permission to the police, prosecutors, or judges to obtain information from the bank regarding the deposits of a suspect or defendant at the bank.

(2) The permission referred to in paragraph (1) shall be granted in writing upon a written request from the Chief of the Indonesian National Police, the Attorney General, or the Chief Justice of the Supreme Court.

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(3) The request referred to in paragraph (2) must state the name and position of the police officer, prosecutor, or judge, the name of the suspect or defendant, the reason why the information is required, and the connection between the criminal case concerned and the information needed.” Number 31 Adding a new provision between Article 42 and Article 43, which becomes Article 42A, reading as follows:

“Article 42A A Bank shall provide the information referred to in Article 41, Article 41A, and Article 42.” Number 32 Adding a new provision between Article 44 and Article 45 (2), which becomes Article 44A, reading as follows:

“Article 44A

(1) Upon the request, approval or power of attorney from a Depositor Customer made in writing, a bank shall provide information regarding the deposits of the Depositor Customer at the bank concerned to the party appointed by the Depositor Customer.

(2) In the event that the Depositor Customer has died, the lawful heirs of the Depositor Customer concerned shall be entitled to obtain information regarding the deposits of the Depositor Customer." Number 33 The provisions of Article 46 paragraph (1) are amended, so that Article 46 paragraph (1) shall read as follows:

"Article 46

(1) Whoever collects funds from the public in the form of deposits without a business license from the Board of Governors of Bank Indonesia as referred to in Article 16, shall be threatened with imprisonment for a minimum of 5 (five) years and a maximum of 15 (fifteen) years and a fine of at least Rp10.000.000.000,00 (ten billion rupiah) and at most Rp200.000.000.000,00 (two hundred billion rupiah)." Number 34 The provisions of Article 47 are amended, so that Article 47 in its entirety shall read as follows:

"Article 47

(1) Whoever without carrying a written order or permission from the Board of Governors of Bank Indonesia as referred to in Article 41, Article 41A, and Article 42, intentionally forces a bank or Affiliated Party to provide information as referred to in Article 40, shall be threatened with imprisonment for a minimum of 2 (two) years and a maximum of 4 (four) years and a fine of at least Rp10.000.000.000,00 (ten billion rupiah) and at most Rp200.000.000.000,00 (two hundred billion rupiah).

(2) Members of the Board of Commissioners, Directors, bank employees or other Affiliated Parties who intentionally provide information that must be kept confidential according to Article 40, shall be threatened with imprisonment for a minimum of 2 (two) years and a maximum of 4 (four) years and a fine of at least Rp4.000.000.000,00 (four billion rupiah) and at most Rp8.000.000.000,00 (eight billion rupiah)." Number 35 Adding a new provision between Article 47 and Article 48 which shall become Article 47A, which reads as follows:

www.hukumonline.com www.hukumonline.com "Article 47A Members of the Board of Commissioners, Directors, or bank employees who intentionally do not provide information that must be fulfilled as referred to in Article 42A and

Article 44A, shall be threatened with imprisonment for a minimum of 2 (two) years and a maximum of 7 (seven) years and a fine of at least Rp4,000,000,000.00 (four billion rupiah) and at most Rp15,000,000,000.00 (fifteen billion rupiah). Number 36 The provisions of Article 48 are amended, so that Article 48 in its entirety shall read as follows:

"Article 48

(1) A member of the Board of Commissioners, Board of Directors, or employee of a bank who deliberately fails to provide information that must be fulfilled as referred to in Article 30 paragraph (1) and paragraph (2) and Article 34 paragraph (1) and paragraph (2), shall be threatened with imprisonment for a minimum of 2 (two) years and a maximum of 10 (ten) years and a fine of at least Rp5,000,000,000.00 (five billion rupiah) and at most Rp100,000,000,000.00 (one hundred billion rupiah).

(2) A member of the Board of Commissioners, Board of Directors, or employee of a bank who negligently fails to provide information that must be fulfilled as referred to in Article 30 paragraph (1) and paragraph (2) and Article 34 paragraph (1) and paragraph (2), shall be threatened with imprisonment for a minimum of 1 (one) year and a maximum of 2 (two) years and or a fine of at least Rp1,000,000,000.00 (one billion rupiah) and at most Rp2,000,000,000.00 (two billion rupiah)." Number 37 The provisions of Article 49 are amended, so that Article 49 in its entirety shall read as follows:

"Article 49

(1) A member of the Board of Commissioners, Board of Directors, or employee of a bank who deliberately:

a. makes or causes the existence of a false record in the books or in reports, as well as in documents or reports of business activities, transaction reports or accounts of a bank;

b. omits or fails to include or causes the failure to make a record in the books or in reports, as well as in documents or reports of business activities, transaction reports or accounts of a bank;

c. alters, obscures, conceals, deletes, or removes the existence of a record in the books or in reports, as well as in documents or reports of business activities, transaction reports or accounts of a bank, or deliberately alters, obscures, removes, conceals or destroys such bookkeeping records, shall be threatened with imprisonment for a minimum of 5 (five) years and a maximum of 15 (fifteen) years and a fine of at least Rp10,000,000,000.00 ten billion rupiah) and at most Rp200,000,000,000.00 (two hundred billion rupiah).

