Stricter Regulations for Financial Services Institutions in Indonesia

The Indonesian Financial Services Authority (OJK) has introduced new regulations for financial services institutions, which include stricter requirements for Board of Commissioners (BOC) members. This article provides an overview of the changes and their implications for investors and business players in the co-funding sector.

Requirements for BOC Members

According to OJK Regulation No. 10/2022, BOC members are required to have at least two years of experience in the financial sector at a managerial level. This is to ensure that they have sufficient knowledge and expertise to oversee the institution’s operations.

• The regulation aims to prevent individuals without relevant experience from taking on leadership roles in financial institutions.
• This requirement is intended to maintain high standards of governance and decision-making within financial services institutions.

Other Regulations

In addition to the requirements for BOC members, the OJK has introduced other regulations for financial services institutions, including:

Electronic Systems

• Providers are required to use electronic systems to conduct their activities.
• Funding transaction data must be submitted to the OJK’s fintech lending data center.
• No more than one electronic system per type of gadget or site address is allowed.

Risk Management Measures

• Providers are obligated to implement effective risk management measures, which must include:
  • Active supervision from the BOD, BOC, and Sharia Supervisory Board
  • Adequate risk management procedures and internal controls
• The regulation aims to ensure that financial services institutions have adequate systems in place to manage risks and prevent losses.

Accounts

• Providers are required to use an escrow account and a virtual account or payment gateway for information technology-based co-funding services.
• A virtual account or payment gateway must be provided for each user, and funding and repayment transactions must be conducted through this system.

Transitional Provision

The regulation provides a transitional provision for providers that:

• Obtained a license before the promulgation of OJK Reg. 10/2022
• Were in the process of obtaining a license before the promulgation of OJK Reg. 10/2022
• Returned their certificate of registration and will re-apply for a license before the promulgation of OJK Reg. 10/2022

This exception only applies for a maximum of six months from the date of promulgation.

Conclusion

The new regulation aims to introduce stricter requirements for financial services institutions in Indonesia, with a focus on ensuring that they have sufficient expertise and resources to operate effectively. The regulation also provides a transitional period for providers to adjust to the new requirements. Investors and business players in the co-funding sector should be aware of these changes and stay informed about further implementing regulations and clarifications from the OJK.