OJK Issues Circulars Addressing Market, Credit, and Cyber Risk Rules
The Financial Services Authority of Indonesia (OJK) recently issued circulars that address the calculation of risk-weighted assets (RWA) for market risk for commercial banks, the cybersecurity and cyber resilience for commercial banks, and the credit information management by institutions. OJK also published a regulation setting maximum limits for lending at rural banks (BPR) and maximum limits for distribution of funds for Sharia rural banks (BPRS).
Below are the key highlights of the recent updates:
- The Circular on calculation of risk-weighted assets for market risk for commercial banks covers provisions related to general requirements, reporting, publication, and calculation of risk-weighted assets market risk for banks that have Sharia business units and/or consolidated risk-weighted assets market risk for banks that have subsidiary companies. The amendments cover rules on classification of the trading book and banking book, trading desks, and standardized and simplified standardized approaches.
- The Circular on cybersecurity and resilience for commercial banks covers general provisions, inherent risk assessment related to cybersecurity, implementation of risk management related to cybersecurity, implementation of cyber-resilience process for commercial banks, cybersecurity maturity level assessment, cybersecurity risk levels and testing, units/functions handling cybersecurity, and cyber incident reporting.
- The Circular on credit information management institutions (LPIP) covers provisions related to the implementation of good governance, procedures for establishing credit information management institutions, explanation of the ownership structure of credit information management institutions, rights and obligations of credit information management institutions, procedures for fit and proper tests as well as procedures for re-evaluating the main controlling party and the main party managing credit information management institutions. The Circular will replace the OJK Circular No 15/49/DPKL dated December 05, 2013, on the same topic.
- The Regulation on maximum limits for lending at rural banks and maximum limits for distribution of funds for Sharia rural banks aims to maintain stability and encourage increasing the contribution of BPRs and BPRS to economic growth through increasing the credit portfolio or real sector financing while still prioritizing the principle of prudence and risk management. The main provisions include obligation to apply the principle of prudence in providing provision of funds or distribution of funds, scope of related parties, the treatment of certain maximum limits for lending and maximum limits for distribution of funds, and the submission of reports on maximum limits for lending at rural banks and maximum limits for distribution of funds for Sharia rural banks.
Related Links (in Indonesian)
- Circular on Calculation of Risk-Weighted Assets
- Circular on Cybersecurity
- Circular on Credit Information Management Institution
- Regulation on Limits for Rural and Sharia Banks
Keywords: Asia Pacific, Indonesia, Banking, Basel, Market Risk, Islamic Banking, Rural Banks, Cyber Risk, Cyber Incident Reporting, Lending, Credit Risk, Regulatory Capital, Standardized Approach, Simplified Standardized Approach, OJK
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