(2) A member of the Board of Commissioners, Board of Directors or employee of a bank who deliberately:

a. requests or receives, permits or agrees to receive a reward, commission, additional money, services, money or valuable goods, for his personal benefit or for the benefit of his affiliates, in order to obtain or attempt to obtain for another person in obtaining advances, bank guarantees, or credit facilities from a bank, or in the context of purchase or discounting by a bank of bills of exchange, promissory notes, checks, and commercial papers or other evidence of obligations, or in the context of giving approval for another person to carry out withdrawals of funds exceeding his credit limit at the bank;

www.hukumonline.com www.hukumonline.com b. fails to carry out the necessary steps to ensure the bank's compliance with the provisions in this Law and other statutory regulations applicable to banks, shall be threatened with imprisonment for a minimum of 3 (three) years and a maximum of 8 (eight) years and a fine of at least Rp5,000,000,000.00 (five billion rupiah) and at most Rp100,000,000,000.00 (one hundred billion rupiah)." Number 38 The provisions of Article 50 are amended, so that Article 50 in its entirety shall read as follows:

"Article 50 An Affiliated Party who deliberately fails to carry out the necessary steps to ensure the bank's compliance with the provisions in this Law and other statutory regulations applicable to banks, shall be threatened with imprisonment for a minimum of 3 (three) years and a maximum of 8 (eight) years and a fine of at least Rp5,000,000,000.00 (five billion rupiah) and at most Rp100,000,000. 000.00 (one hundred billion rupiah)." Number 39 Adding a new provision between Article 50 and Article 51 which is made Article 50A, which reads as follows:

"Article 50A A shareholder who deliberately orders the Board of Commissioners, Board of Directors, or employee of a bank to perform or not perform an action that results in the bank failing to carry out the necessary steps to ensure the bank's compliance with the provisions in this Law and other statutory regulations applicable to banks, shall be threatened with imprisonment for a minimum of 7 (seven)

years and a maximum of 15 (fifteen) years and a fine of at least Rp10,000,000,000.00 (ten billion rupiah) and at most Rp200,000,000,000.00 (two hundred billion rupiah)." Number 40 The provisions of Article 51 paragraph (1) are amended, so that Article 51 paragraph (1) shall read as follows:

"Article 51

(1) Criminal acts as referred to in Article 46, Article 47, Article 47A. Article 48 paragraph (1). Article 49, Article 50, and Article 50A are crimes." Number 41 The provisions of Article 52 are amended, so that Article 52 in its entirety shall read as follows:

"Article 52

(1) Without prejudice to the criminal provisions as referred to in Article 47,

Article 47A, Article 48, Article 49. and Article 50A, Bank Indonesia may impose administrative sanctions on a bank that does not fulfill its obligations as stipulated in this Law, or the Leadership of Bank Indonesia may revoke the business license of the bank concerned.

(2) Administrative sanctions as referred to in paragraph (1), among others are:

a. monetary fine;

b. written warning,

c. downgrading of the bank's soundness level;

d. prohibition to participate in clearing activities;

e. freezing of certain business activities, either for a specific branch office or for the bank as a whole;

www.hukumonline.com www.hukumonline.com f. dismissal of bank management and subsequently appointing and installing a temporary replacement until the General Meeting of Shareholders or Cooperative Members' Meeting appoints a permanent replacement with the approval of Bank Indonesia.

g. inclusion of members of management, bank employees, shareholders in the list of persons discredited in the Banking sector.

(3) Further implementation regarding administrative sanctions shall be determined by Bank Indonesia." Number 42 The provisions of Article 55 are amended, so that Article 55 in its entirety shall read as follows:

"Article 55 A Bank that has obtained a business license at the time this Law comes into force shall be declared to have obtained a business license under this Law." Number 43 Adding new provisions between Article 59 and Article 60 which shall be made Article 59A, which reads as follows:

"Article 59A A special body carrying out the task of restructuring Banking that has existed before the coming into force of this Law shall be declared to remain valid."

Article II With the coming into force of this Law, the Regulation on Credit Business Conducted by Kelurahan in the Kadipaten Paku Alaman Region (Rijksblaad of the Paku Alaman Region Year 1937 Number 9), shall be declared no longer valid.

This Law shall come into force on the date of its promulgation.

In order that everyone may know of it, it is ordered to promulgate this Law by placing it in the State Gazette of the Republic of Indonesia.

