News & Announcements


The COVID-19 pandemic has drastically changed the public’s needs in various sectors, one of which is the need to rely on more technology in their daily activities and lives, including the use of technology-based services in the financial sector to limit mobility. In response to the fast-growing trend and need for cutting-edge technologies in the financial sector, the Financial Services Authority (Otoritas Jasa Keuangan or “OJK”) recently issued 3 new regulations, which change the shape and direction of the Indonesian banking sector, namely, (i) OJK Regulation No. 12/POJK.03/2021 on Commercial Banks (“OJKR 12/2021”), (ii) OJK Regulation No. 13/POJK.03/2021 on General Guidelines for Commercial Bank Products (“OJKR 13/2021”), and (iii) OJK Regulation No. 14/POJK.03/2021 on the Amendment to OJK Regulation No. 34/POJK.03/2018 on the Re-assessment of the Main Parties in Financial Services Institutions (“OJKR 14/2021”).

In this edition of our newsletter, we’ll be looking at the key points on commercial banks as well as several important changes brought by these 3 new regulations.

The Regulatory Highlights

  1. Similar to the previous regulations, the new regulations divide commercial banks into 2 categories—namely, Indonesia Incorporated Banking Companies (Bank Berbadan Hukum Indonesia or “BHI”) and Foreign Bank Branch Offices (Kantor Cabang dari Bank yang Berkedudukan di Luar Negeri or “KCBLN”)—and require all banking products to be subjected to risk management and to be reported to and/or approved by the OJK (depending on their types).
  2. Foreigners are still allowed to own up to 99% of a BHI’s total paid-up capital. However, to open a KCBLN, the foreign bank’s principal must meet certain prerequisites, including the requirement of being named as one of the world’s top 100 asset owners for the last 3 years.
  3. OJKR 12/2021 requires Commercial Banks (both the BHI and the KCBLN) to seek 2 main licenses from the OJK:
    • Principle approval (persetujuan prinsip)
      The principle approval must be obtained by the BHI during the preparation of its establishment or by the KCBLN during the preparation of its opening. To obtain the principle approval, the prospective founders and/or controlling shareholders must submit an application to the OJK together with the required documents, including their corporate plan, risk management guideline, and work system and procedure.
    • Business license (izin usaha)
      The business license must be obtained upon the Commercial Bank’s readiness to commence its commercial activities. To obtain the business license, the BHI must submit proof of payment of its paid-up capital in the amount of at least IDR 10 trillion, while the KCBLN must provide proof of full payment (of the same amount) of the required Capital Equivalency Maintained Assets (CEMA).
  1. Fit and Proper Test and Re-assessment of the Main Parties.
    OJK Regulation No. 34/POJK.03/2018 on the Re-assessment of the Main Parties in Financial Services Institutions (“OJKR 34/2018”) (as lastly amended by OJKR 14/2021) authorizes the OJK to conduct the fit and proper re-assessment of a Commercial Bank’s Main Parties.
    According to OJKR 14/2021, the Main Parties of a Commercial Bank include the following:
    1. the controlling shareholders (i.e., the shareholders owning 25% or more of the Commercial Bank’s issued shares with voting rights OR those owning less than 25% of the Commercial Bank’s issued shares with voting rights but having factual control of the Commercial Bank (either directly or indirectly);
    2. Members of the Board of Directors and Board of Commissioners; and
    3. Executive officers (i.e., the Commercial Bank’s officers having direct responsibility to the Board of Directors or having a significant influence on the policies and/or operations of the Commercial Bank).

