Bank Executive Officers Face Tighter Rules and Regulations
In a move to strengthen governance and risk management practices in Indonesia’s commercial banking sector, the country’s financial regulatory body, OJK (Otoritas Jasa Keuangan), has introduced new rules and regulations governing the activities of bank executive officers.
New Requirements for Bank Directors and Commissioners
- At least five years of experience in the field of operations as an executive officer of a bank
- No concurrent positions in other financial institutions or companies that may pose a conflict of interest
The term of office for both board of directors (BOD) members and board of commissioners (BOC) members is capped at five years, with no possibility of extension. This move aims to ensure the independence and effectiveness of these bodies in overseeing the operations of commercial banks.
Governance Practices Enhanced
- Regulations governing remuneration for bank executives
- Commercial banks required to implement fair and just remuneration policies
- OJK reviews and evaluates remuneration policies if necessary
- Emphasis on risk management practices in the banking sector
- Banks must adopt a more sensitive approach to calculating their capital requirements, taking into account market risks as well as other factors
New Regulations for Risk Management and Customer Relationships
- Greater emphasis on risk management practices in the banking sector
- Banks must now adopt a more sensitive approach to calculating their capital requirements, taking into account market risks as well as other factors
- New regulations governing relationships between banks and customers
- Clear agreements with customers outlining terms and conditions of services provided
- Customers have the right to legal protection when using banking services
- Banks required to handle complaints in a fair and transparent manner
The new regulations have been welcomed by industry stakeholders, who see them as an important step towards improving governance and risk management practices in Indonesia’s commercial banking sector.