Ratified In Jakarta, On 10 November 1998 PRESIDENT OF THE REPUBLIC OF INDONESIA, Signed.

BACHARUDDIN JUSUF HABIBIE Promulgated In Jakarta, On 10 November 1998 STATE MINISTER/SECRETARY OF STATE OF THE REPUBLIC OF INDONESIA, Signed.

AKBAR TANDJUNG STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 1998 NUMBER 182

www.hukumonline.com www.hukumonline.com ELUCIDATION OF THE LAW OF THE REPUBLIC OF INDONESIA NUMBER 10 YEAR 1998 CONCERNING AMENDMENT TO LAW NUMBER 7 YEAR 1992 CONCERNING GENERAL BANKING The national development carried out so far is a continuous development effort in the context of realizing a just and prosperous society based on Pancasila and the 1945 Constitution. In order to achieve that goal, the implementation of development must always pay attention to the harmony, compatibility, and balance of various elements of development, including in the economic and financial sectors.

The development of the national economy today shows a direction that is increasingly integrated with the regional and international economy which can support as well as have unfavorable impacts. Meanwhile, the development of the national economy always moves quickly with increasingly complex challenges. Therefore, various policy adjustments in the economic sector including the Banking sector are needed so that it is expected to be able to improve and strengthen the national economy.

The Banking sector which has a strategic position as an intermediary institution and supporter of the payment system is a very determining factor in the said adjustment process. In connection with that, improvements to the national Banking system are needed which not only include efforts to restructure banks individually but also to restructure the Banking system as a whole. Efforts to restructure national Banking are a shared responsibility between the Government, the banks themselves and the public using bank services. The existence of such shared responsibility can help maintain the soundness level of national Banking so that it can play a maximum role in the national economy.

In order for bank supervision and guidance to be carried out effectively, the authority and responsibility regarding bank licensing, which was originally with the Minister of Finance, shall be with the Leadership of Bank Indonesia so that Bank Indonesia has full authority and responsibility to determine licensing, guidance and supervision of banks as well as the imposition of sanctions on banks that do not comply with applicable banking regulations. Thus, Bank Indonesia has the authority and responsibility to assess and decide the feasibility of establishing a bank and or opening a bank office.

The prudential principle must be firmly upheld while the provisions regarding bank business activities need to be improved, especially those related to fund distribution, including increasing the role of Environmental Impact Analysis (AMDAL) for large-scale and or high-risk companies.

The role of national Banking needs to be enhanced in accordance with its function in collecting and distributing public funds by paying more attention to financing national economic sector activities with priority to cooperatives, small and medium enterprises, and various layers of society without discrimination so that it will strengthen the structure of the national economy. Likewise, banks need to place greater attention on improving economic performance in the operational area of each office.

Meanwhile, the role of banks that carry out business activities based on Sharia Principles needs to be enhanced to accommodate the aspirations of community needs. Therefore, this Law provides the widest possible opportunity for the public to establish banks that carry out business activities based on Sharia Principles, including providing opportunities for Commercial Banks to open branch offices specifically conducting activities based on Sharia Principles.

In order to enhance the function of social control over Banking institutions, the provisions regarding Bank Secrecy which have so far been very closed must be reviewed. The said Bank Secrecy is one of the elements that must be possessed by every bank so that the institution

www.hukumonline.com www.hukumonline.com of public trust that manages public funds, but not all aspects administered by the bank are matters that are kept secret.

To support the performance of the national Banking industry, supporting institutions are needed, both those intended temporarily in order to overcome the Banking problems currently faced and those of a more permanent nature such as the Deposit Insurance Agency.

In order to strengthen the Banking institution as an institution of public trust, regulations are needed regarding the responsibility of shareholders who intentionally cause non-compliance with Banking provisions by being subject to the threat of heavy criminal sanctions.

In line with the developments mentioned above, with Indonesia's commitment in various international forums such as the World Trade Organization (WTO), Asia Pacific Economic Cooperation (APEC), and Association of South East Asian Nations (ASEAN), various adjustments are needed in national Banking regulations including the opening of market access and non-discriminatory treatment of foreign parties. Liberalization efforts in the Banking sector are carried out in such a way that they can simultaneously improve the performance of the national Banking industry. Therefore, greater opportunities need to be given to foreign parties to participate in owning national banks so that a partnership with national parties is still maintained.

In this connection, attention must also be paid to laws and regulations related to this Law, among others Law No. 5 of 1962 on Regional Companies, Law No. 25 of 1992 on Cooperatives, Law No. 7 of 1994 on the Ratification of the Agreement Establishing World Trade Organization, Law No.

1 of 1995 on Limited Liability Companies, Law No. 8 of 1995 on the Capital Market, Law No. 9 of 1995 on Small Business, and Law No. 4 of 1996 on Mortgage Rights on Land and Objects Related to Land.

