The banking sector in Indonesia continues to evolve, entering a new chapter as it adapts to the changing landscape of economic needs. As this industry faces growing challenges, the Financial Services Authority (OJK) has introduced new regulations to allow banks more flexibility and broader opportunities. What does this shift mean for all of us? Let’s dive into the details of Regulation Number 26 of 2024 about expanding banking activities in Indonesia and its impact on Indonesian banking.
With Regulation Number 26 of 2024, OJK offers banks the chance to expand their business activities, including equity participation in both financial and non-financial sectors. This move is designed to make banks more agile, enabling them to meet the increasing and diversifying economic demands.
This regulation responds to the Financial Sector Development and Strengthening Law (Law No. 4 of 2023), which calls for enhanced flexibility for commercial banks to engage in broader capital participation. The aim is to help banks stay adaptable amidst a more dynamic economy and meet the complex needs of their customers.
Expanding Banking Activities in Indonesia According to OJK
OJK’s Deputy Head of Financial Literacy, Inclusion, and Communication, M. Ismail Riyadi, explained that one of the key features of this regulation is the adjustment of the scope of subsidiary companies for commercial banks to align with Law No. 4 of 2023. Additionally, it covers regulations on capital participation by rural banks (BPR) or Islamic rural banks (BPRS), the transfer of loans by commercial banks and BPR/BPRS, and guarantees provided by commercial banks.
Read also: Microsoft States Indonesia Still Lacks Data Centers
The regulation also outlines provisions on the use of electronic signatures (e-signatures) and electronic agreements by commercial banks, the operation of foreign exchange services by banks, and Islamic banking products.
Ismail further added that this regulation, which was enacted on December 13, 2024, will take effect starting January 1, 2025, for capital participation involving BPR/BPRS.
For those seeking more details on the regulation, OJK provides a comprehensive overview on its SIKePO platform, available through a web browser or as a mobile app on both Google Play Store and Apple’s App Store.
Banks’ Response to the Expanding Banking Business Activities in Indonesia
The new regulation has garnered mixed reactions from the banking sector. Efdinal Alamsyah, Director of PT Bank Oke Indonesia Tbk. (DNAR), believes the new rule doesn’t bring substantial change to the banking industry. Quoted from Bisnis, According to him, this regulation mainly serves as an improvement on existing regulations, particularly regarding capital participation, guarantees, and foreign exchange services.
On the other hand, PT Bank Central Asia Tbk. (BBCA) emphasized that the company would coordinate with relevant stakeholders to implement the regulation effectively. Hera F. Haryn, EVP Corporate Communication & Social Responsibility at BCA, noted that this new regulation opens doors for banks to invest in non-financial companies that support the financial industry.
You may be interested: Exporters Will Be Required to “Park” Export Foreign Exchange Earnings (DHE) for 1 Year
“This will certainly have a positive impact on the banking sector,” she added, quoted from Bisnis.
While banks are given greater freedom, OJK has stressed the importance of adhering to the principle of prudence in every step taken. A comprehensive risk analysis and good management practices are critical to ensure that this expansion does not create unforeseen problems. OJK will continue its supervision to make sure that these developments align with existing regulations.
Implications for the Public and Businesses
For the public, this regulation is expected to result in a wider array of banking services, as well as more innovative offerings. For businesses, especially those in sectors that were previously underserved by the banking system, this presents an opportunity to access financing more easily. The collaboration between banks and various industries is expected to drive more inclusive and sustainable economic growth.
Moreover, Regulation No. 26 of 2024 marks a significant milestone for the Indonesian banking industry. With the new expansion allowed under the regulation, banks now have the potential to become drivers of innovation and economic growth. However, it is crucial that the balance between expansion and prudence is maintained to ensure that the expected benefits materialize without creating unwanted risks.
Last but not the least, are you ready to take advantage of the golden opportunities brought by OJK’s new regulation and take your business to new heights? With Bizindo, opening a bank account is as easy as a breeze—quick, practical, and hassle-free! We’re also here to assist you with company establishment, sworn translation services, and professional business visa processing. Start your journey to success with Bizindo today! Don’t wait, contact us now to secure a special offer!
20% off today. Whatsapp us!