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Integrated Licensing via Bank of Indonesia Licensing Front Office

As per May 2020, Bank of Indonesia shifts more of its services to the online system to avoid the need to meet physically.

Bank of Indonesia has been gradually shifting its service to the online system. Back in 2018, Bank of Indonesia has started changing some of its services, including licensing services for Payment System Services (PJSP), Monetary Services Organizer (KLU), and Financial Technology Registration to Bank of Indonesia Licensing Front Office via E-Licensing system. As per May 2020, with the worsening situation of Covid-19, which leads to the physical distancing policy, Bank of Indonesia shift more of their services to the online system as to avoid the need to meet physically. Bank of Indonesia issued Bank of Indonesia Regulation (PBI) No. 22/8/PBI/2020 on Integrated Licensing of Bank Indonesia via Licensing Front Office. This new regulation aims to regulate the improvement of the usage of Bank of Indonesia Licensing Front Office in providing transparent, accountable, effective, and efficient services.             

Scope of Regulation

PBI No. 22/8/PBI/2020, in general, regulates regarding licenses, approval, and services provided by Bank of Indonesia Licensing Front Office in Monetary, macroprudential, and also payment and management of rupiah currency activities. Despite trying to offer more online services, however, this new PBI explicitly states that this ease of licensing doesn’t include the following services:

  1. Approval for implementation of the development of payment system service activity, development of product and payment system service activity, and admiration for cooperation as stipulated in Bank of Indonesia Regulation regarding implementation of payment transaction processing;
  2. Establishment as a standard institution, service institution, and/or approval as switching institution as stipulated in Bank of Indonesia Regulation regarding national payment gateway; and
  3. License or approval regarding implementation of general bank resolution through the establishment of the intermediary bank by deposit Insurance Agency as stipulated in Bank of Indonesia Regulation regarding the operational relationship between the intermediary bank and Bank of Indonesia.

In specific, the scope of services in PBI No. 22/8/PBI/2020 includes the licenses, approval, and services in the followings sectors:

  1. Transaction of shariah deposit certificate in the money market;
  2. Member of monetary operation;
  3. Issuance and purchase of commercial securities in the money market;
  4. Purchase of deposit certificate in the money market;
  5. Treasury certificate and implementation of market code of ethic;
  6. The organizer of means of transaction implementation in money market and foreign exchange market;
  7. Integrated licensing service regarding the operational relationship between the general bank and Bank of Indonesia;
  8. Bank’s external debt;
  9. The organizer of rupiah currency processing service;
  10. The organizer of payment system service;
  11. Implementation of the transaction, administration of securities, and settlement of instant funds;
  12. Application of fund transfer dan scheduled clearing by Bank of Indonesia;
  13. The organizer of non-bank fund transfer;
  14. Non-bank foreign currency exchange business;
  15. Moving foreign banknotes into or from Indonesia custom area;
  16. Checking account in Bank of Indonesia; and
  17. Auction and administration of state-owned securities.

Easer Licensing

The ease of licensing provided by Bank of Indonesia Licensing Front Office is open to any applicant, including bank, non-bank institution, ministry, or other rightful parties, according to the specific licenses as stipulated in the respective regulations. Application submitted to the Front Office can be made online, but the Applicant is required to acquire access right first from the Bank of Indonesia.

Just because the Bank of Indonesia is trying to ease up the licensing process, does not mean the approval will be much easier to get. Bank of Indonesia will still review the completion and both the administrative and substantive authenticity of the documents submitted. When the Bank of Indonesia received an application, they will first review the required documents’ completion according to the respective regulation of the requested license and the administrative authenticity of the materials. Afterward, Bank of Indonesia will review the substantive authenticity of the documents. The system will give more time for the Applicant who has a problem or lack of required documents. The Applicant also can apply offline when they got an online problem system or they want to apply for a specific license that has not integrated yet with the system. Bank Indonesia will approve with a physical letter when requirements already met.

In order to help the applicant and increase the efficiency, Bank of Indonesia is also open to initial consultation before submission of application. In the event there is a force majeure which hinders the licensing process, Bank of Indonesia will inform the applicant and suggest a proper remedy.  Any delay or losses resulted from the applicant not complying to the remedy will discharge the Bank of Indonesia from responsibility.

Author: Benedictus Giovanni

Gaffar & Co., Indonesian Boutique Law Firm which specializing and focus on commercial law areas include capital market and financial services.

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