ARTICLE BY ARTICLE

Article I Number 1

Article 1 Point 1 through Point 28 Sufficiently clear.

Number 2 Sufficiently clear.

Number 3

Article 6 Letter m A Commercial Bank conducting business activities conventionally may also conduct business activities based on Sharia Principles through:

a. establishment of a new branch office or office below the branch office; or b. conversion of a branch office or office below the branch office conducting business activities conventionally into an office conducting activities based on Sharia Principles. In the context of preparing for the conversion of the bank office, the branch office or office below the branch office that previously conducted business activities conventionally may first form a separate unit that carries out activities based on Sharia Principles within the bank office.

A Commercial Bank based on Sharia Principles does not conduct business activities conventionally.

The main provisions stipulated by Bank Indonesia include, among others:

www.hukumonline.com www.hukumonline.com

1. business activities and bank products based on Sharia Principles;

2. establishment and duties of the Sharia Supervisory Board;

3. requirements for the opening of a Branch Office conducting business activities conventionally to conduct business activities based on Sharia Principles.

Number 4

Article 7 Letter c The main provisions stipulated by Bank Indonesia include, among others:

a. temporary equity participation by the bank originating from the conversion of credit failure or financing failure based on Sharia Principles at the company concerned;

b. requirements for credit failure or financing failure based on Sharia Principles that can be converted into equity participation;

c. such equity participation must be withdrawn if:

i) it has exceeded a period of at most 5 (five) years; or

ii) the company has obtained profit;

d. such temporary participation must be written off from the bank's balance sheet, if within a period of at most 5 (five) years, the bank has not succeeded in withdrawing its participation;

e. reporting to Bank Indonesia regarding temporary equity participation by the bank.

Number 5

Article 8 Paragraph (1)

Credit or financing based on Sharia Principles provided by the bank contains risk, so in its implementation the bank must pay attention to the principles of sound credit or financing based on Sharia Principles. To reduce such risk, collateral for the provision of credit or financing based on Sharia Principles in the sense of confidence in the ability and capability of the Debtor Customer to repay its obligations as agreed is an important factor that must be considered by the bank.

To obtain such confidence, before providing credit, the bank must conduct a careful assessment of the character, ability, capital, collateral, and business prospects of the Debtor Customer.

Considering that collateral is one of the elements of credit provision, if based on other elements confidence has been obtained regarding the ability of the Debtor Customer to repay its debt, the collateral may be only in the form of goods, projects, or receivables financed by the credit concerned. Land whose ownership is based on customary law, namely land whose proof of ownership is in the form of girik, petuk, and others of a similar kind, can be used as collateral. The bank is not required to request collateral in the form of goods not directly related to the object being financed, commonly known as additional collateral.

In addition, the bank in providing credit or financing based on Sharia Principles must also pay attention to the results of the Environmental Impact Analysis (AMDAL)

for companies of a large scale and or high risk so that the financed project continues to preserve the environment.

Paragraph (2)

The main provisions stipulated by Bank Indonesia include, among others:

a. the provision of credit or financing based on Sharia Principles is made in the form of a written agreement;

www.hukumonline.com www.hukumonline.com b. the bank must have confidence in the ability and capability of the Debtor Customer, which is obtained, among other things, from a careful assessment of the character, ability, capital, collateral, and business prospects of the Debtor Customer;

c. the obligation of the bank to formulate and implement procedures for granting credit or financing based on Sharia Principles;

d. the obligation of the bank to provide clear information regarding the procedures and requirements for credit or financing based on Sharia Principles;

e. the prohibition for the bank to provide credit or financing based on Sharia Principles with different requirements to the Debtor Customer and/or affiliated parties;

f. dispute resolution.

Number 6

Article 11 The provision of credit or financing based on Sharia Principles by a bank carries the risk of failure or default in its repayment, so that it may affect the soundness of the bank. Considering that the said credit or financing originates from public funds deposited with the bank, the risk faced by the bank may also affect the security of those public funds. Therefore, in order to maintain soundness and increase its resilience, the bank is required to spread risk by regulating the distribution of credit or the provision of financing based on Sharia Principles, the provision of guarantees or other facilities in such a way that it is not concentrated on a particular Debtor Customer or group of Debtor Customers.

Paragraph (1)

A group is a collection of persons or entities that have links with one another in terms of ownership, management, and/or financial relationships.

Paragraph (3)

Letter a through Letter c Sufficiently clear.

Letter d What is meant by family in this provision is a family relationship up to the second degree both in a direct line of descent and collateral, including parents-in-law, sons/daughters-in-law and brothers/sisters-in-law.

Letter a and Letter f Sufficiently clear.

