Client Update: New OJK Regulation On The Minimum Capital Adequacy Requirement For Commercial Banks

March 21, 2016

On 29 January 2016, the Indonesian Financial Services Authority (“OJK”) issued a new regulation No. 11/POJK.03/2016 on Minimum Capital Adequacy Requirement for Commercial Banks (“POJK 11/2016”) which came into force on 2 February 2016.

This regulation was issued in accordance with the implementation of Basel III. It regulates the ratio of minimum capital adequacy requirement (“KPMM”), components of capital, and additional capital in the form of capital conservation buffer, countercyclical buffer, and capital surcharge.

Minimum Capital Adequacy Requirement for Commercial Banks was previously regulated under Bank Indonesia Regulation No. 15/12/PBI/2013 on KPMM (“Old Regulation”). However, OJK revoked the Old Regulation and replaced it with POJK 11/2016 in the framework of harmonizing all Bank Indonesia regulations related to the institutional and supervisions of banks which were transferred from Bank Indonesia to OJK on 31 December 2013. Most key provisions under the Old Regulation remain unchanged and are the same with the key provisions under POJK 11/2016 except that there are minor changes in some provisions as noted below.

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Author : MDC