OJK issued a statement highlighting that the stability of the financial services sector has been good until April, even amid the COVID-19 pandemic. It also issued certain regulatory statements to address provisions related to restructured credit for debtors affected by the pandemic and on the timelines for submission of periodic reports, among others. This regulation has been effective from April 14, 2020. OJK published Financial Information Service System (SLIK) reporting guideline for restructured credit or financing due to COVID-19 impact, along with the related frequently asked questions (FAQs).
Economic data shows that COVID-19 pandemic has caused significant pressure on the global economy. Through a number of anticipatory policies (pre-emptive) and forward-looking assessments, which are reflected in financial, fiscal, and monetary sector stimulus, Indonesia is able to control volatility in the financial markets, which rose sharply in line with the increasing spread of COVID-19. The risk profile of financial service institutions in March 2020 was maintained at a controlled level with a gross non-performing loan (NPL) ratio of 2.77%. Meanwhile, banking liquidity and capital are at an adequate level. The liquid/non-core deposit ratio is monitored at 112.90%, above the 50% threshold. In addition, OJK continues to monitor the daily liquidity conditions of financial service institutions, including the availability of High Quality Liquidity Asset in the form of securities. Capital adequacy ratio of banks was recorded at 21.77% and risk-based capital of the life insurance and general insurance industries respectively 643% and 297%, above the regulatory threshold of 120%.
Credit relief from banks and finance companies for debtors affected by COVID-19, up to April 26, has been carried out by 65 banks. OJK also welcomed and supported the efforts of government in implementing a further economic stimulus policy related to the provision of interest subsidies for bank debtors and finance companies. OJK and the government will prepare provisions for the implementation of this further stimulus program. The following interest subsidies will be given for six months (April-September 2020):
- Interest rates for clusters below IDR 500 million are 6% for the first three months and 3% for the next three months
- Interest rates for clusters above IDR 500 million to IDR 10 billion are 3% for the first three months and 2% for the next 3 months
Related Links (in Indonesian)
- Press Release on Financial Sector Stability
- Press Release on Publication of Regulations in Response to COVID-19
- Press Release on Reporting Guidelines
- Regulation Related to Countercyclical Policies
- FAQs on Guidelines (PDF)
Keywords: Asia Pacific, Indonesia, Banking, COVID-19, Reporting, Restructured Loans, Regulatory Capital, Liquidity Risk, Credit Risk, NPL, OJK
Previous ArticleBCRA Updates Capital Requirements and Information Regime Rules
The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.
The European Banking Authority (EBA) recently published a report that recommends enhancements to the Pillar 1 framework, under the prudential rules, to capture environmental and social risks.
As a follow on from its prudential standard on the treatment of crypto-asset exposures, the Basel Committee on Banking Supervision (BCBS) proposed disclosure requirements for crypto-asset exposures of banks.
The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.
The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.
The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.
The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.