Paragraph (4A)

This prohibition is intended so that in providing credit or financing based on Sharia Principles, the bank applies sound credit principles. The bank is declared to have committed a violation of this paragraph if at the time of its provision, the balance of the credit or financing exceeded the maximum limit stipulated by Bank Indonesia.

Number 7

Article 12 Paragraph (1)

In the context of elaborating the provisions regarding the principles, functions, and objectives of Banking, their implementation is always adjusted to the demands of national development, as long as it does not conflict with Bank Indonesia's monetary program.

Paragraph (2)

The main points of the provisions further regulated by Government Regulation include, among others:

www.hukumonline.com www.hukumonline.com a. The obligation of Commercial Banks to channel credit or financing based on Sharia Principles to cooperatives, small and medium enterprises with easy and flexible procedures and requirements;

b. Programs to improve the standard of living of the general public in the form of providing credit with low interest or financing based on Sharia Principles with a low profit-sharing rate;

c. Interest or profit-sharing subsidies borne by the State Revenue and Expenditure Budget.

Number 8

Article 12A Paragraph (1)

The purchase of collateral by the bank through auction is intended to help the bank accelerate the settlement of its Debtor Customer's obligations. In the event that the bank is the buyer of its Debtor Customer's collateral, the status of the bank is the same as that of a non-bank buyer.

The bank is allowed to purchase collateral outside of auction, intended to accelerate the settlement of its Debtor Customer's obligations.

The bank is not permitted to own the collateral it has purchased and must resell it as soon as possible so that the proceeds from the sale of the collateral can be immediately utilized by the bank.

Paragraph (2)

The main points of the provisions further regulated by Government Regulation include, among others:

a. Collateral that can be purchased by the bank is collateral whose credit has been categorized as non-performing for a certain period of time;

b. Collateral that has been purchased must be liquidated at the latest within a period of one year;

c. Within a period of one year, the bank may suspend obligations related to the transfer of rights to the collateral concerned, in accordance with the applicable laws and regulations.

Number 9

Article 13 Letter c A Rural Bank that carries out its business activities based on Sharia Principles is not permitted to carry out activities conventionally. Likewise, a Rural Bank that conducts business activities conventionally is not permitted to conduct activities based on Sharia Principles.

The main points of the provisions stipulated by Bank Indonesia include, among others:

a. Business activities and bank products based on Sharia Principles;

b. Establishment and duties of the Sharia Supervisory Board.

Number 10

Article 16 Paragraph (1)

The activity of collecting funds from the public by anyone is basically an activity that needs to be supervised, considering that in that activity there is an interest of the public whose funds are deposited with the party collecting those funds. In connection with that, in this paragraph it is affirmed that the activity of collecting funds from the public in the form of deposits can only be carried out by parties that have obtained a business license as a Commercial Bank or as a Rural Bank.

www.hukumonline.com www.hukumonline.com However, in society there are also other types of institutions that also carry out activities of collecting funds from the public in the form of deposits or similar to deposits, for example those carried out by post offices, by pension funds, or by insurance companies. The activities of these institutions are not covered as Banking business activities based on the provisions in this paragraph. The activity of collecting funds from the public carried out by these institutions is regulated by separate laws.

Paragraph (2)

In granting a business license as a Commercial Bank and a Rural Bank, Bank Indonesia, in addition to taking into account the fulfillment of the requirements referred to in this paragraph, is also required to take into account the level of healthy competition among banks, the level of saturation of the number of banks in a certain region, as well as the equitable distribution of national economic development.

Letter a In a Commercial Bank, management by foreign parties is possible as long as it is in accordance with the provisions of the applicable laws and regulations.

Letter b Clear enough.

Letter c The ownership requirements referred to include the amount and composition of foreign ownership permitted in a Commercial Bank.

Letter d Clear enough.

Letter e Clear enough Paragraph (3)

The principal provisions stipulated by Bank Indonesia include, among others:

a. requirements to become a bank manager, among others, concerning expertise in the Banking sector and good conduct;

b. prohibition of family relationships among bank managers;

c. minimum paid-up capital for the establishment of a Commercial Bank and a Rural Bank;

d. maximum limits on ownership and management;

e. feasibility of the work plan;

f. time limit for granting a bank establishment license.

Number 11 Clear enough.

Number 12

Article 18 Paragraph (1) and Paragraph (2)

Clear enough.

Paragraph (3)

What is meant by an office under a branch office includes, among others, a sub-branch office and a cash office. In order to fulfill the provision of Banking services, it is also possible to open other types of offices under a branch office, for example payment points, mobile cash and automated teller machines (ATM).

The plan to open the said office must first be reported to Bank Indonesia.