The Highlighted Changes

  1. Digital Banks
    OJKR 12/2021 introduces the so-called “Digital Bank”, a new form of commercial bank that can operate its business through the electronic channel.
    To operate business as a Digital Bank, a commercial bank must take the form of a BHI, either by establishing a new BHI as a Digital Bank or by transforming the existing BHI into a Digital Bank after satisfying the following requirements as set under OJKR 12/2021, including:
    1. having a physical head office;
    2. having a business model with innovative and secure technology;
    3. having the ability to manage a prudent and sustainable digital banking business model;
    4. having adequate risk management;
    5. having a competent Board of Directors in Information and Technology (“IT”);
    6. applying personal data protection;
    7. contributing to the development of the digital finance ecosystem and/or financial inclusivity; and
    8. for a new BHI: capital injection of at least IDR 3 trillion when applying for the principle approval.
  1. New Commercial Bank Categorization (BUKU v KBMI)
    Under the previous regulation, Commercial Banks are categorized into 4 types according to their core capital and business activities (known as “BUKU”, which stands for Bank Umum berdasarkan Kegiatan Usaha (Commercial Banks according to Business Activities)), and the category assigned to a particular Commercial Bank determines what activities it may legally undertake. However, under OJKR 12/2021, Commercial Banks are now classified into 4 types according to their core capital (known as “KBMI”, which stands for Kelompok Bank berdasarkan Modal Inti – Bank Category according to Core Capital, namely,  KBMI 1 (banks with a core capital of up to IDR 6 trillion), KBMI 2 (banks with a core capital between more than IDR 6 trillion and IDR 14 trillion), KBMI 3 (banks with a core capital between more than IDR 14 trillion and IDR 70 trillion), and KBMI 4 (banks with a core capital of more than IDR 70 trillion). The main difference between the BUKU and the KBMI concepts is that Commercial Banks can now conduct all basic banking business activities/products or advanced banking business activities/products (provided the products are approved by OJK) regardless of their KBMIThis is because now a bank’s products and activities are approved by the OJK on the basis of the risks involved and not according to their minimum capital requirement, as discussed in the next paragraph.
  1. Capital-based v Risk-based approval for Banking Products
    1. Through OJKR 13/2021, the OJK shifts the nature of approval it gives in relation to the banking products from capital-based approval to risk-based approval.
    2. OJKR 13/2021 also classifies banking products into 2 main categories:
      1. Basic Banking Products, which may include the following:
        1. lending (penyaluran dana);
        2. funding (penghimpunan dana); and
        3. other basic banking products or activities such as funds transfer, electronic money, “plain vanilla” derivative transactions, sale of sovereign securities (surat berharga negara), traveller’s cheques, and digital financial services.

To launch a new basic banking product, a Commercial Bank is only required to report the plan to the OJK.

      1. Advanced Banking Products, which may include the following:
        1. IT-based products/services;
        2. products related to activities or products provided by non-bank financial services institutions;
        3. products requiring approval or licensing from other authorities; and/or
        4. products that are complex in nature.

To provide an advanced banking product, a Commercial Bank must obtain prior approval from the OJK, and the OJK will conduct a piloting review (uji coba terbatas) on among others: the user target, location test, and transaction limit. Once approved, a Commercial Bank may engage in that specific advanced banking product. Exemption from the piloting review applies in the case of:

        1. it is related to an activity or product provided by a non-bank Financial Services Institution requiring prior approval from other relevant authorities;
        2. it is aimed at implementing the Government’s program; or
        3. the Commercial Bank can convince the OJK that the new advanced banking product does not require the review.
      1. In addition, if an advanced banking product is a development of an IT-based product and is provided by a Commercial Bank (i) classified as level 1 or 2 in the risk management application; (ii) classified as level 1 or 2 in the good corporate governance quality; and (iii) having adequate IT infrastructure and IT infrastructure management, it may be exempted from the piloting review and given a special incentive in the form of instant approval (i.e.,  the Commercial Bank can immediately launch the relevant new advanced banking product if the OJK raises no objection within 10 business days).


  1. New Rules on Minimum Capital, Assets, and CEMA Requirements:
No. Subject Previous Regulation New Regulation
1. Minimum Paid-Up Capital IDR 3 trillion IDR 10 trillion
2. Minimum Paid-Up Capital When Applying for the Principle Approval 30 % of IDR 3 trillion or IDR 900 billion IDR 4 trillion
3. Assets Ownership for Opening a KCBLN (i).       The foreign bank must be named as one of the world’s top 200 asset owners. (i).       The foreign bank must be named as one of the world’s top 100 asset owners for the last 3 years.
(ii).    The foreign bank must place a deposit of at least IDR 3 trillion for CEMA. (ii).     The foreign bank must place a deposit of at least IDR 10 trillion for CEMA.

  1. New Rule on Fit and Proper Re-Assessment Procedure
    As an effort to facilitate a faster re-assessment process, OJKR 14/2021 now allows the OJK to determine, at its sole discretion, the final result of the re-assessment without following the general procedure set by OJKR 34/2018, especially if the OJK finds a condition that potentially endangers the Commercial Bank’s business continuity and/or threatens  the financial system stability.

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