Strengthen BPR, OJK Releases Two New Rules

JAKARTA - The Financial Services Authority (OJK) seeks to strengthen and develop the banking sector, especially the People's Economy Bank (BPR) and the Sharia People's Economy Bank (BPRS) by issuing OJK Regulations (POJK) regarding the status and follow-up to the supervision of BPR and BPRS as well as POJK for the quality of BPR assets.

Head of the Department of Literacy, Financial and Communication Inclusion OJK, Aman Santosa said, POJK Number 28 of 2023 (POJK 28/2023) concerning the Determination of the Status and Follow-up to Supervision of BPR and BPRS was issued to support and realize efforts to develop and strengthen BPR/BPRRS in line with the development of a more complex and diverse financial services industry.

Meanwhile, POJK Number 1 of 2024 (POJK 1/2024) concerning the Quality of BPR Assets was issued to build a healthy and high competitive BPR industry by always paying attention to the principles of prudence and risk management of business activities, especially asset management.

The two POJKs are follow-up to the mandate of Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (UU P2SK).

POJK 28/2023 is an improvement over POJK Number 19/POJK.03/2017 concerning the Determination of Status and Follow-up to the Supervision of Rural Banks and Sharia People's Financing Banks as amended by POJK Number 32/POJK.03/2019.

"This POJK contains adjustments to the arrangements regarding, among others, the status and period of supervision of BPR and Sharia BPR, the task of supervising the Financial Services Authority, and placing funds by the Deposit Insurance Corporation. POJK 28/2023 will take effect on December 31, 2023. POJK Number 1 of 2024," said Aman, Saturday, February 3.

Aman also explained that there are several things behind the issuance of this rule, among others, first, the alignment of regulations regarding Agunan Taken Over and business activities that are allowed in accordance with Law No. 4 of 2023 concerning the Development and Strengthening of the Financial Sector;

Second, the issuance of a private entity financial accounting standard which is a substitute for financial accounting standards without a public entity that will apply on January 1, 2025.

Third, the results of the evaluation of problems and settlements for the provision of credit after the COVID-19 pandemic.

Fourth, align with the latest provisions and improve principles-based arrangements.

The principal of the POJK 1/2024 arrangement consists of expansion of productive asset coverage, addition of arrangements regarding non-productive assets, quality of productive assets, collection of asset quality assessments and reserve impairment losses (CKPN), credit restructuring, neglected property, collateral taken over, book delete, credit policy, and credit procedures.