Paragraph (4)

www.hukumonline.com www.hukumonline.com The principal provisions stipulated by Bank Indonesia include, among others:

a. requirements for the soundness level of the bank;

b. the level of healthy competition among banks;

c. the level of saturation of the number of banks in a certain region;

d. equitable distribution of national economic development;

e. time limit for granting an office opening license at the latest 60 (sixty)

days after the application documents are received in full;

f. time limit and reasons for rejection;

g. time limit for reporting the opening of an office under a branch office.

Number 13

Article 19 Paragraph (1)

In granting a license to open a branch office of a Rural Bank, Bank Indonesia, in addition to taking into account the fulfillment of the requirements referred to in this paragraph, is also required to take into account the level of healthy competition among banks, the level of saturation of the number of banks in a certain region, as well as the equitable distribution of national economic development.

The opening of an office under a branch office of a Rural Bank does not require a license.

The plan to open the said office must first be reported to Bank Indonesia.

Paragraph (2)

The principal provisions stipulated by Bank Indonesia include, among others:

a. requirements for the soundness level of a Rural Bank;

b. the level of healthy competition among Rural Banks;

c. the level of saturation of the number of Rural Bank offices in a certain region;

d. equitable distribution of national economic development;

e. time limit for granting an office opening license at the latest 30 (thirty)

days after the application documents are received in full;

f. time limit and reasons for rejection.

Number 14

Article 20 Paragraph (1)

What is meant by a bank domiciled abroad is a bank established under foreign law and headquartered abroad. Thus, the bank concerned is subject to the law of the place where the bank was established.

In granting a license to open the said types of offices, Bank Indonesia, in addition to taking into account the soundness level of the bank, also takes into account the level of healthy competition among banks, the level of saturation of the number of bank offices in a certain region, as well as the equitable distribution of national economic development.

Number 15

Article 21 Paragraph (1)

Number 16

Article 22

www.hukumonline.com www.hukumonline.com Paragraph (1)

Letter a Included in the definition of an Indonesian legal entity are, among others, the Republic of Indonesia, State-Owned Enterprises, Regional-Owned Enterprises, cooperatives, and privately-owned business entities.

Letter b In the event that one of the parties that will establish a Commercial Bank is a foreign legal entity, the said party must first obtain a recommendation from the monetary authority of the country of origin. The said recommendation shall at least contain a statement that the foreign legal entity concerned has a good reputation and has never committed disgraceful acts in the Banking sector.

Paragraph (2)

The principal provisions stipulated by Bank Indonesia include, among others:

a. share ownership;

b. document requirements that must be fulfilled;

c. the financial condition of the prospective founders of the bank.

Number 17

Article 26 Paragraph (1)

The provision in this paragraph is intended to strengthen the capital structure, the spread of ownership, and improve the performance of the bank.

The issuance of shares may be carried out through a stock exchange in Indonesia and/or abroad.

Paragraph (2)

The provision in this paragraph is intended to open wider opportunities to various parties, both Indonesian and foreign, to participate in owning a Commercial Bank.

Paragraph (3)

The main provisions further regulated by Government Regulation include, among others:

a. Requirements for share ownership including the financial condition of the prospective bank owner:

b. Document requirements that must be fulfilled.

Number 18

Article 27 Letter a Sufficiently clear Letter b The plan to transfer bank ownership carried out directly must first be reported to Bank Indonesia. This reporting is intended to ensure that the transfer of ownership is carried out to parties that meet the requirements as bank owners.

The transfer of bank share ownership carried out through a stock exchange is reported to Bank Indonesia if the ownership of a party through such stock exchange has reached a certain amount that can affect the course of the bank's management in accordance with the provisions stipulated by Bank Indonesia.

Number 19

Article 28 Paragraph (1)

www.hukumonline.com www.hukumonline.com In carrying out mergers, consolidations, and acquisitions, the emergence of concentration of economic power in a group in the form of a monopoly that is detrimental to the public is avoided.

Likewise, mergers, consolidations, and acquisitions carried out must not harm the interests of the customers.

Number 20

Article 29 Paragraph (1), paragraph (2), and paragraph (3)

What is meant by fostering in paragraph (1) is efforts carried out by establishing regulations concerning institutional aspects, ownership, management, business activities, reporting as well as other aspects related to the bank's operational activities.

What is meant by supervision in paragraph (1) includes indirect supervision, primarily in the form of early supervision through research, analysis, and evaluation of bank reports, and direct supervision in the form of examinations followed by corrective actions.

In line with that, Bank Indonesia is given the authority, responsibility, and obligation as a whole to carry out fostering and supervision of banks by taking both preventive and repressive measures.

On the other hand, banks are required to have and implement an internal supervision system in order to ensure the implementation of the decision-making process in bank management in accordance with the prudential principle.

Considering that banks primarily work with funds from the public deposited in banks on the basis of trust, every bank needs to continuously maintain its soundness and maintain public trust in it.

Paragraph (4)

The provision of information regarding the possibility of risks of loss to customers is intended so that access to obtain information regarding the business activities and condition of the bank becomes more open, which at the same time guarantees transparency in the banking world.

