New Multiple-Licensing Policy Introduced

The Financial Services Authority (Otoritas Jasa Keuangan– “OJK”) has issued Regulation No. 6/POJK.03/2016 on Business Activities and Branch Offices Based on Core Bank Capital (“OJK Regulation”) in a bid to protect the national banking sector as it comes up against regional and global competition.The OJK Regulation updates guidelines for conventional and sharia banks (“Banks”) based on their core capital levels and covers their business operations, as well as the establishment of branch offices. This “multiple-licensing policy” [1] was previously regulated under Bank Indonesia (BI) Regulation No. 14/26/PBI/2012 (“BI Regulation”). [2] The OJK Regulation is of relevance to commercial banks as well as to branch offices of foreign banks, and also encompasses sharia banks and sharia business units.Bank CategorizationSimilar to the BI Regulation, the OJK Regulation classifies Banks into four categories in accordance with their core-capital levels, as detailed below: [3]