OJK Amends Regulation on Bank Business Plan

The Financial Services Authority (“ OJK ”) is currently preparing a Draft OJK Regulation (“ RPOJK ”) on Business Plan of Commercial Banks. This regulation will replace POJK No. 5/POJK.03/2016 on Bank Business Plans (“ POJK 5/2016 ”), which is considered inadequate to address the evolving dynamics of banking business models, in line with industry transformation under Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector (“ UU 4/2023 ”).

“With the increasing complexity of digitalized banking business models, supervision must go far beyond financial aspects, including ensuring seamless banking operations, digital resilience, and governance of relationships with technology partners,” stated the Chief Executive of Bank Supervision at OJK, Dian Ediana Rae.

Furthermore, the approach to bank supervision will shift from one based solely on historical ratios to a forward-looking approach focused on the quality of strategy and the bank’s ability to execute it. In this regard, the bank’s Board of Directors will be required to ensure the effective implementation of the business plan, including maintaining deviations between actual performance and targets at a non-material level. In the event of a material deviation, the Bank must demonstrate optimal efforts accompanied by explanations that can be justified and accounted for.