Such information may contain the condition of the bank, including capital adequacy and asset quality.

If such information has been provided, the bank is considered to have implemented this provision. Such information needs to be provided in the event that the bank acts as an intermediary for the placement of funds from customers, or the purchase/sale of securities for the interest and at the order of its customers.

Paragraph (5)

The main provisions stipulated by Bank Indonesia include, among others:

a. the scope of fostering and supervision;

b. criteria for assessing the level of soundness;

c. prudential principles in management;

d. guidelines for providing information to customers.

Number 21

Article 31 Basically, examinations carried out by Bank Indonesia are conducted periodically at least once a year for each bank. In addition, examinations may be conducted at any time if deemed necessary to confirm the results of indirect supervision and if there is an indication of deviation from sound banking practices.

With respect to state finances managed by a bank, the Supreme Audit Agency may conduct an examination at the bank concerned.

www.hukumonline.com www.hukumonline.com Number 22

Article 31A Examination of a bank carried out by a Public Accountant is an on-site examination which constitutes a form of delegation of the authority of Bank Indonesia as the authority for fostering and supervising banks.

Number 23 Sufficiently clear Number 24

Article 33 Paragraph (1)

Sufficiently clear Paragraph (2)

The main provisions stipulated by Bank Indonesia include, among others:

a. the type, procedure, and scope of examination;

b. the time period and reporting of examination results;

c. follow-up on examination results.

Number 25

Article 37 Paragraph (1)

The condition of a bank is said to be experiencing difficulties that endanger the continuity of its business if, based on Bank Indonesia's assessment, the bank's business condition is increasingly deteriorating, among others, characterized by a decline in capital, asset quality, liquidity, and profitability, as well as bank management that is not carried out based on the prudential principle and sound banking principles.

In this paragraph, the steps that need to be taken against a bank experiencing difficulties and endangering the continuity of its business are stipulated, so that the revocation of its business license and/or liquidation action as referred to in paragraph (2) does not occur.

The steps referred to are carried out in order to maintain/save the bank as an institution of public trust.

What is meant by other parties in this paragraph are parties outside the bank concerned, whether other banks, other business entities or individuals that meet the requirements.

Paragraph (2)

The criteria for endangering the banking system are that if the level of difficulty experienced in carrying out business activities, a bank is unable to fulfill its obligations to other banks, so that in turn it will cause a chain effect to other banks.

Paragraph (3)

Clear enough.

Number 26

Article 37A Paragraph (1) and paragraph (2)

www.hukumonline.com www.hukumonline.com What is meant by Banking difficulties that endanger the national economy is a condition of the banking system which, according to Bank Indonesia's assessment, causes a crisis of public trust in Banking that impacts the livelihoods of many people.

This requires the direct role of the Government to overcome it through policies and actions that impact the State Revenue and Expenditure Budget.

Considering the above, in the case of the establishment of a special body as referred to in paragraph (1), the Government requires consultation with the House of Representatives of the Republic of Indonesia. The consultation is carried out with the Commission in charge of finance and Banking to obtain approval.

The said special body is stipulated by Presidential Decree and is responsible to the Minister of Finance.

The special body referred to in this provision is temporary until the completion of the tasks assigned to this body, namely:

a. Restructuring of banks handed over by Bank Indonesia;

b. Settlement of bank assets both physical assets and debtor obligations through the Asset Management Unit;

c. Efforts to recover state money that has been channeled to banks.

Paragraph (3)

Letter a By taking over all rights and authorities of shareholders including the rights and authorities of the General Meeting of Shareholders, the special body can carry out the management and administration of the bank in the restructuring program, subsequently all rights and authorities of shareholders including the rights and authorities of the General Meeting of Shareholders of the bank in the restructuring program shall transfer to the special body.

Letter b Clear enough Letter c With this provision the special body can control, manage and carry out ownership actions as if it were the owner.

Letter d In the event that the review, cancellation of termination, and or amendment of the contract by the special body causes losses to a party, that party can only claim compensation not exceeding the value of benefits that have been obtained from the said contract after first proving clearly and distinctly the losses suffered.

Letter e The sale or transfer of assets by the special body is followed by the transfer of material rights to the buyer. Thus the buyer obtains legal certainty of the transfer of rights to the said assets.

The sale or transfer can be carried out directly or through a public offering to obtain the best price.

Letter f Other parties according to this paragraph are individuals, State-Owned Enterprises, privately-owned business entities, and or other legal entities.

Letter h Clear enough.

Letter i According to this provision, for bank receivables against third parties taken over by the special body, the special body can carry out receivables collection actions by

www.hukumonline.com www.hukumonline.com issuing a Distress Warrant, based on the record of the debtor's debt at the bank in the restructuring program.

