OJK Amends Licensing Procedures for Microfinance Institutions

The Financial Services Authority (“OJK”) has issued Regulation No. 61/POJK.05/2015 (“Amendment”), which amends OJK Regulation No. 12/POJK.05/2014 on Business Licensing and Organizational Structures for Microfinance Institutions (“2014 Regulation”). [1] With the ultimate goal of enhancing licensing procedures for microfinance institutions, the Amendment redefines the provisions which relate to licensing requirements, the Sharia Supervisory Board (Dewan Pengawas Syariah–“DPS”), changes to a business’s name, the expansion of business areas, and sanctions for non-compliance. Furthermore, the Amendment also adds one new provision which was not previously included under the 2014 Regulation, namely licensing procedures for microfinance institutions with non-cash capital.Due to the wide scope of the Amendment, this edition of Indonesian Legal Brief (ILB) will confine its discussions to licensing procedures, the expansion of business areas, and non-cash capital microfinance institutions.The Amendment is of relevance to Indonesian citizens, rural enterprises, and regional/municipal governments, as well as cooperatives which are currently or intending to become involved in the microfinance sector.Licensing Procedures for Microfinance InstitutionsIn order to provide financial services to the public, newly established microfinance institutions must first secure a business license from the OJK. [2] To secure this business license, the Board of Directors (“BoD”) of a microfinance institution must submit an application, along with the following documents: [3]