OJK: Banking Needs Core Capital IDR 3 Trillion To Be Ready To Face Risks Of Global Economic Uncertainty

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Deputy Commissioner for Banking Supervision of the Financial Services Authority (OJK) Bambang Widjanarko said banks need a minimum core capital of IDR 3 trillion to absorb various risks as a result of global economic uncertainty. " “ Banking also requires strong capital support to provide financial support both for business expansion, adequate infrastructure provision as a result of digitization and community needs," he said in a webinar “Strategy on Fulfillment of Minimum Core Capital and Opportunities for Consolidating Regional Development Banks ” in Jakarta, quoted from Antara, Thursday, October 13. Commercial banks are given time to fulfill these obligations until the end of 2022, while Regional Development Banks (BPD) are given until the end of 2024. In addition to various global economic risks due to geopolitical conflicts, the weakening of the economic performance of several countries, rising inflation, and tightening monetary policy, banks are also experiencing structural challenges, such as low competitiveness, rapid development of information technology, and large development financing needs. Banking shareholders are given the flexibility to fulfill their minimum core capital obligations of IDR 3 trillion, for example by increasing capital or consolidating. "If the controlling shareholder is able to be independent, many things can be done to increase capital deposits, it can be with rights issue, profit evaporation, inviting strategic partners, depositing shares, and IPO," he added. Bank consolidation can be done through the merger, takeover, and establishment of a bank business group (KUB). The last scheme can be carried out if the controlling shareholder or the holding company is able to meet the adequacy of bank liquidity in the KUB which will have a structure consisting of a parent company and a subsidiary company. " “ Meanwhile, KUB member banks are only required to meet the core capital provisions of at least IDR 1 trillion," he said.