OJK published a policy package that sets out relaxations to certain regulatory capital and liquidity risk framework provisions in the banking sector to help maintain financial sector stability amid COVID-19 pandemic. The policy package for commercial banks includes relaxation measures related to reporting, credit treatment, and governance of restructured credit or financing in accordance with the Circular POJK No.11/POJK.03/2020. The package also addresses adjustment of implementation of several banking regulations and postponement of implementation of Basel III reforms. Moreover, OJK relaxed policy measures for rural credit banks and "Islamic People's Financing Banks." It published a circular on amendments to the minimum capital requirements and fulfillment of minimum core capital for Sharia rural banks. The amendments have been in effect from May 20, 2020. Additionally, OJK issued a statement highlighting that the stability of the financial services sector has been maintained until May, even amid the COVID-19 pandemic.
The relaxation policy package for conventional commercial banks and Sharia commercial banks includes the following measures:
- According to the POJK No.11/POJK.03/2020, restructured credit or financing are reported in the Financial Information Services System (SLIK).
- The obligation to fulfill the Capital Conservation Buffer in the capital component of 2.5% of the Risk Weighted Assets for banks (BUKU 3 and BUKU 4) is temporarily removed until March 31, 2021.
- Obligations to fulfill Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) for banks (BUKU 3, BUKU 4, and Foreign Banks) must be maintained as low as 85% by March 31, 2021. Banks are required to prepare action plans to return the fulfillment of LCR and NSFR to 100% no later than April 30, 2021.
- Assessment of Foreclosed Collateral Quality based on the term of ownership can be paused until March 31, 2021.
- In line with the announcement by BCBS on March 27, 2020, the implementation of the Basel III reforms standard in Indonesia—which includes the calculation of risk-weighted assets for operational, credit, market, and credit valuation adjustment (CVA) risks—has been postponed to January 01, 2023.
Related Links (in Indonesian)
- Press Release on Policy Package in Response to COVID-19
- Press Release on Financial Sector Stability
- Notification on Amendments to Minimum Capital Requirements for Sharia Rural Banks
Effective Date: May 20, 2020
Keywords: Asia Pacific, Indonesia, Banking, COVID-19, Reporting, Restructured Loans, Regulatory Capital, Liquidity Risk, Credit Risk, LCR, NSFR, Deadline Extension, Basel, Operational Risk, Market Risk, Risk-Weighted Assets, CVA Risk, OJK
Previous ArticleIOSCO Statement Highlights Importance of Disclosures on COVID Impact
HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.
EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.
BoE has set out a three-phased plan to transform data collection from the UK financial sector over the next decade.
BIS recently made a couple of announcements with respect to the planned and ongoing work in the area of financial technology.
ESRB updated the list of national macro-prudential measures applied by each member state in the European Economic Area.
BoE has set out results of a survey on the impact of COVID-19 events on the use of machine learning and data science.
In response to a request from the European Council and Parliament, ECB published an opinion on the proposed regulation on markets in crypto-assets.
APRA announced the updated aggregate amounts for the 2021 Committed Liquidity Facility (CLF) established between the Reserve Bank of Australia (RBA) and certain locally incorporated authorized deposit-taking institutions that are subject to the Liquidity Coverage Ratio (LCR).
ECB published supervisory Memorandums of Understanding (MoUs) with UK as well as other European and non-European authorities.
EIOPA identified business model sustainability and adequate product design as the two EU-wide strategic supervisory priorities.