Policy

Jakarta, 30 December 2024. Indonesia Financial Services Authority (OJK) remains committed to strengthen Indonesia's banking industry, including the issuance of regulations for Rural Bank and Sharia Rural Bank (BPR/BPRS). 

The three OJK Regulations (POJK) include:

1. POJK Number 23 of 2024 concerning Reporting through the OJK Reporting System and Financial Condition Transparency for BPR and BPRS (POJK Reporting and Financial Condition Transparency for BPR and BPRS)
2. POJK Number 24 of 2024 concerning Asset Quality of BPRS (POJK Asset Quality for BPRS)
3. POJK Number 25 of 2024 concerning the Implementation of Sharia Governance for BPRS (POJK Sharia Governance for BPRS)

POJK Number 23 of 2024

This regulation aims to enhance technology-based supervision and financial transparency of BPR and BPRS by digitizing reports previously submitted offline, adjusting report coverage, and modifying publication procedures. It serves as the legal basis for all BPR and BPRS reports—both periodic and incidental—submitted to OJK via the Online Reporting Application of OJK (APOLO), thereby improving reporting efficiency.

Key provisions of POJK Reporting and Financial Condition Transparency for BPR and BPRS include:

• Reporting through APOLO, covering periodic and incidental reports in compliance with regulatory requirements;
• Simplifying reporting by reducing redundant submissions and combining similar reporting periods;
• Enhancing public financial transparency through increased access to annual reports and financial publications on BPR and BPRS websites.

This regulation came into effect on 1 December 2024, revokes POJK Number 48/POJK.03/2017, POJK Number 13/POJK.03/2019, and POJK Number 35/POJK.03/2019.

POJK Number 24 of 2024

This POJK is also an enhancement of POJK Number 29/POJK.03/2019 concerning the Quality of Productive Assets and the Formation of Allowances for Impairment of Productive Assets in BPRS. It includes adjustments to the regulations regarding:

• Alignment of regulations on Foreclosed Collateral (AYDA) and permissible business activities in accordance with the Financial Sector Development and Strengthening Law/Financial Sector Omnibus Law (UU P2SK);
• Issuance of private entity financial accounting standards (SAK EP), which replace the financial accounting standards for entities without public accountability (SAK ETAP) and will take effect on 1 January 2025;
• Strengthening the role of the Sharia Supervisory Board in financing policies and procedures in line with the UU P2SK, as well as regulations on risk management and sharia governance for BPRS;
• Adding a pillar for fulfilling sharia principles in the scope of financing policy guidelines for BPRS; and
• Aligning with current regulations applicable to BPR and improving principle-based regulatory provisions.

The key provisions of the POJK on the Quality of Assets for BPRS include the expansion of the scope of productive assets, the addition of regulations on non-productive assets, productive asset quality, allowance for asset quality assessment and impairment losses (CKPN), financing restructuring, abandoned properties, foreclosed collateral, write-offs, as well as financing policies and procedures

POJK Number 25 of 2024

POJK concerning Sharia Governance for BPRS issued to strengthen sharia governance in BPRS, including enhancing the authority and role of the Sharia Supervisory Board (DPS).

This regulation is a follow-up to the mandate of Law Number 4 of 2023 on UU P2SK and part of the 2023–2027 Roadmap for the Development and Strengthening of Islamic Banking, as well as the 2024–2027 Roadmap for the Development and Strengthening of BPR and BPRS.

In its formulation, the POJK also considers input from stakeholders, incorporates the General Governance Guidelines for Indonesian Sharia Entities (2023) issued by the National Governance Policy Committee, and aligns with the IFSB-10 Guiding Principles on Shariah Governance Systems for Institutions Offering Islamic Financial Services.

This POJK complements the governance framework for BPRS, covering general governance (regulated by POJK Number 9 of 2024 concerning Governance Implementation for BPR and BPRS) as well as specific sharia governance as stipulated in this regulation.

The enhancement of the DPS role in this POJK emphasizes the importance of DPS's duties and functions in supervising the implementation of sharia-compliant activities in Islamic banks. To support this enhanced role, the regulation establishes specific functions responsible for implementing sharia governance, which include sharia compliance, sharia risk management, and sharia internal audit. Additionally, it mandates the Board of Directors and Board of Commissioners of Islamic banks to support the DPS's tasks.

With these improvements, the implementation of sharia principles in banks becomes not only the responsibility of DPS but also a duty shared across all levels and layers of the organization.