New POJK Redefining BOOK, Expanding Small Banking Opportunities to Become Digital Banks

After much anticipation, OJK issued three new regulations to support the banking industry to be more efficient, competitive, and adaptive to the needs of the community.

The three POJKs are POJK No.12/POJK.03/2021 concerning Commercial Banks, POJK No.13/POJK.03/2021 concerning the Implementation of Commercial Bank Products, and POJK No.14/POJK.03/2021 concerning Amendments to POJK No. 34/POJK.03/2018 concerning Reassessment of Main Parties of Financial Services Institutions.

Chairman of the OJK Board of Commissioners, Wimboh Santoso, said that the three POJKs were issued to adjust to the needs in line with global dynamics, changing landscapes, and the banking ecosystem. [..] so it is necessary to apply a principle-based regulatory pattern (principles based) to make regulations more flexible (agile) and anticipate future changes (forward looking) and become a reference that maintains the continuity of industrial operations," he said in an official statement, Thursday (19/8).

POJK for Commercial Banks emphasizes the meaning of digital bank, namely banks that are currently digitizing products and services (incumbent), or through the establishment of a new bank that immediately has the status of a comprehensive digital bank (full digital banking).

“However, there is no dichotomy between banks that already have digital services, digital banks as a result of the transformation of banks incumbent, or a digital bank formed through new bank establishment (full digital bank). After all, a bank is still a bank. banks are banks” said the Chief Executive of OJK Banking Supervision Heru Kristiyana.

In other words, in accordance with the current law on banking, there are still two types of banks, namely Commercial Banks and Rural Banks. The regulator does not define a digital bank as a new kind of bank.

He continued, the POJK for Commercial Banks and POJK for the Operation of Commercial Bank Products basically did not put a new burden on the national banking industry, but instead provided a better foundation for running a business, especially in the midst of the Covid-19 pandemic.

POJK 12 concerning Commercial Banks

In POJK 12, it focuses more on:

1. Requirements for the establishment of a new bank and operational aspects. This includes simplification and acceleration of licensing for bank establishments, office networks, business process arrangements including digital services or the establishment of digital banks.
2. Encouraging banks, especially banks with Indonesian legal entities, to synergize with each other in order to increase efficiency and expand services.
3. Encouraging bank business groups (KUB) through consolidation is a profitable option for banks, including banks that have not met the minimum core capital of IDR 3 trillion.
4. Strengthening regulations by increasing the capital requirement to IDR 10 trillion for the establishment of new banks, both with the traditional bank business model, as well as the establishment of a fully digital bank.
5. Redefining bank grouping based on core capital (KBMI), no longer using BUKU (business activity commercial bank).

This redefinition does not affect banking performance Existing because it does not reduce the scope of business activities. Precisely for small banks, KBMI is a smoothing plan for those who want to become a digital bank. In the previous rule in BUKU 1, they were not allowed to enter the digital realm. As long as they continue to adjust the minimum capital of IDR 3 trillion for the converted digital bank.

POJK 13 concerning Operation of Commercial Bank Products

As for the POJK, it focuses on:

1. Strengthening in licensing and operating bank products from the beginning using a core capital approach (capital-based approval) to a risk-based approach (risk-based approval).
2. Providing space for banks to be more innovative in issuing digital products and services without ignoring the prudential aspects.
3. Regulate from planning, implementation, to discontinuation of bank products.
4. Accelerating the licensing process for bank products, both through simplification of product classification (basic and advanced) and including its implementation, among others through: pilot review and instant approval, to create levels playing of fields the same in the banking industry.

Previously, OJK noted that there were seven banks in the process go-digital namely Bank BCA Digital, BRI Agroniaga, Bank Neo Commerce, Bank Capital, Bank Harda Internasional, Bank QNB Indonesia, and KEB HanaBank. In addition, there are five banks that claim to have become digital banks. They are Bank Jago, Jenius from Bank BTPN, Wokee from Bank Bukopin, Digibank from Bank DBS, and TMRW from Bank UOB.

-

Header Image: Depositphotos.com