OJK Publishes Regulatory Notifications Amid COVID-19 Pandemic
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
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Karen Moss
Senior practitioner in asset and liability management (ALM) and liquidity risk who assists banking clients in advancing their treasury and balance sheet management objectives
Previous Article
BCRA Updates Capital Requirements and Information Regime RulesRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.