This Distress Warrant headed with the words "FOR JUSTICE BASED ON THE ONE GOD" has executory power and legal standing equal to a court decision that has obtained permanent legal force. In the event that the receivables collection action is not heeded by the debtor, the special body can carry out confiscation of the property rights belonging to the said debtor, and subsequently can conduct an auction of the debtor's assets in the context of recovering the said receivables. Assets that cannot be confiscated include household furnishings, books, and work equipment for the survival of the debtor. Although this special body is given the authority to carry out forced collection, the implementation procedures still pay attention to aspects of legal certainty and justice.

Letter j Clear enough.

Letter k To obtain the said information, the special body can request the assistance of authorized law enforcement state apparatus.

What is meant by any party is Affiliated Parties and other parties involved or reasonably suspected of being involved, including legal entities owned by the bank or Affiliated Parties.

Letter l The losses referred to can be caused by unreasonable transactions involving the bank in this program. Unreasonable transactions include:

a. transactions that benefit certain parties unlawfully;

b. transactions that do not contain terms that are the result of negotiation between non-affiliated parties; or

c. transactions that result in the bank receiving a value that is not commensurate with the value released or handed over by the bank.

Letter m Clear enough.

Letter n Other actions referred to include forming a division within the special body or forming and or making capital participation in a legal entity.

Paragraph (4)

Legal remedies taken by any party do not prevent or delay the implementation of legal actions taken by the special body as referred to in this Article. In the event that for the said legal remedy a court decision is issued that has obtained permanent legal force (in kracht) winning the said any party.

the special body must comply with the said court decision.

Paragraph (5) to Paragraph (8)

Clear enough.

Paragraph (9)

The main points of provisions further regulated by Government Regulation include:

a. establishment of the special body;

b. budget and expenditure of the special body;

c. procedures for collecting bank receivables in the restructuring program;

d. procedures for temporary capital participation;

e. dissolution:

f. procedures for bank restructuring Article 37B.

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Article 37B Paragraph (1)

Clear enough.

Paragraph (2)

The Deposit Insurance Agency is needed in order to protect the interests of customers and at the same time increase public confidence in banks.

In administering deposit insurance of public funds at banks, the Deposit Insurance Agency may use a mutual fund scheme; an insurance scheme; or other schemes approved by Bank Indonesia.

Paragraph (3)

Clear enough.

Number 31

Article 42A Clear enough.

Number 32

Article 44A Paragraph (1) and Paragraph (2)

Clear enough.

Number 33

Article 46 Paragraph (1)

Clear enough.

Number 34

Article 47 Paragraph (1)

Clear enough.

Paragraph (2)

What is meant by bank employee is all officials and employees of the bank.

Number 35

Article 47A Number 36

Article 48 Paragraph (1)

What is meant by bank employee is a bank official who is given the authority, and responsibility to carry out the bank's operational duties, and an employee who has access to information regarding the condition of the bank.

Paragraph (2)

Clear enough Number 37

www.hukumonline.com www.hukumonline.com

Article 49 Paragraph (1)

What is meant by bank employee is all officials and employees of the bank.

Paragraph (2)

Letter a What is meant by bank employee is all officials and employees of the bank.

Letter b What is meant by bank employee is a bank official who has the authority and responsibility regarding matters relating to the business of the bank concerned.

Number 38

Article 50 Clear enough Number 39

Article 50A Clear enough.

Number 40

Article 51 Paragraph (1)

The acts as referred to in the articles in this paragraph are classified as criminal offenses, meaning that the said acts will be subject to a heavier penalty compared to if they were merely violations. This is considering that a bank is an institution that holds funds entrusted to it by the public, so that acts that can damage public confidence in banks, which in essence will also harm both the bank and the public, must always be avoided.

By being classified as a crime, it is expected that a higher level of compliance with the provisions in this Law can be formed.

Regarding criminal offenses committed by members of the Board of Commissioners, Directors, or employees of a Rural Bank, in essence the provisions concerning criminal sanctions in Chapter VIII apply, considering that the nature of the said criminal threat applies generally.

Number 41

Article 52 Paragraph (1) and Paragraph (2)

Clear enough.

Paragraph (3)

The main points of the provisions stipulated by Bank Indonesia include, among others:

a. types of administrative sanctions;

b. procedures for implementing administrative sanctions;

c. follow-up on the implementation of administrative sanctions;

d. supervision of the implementation of administrative sanctions.

Number 42

Article 55

www.hukumonline.com www.hukumonline.com Clear enough.

Number 43

Article 59A The special body referred to in this provision is temporary in nature, with the special task of taking the necessary steps to make the national banking system healthy.

The body that currently exists in the context of carrying out efforts to make banking healthy may continue to carry out the task of making banking healthy based on this Law.

Article II Clear enough.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 3790