News & Announcements

W&P Newsletter – Relaxation of Asset Quality Determination and Financing Restructuring Rules for Non-Bank Financial Institutions

On 28 January 2020, the Indonesian National Disaster Management Agency (Badan Nasional Penanggulangan Bencana or “BNPB”) declared a disaster emergency status due to the (“COVID-19”) outbreak in Indonesia. Following the declaration of the disaster emergency status, the Indonesian Financial Services Authority (Otoritas Jasa Keuangan or “OJK”) issued OJK Regulation No. 14/POJK.05/2020 on the Countercyclical Policy regarding the Impact of COVID-19 Outbreak on Non-Bank Financial Institutions (Lembaga Jasa Keuangan Non-Bank or “LJKNB”) (the regulation, “OJKR 14/2020”). In an effort to optimize the operations of LJKNBs and to ensure the stability of the financial system while supporting the growth of Indonesian economy during the COVID-19 outbreak, OJKR 14/2020 provides LJKNBs with certain leniency and exemptions from certain obligations by providing similar policies to those laid down in the previous OJK Regulation No. 11/POJK.03/2020, which  relaxes the requirements for Indonesian banks in determining their asset quality and allows loan restructuring for debtors that are affected by the COVID-19 outbreak.

The flexibilities provided by OJKR 14/2020 to COVID-19 affected debtors of LJKNBs, particularly multi-finance companies, are among others as follows:

Determination of Quality

 OJKR 14/2020 relaxes the requirements for determining the asset quality of COVID-19 affected debtors with financing of up to IDR10,000,000,000 (approx. USD 670,500) from multi-finance companies. It sets a new rule whereby the asset quality of an affected debtor within the above threshold shall be determined only on the basis of timely payment of the principal and/or interest or, in the case of sharia financing, the revenue share/ujrah. For any new financing above IDR10,000,000,000, the existing rules set in OJK Regulation No. 35/POJK.05/2018[1] (“OJKR 35/2018”) shall apply to the determination of quality of assets (in the form of financing receivables or piutang pembiayaan). Under OJKR 35/2018, the asset quality of a multi-finance company in respect to a debtor is determined not only based on the debtor’s punctuality in paying the principal and/or interest, but also taking into account the debtor’s repayment ability, financial performance, and business prospects.

Financing Restructuring

 Any debtors (whether individuals or business entities) that are affected by the COVID-19 outbreakare also eligible to have their financing restructured, subject to the following considerations:

  • there being restructuring process and policies from the fund owners signed by their authorized representatives in the event of joint financing (pembiayaan bersama) and channeling (pembiayaan penerusan);
  • there being a request for the financing restructuring by the affected debtor to the LJKNB; and/or
  • there being a restructuring feasibility assessment by the relevant LJKNB. Any LJKNB intending to implement the relaxation and restructuring policies must have internal policies in place regarding the COVID-19 affected debtors, which must include at least (i) the criteria of debtors deemed affected by COVID-19 and (ii) the economic sectors affected by COVID-19.

Extension of Periodical Report Submission Timeline

 All LJKNBs, including multi-finance companies, must submit a multitude of periodical reports to the OJK, for which they are given certain submission deadline extensions during the period of the COVID-19 disaster emergency status:

  • 14 (fourteen) business days past the submission due date for monthly and quarterly mandatory reports;
  • 1 (one) month past the submission due date for semiannual mandatory reports; and
  • 2 (two) months past the submission due date for annual mandatory reports.

Fit and Proper Tests to be Conducted through Video Conference

 OJKR 14/2020 allows the presentation/clarification by a prospective primary party (e.g. a controlling shareholder, director, and commissioner) in a fit and proper test process to be conducted through video conference.

Note, however, that the video conference presentation/clarification is permitted only to the extent that the prospective primary party:

  • is not imposed with suspension or limitation of business activities;
  • is not indicated to have violated the prudential principles in the financial services sector;
  • is not indicated to have committed any act that gives unfair advantage to shareholders, other primary parties, employees, and/or other parties that may cause damage or otherwise prejudice the rights of creditors, debtors, policyholders, insured parties, participants, security grantees, and/or other consumers;
  • has not been denied approval as a primary party due to failure to meet any integrity requirements; and/or
  • fulfils all other criteria set by the OJK.


For further information on the above, please contact W&P team members:, and

[1] OJK Regulation No. 35/POJK.05/2018[1] on the Conduct of the Business Activities of Multi-finance Companies.