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Updated Financial Sector Regulation

The World Health Organization (WHO) has stipulated the status of Coronavirus Disease 2019 (Covid-19) global outbreak as Pandemic. This unprecedented global outbreak has rapidly spread and affected almost every country in this world, aside from its health and clinical impact threat, the pandemic has also brought negative impact to many other sectors such as the economy, many countries see that the pandemic has turned into a major threat to the global economy and predict will lead many countries to economic crisis situation.

Indonesia is nonetheless, hence in order to prevent or minimize the negative impact of the global outbreak to the national economic and particularly to protect the micro-small medium enterprises sector as one of Indonesia’s major economic pillars, The Indonesian Financial Service Authority (OJK) has issued a regulation to optimize banking performances in intermediary function, maintain financial system stability, and support economic growth trough Regulation Number 11/POJK.03/2020 concerning National Economic Stimulus as Countercylical Policy in Impact of Coronavirus Disease 2019 (“POJK 11/2020”).

Highlights of The Regulation

  1. The regulation applies for Bank (Conventional Bank, Sharia Bank, Sharia Business Unit, Rural Credit Bank, Sharia Rural Credit Bank).
  2. Bank could apply policies to support economic growth stimulus for debtor that affected by COVID-19 outbreak included micro-small medium enterprises debtor, which are:
    a. determination of asset quality policies; and
    b. credit or financing restructuration policies.
  3. In according to aforementioned polices, Bank must pay attention to risk management application as being stipulated in Regulation of OJK concerning Bank risk management application.
  4. The aforementioned policies application must be completed with guidelines for determinate the affected debtor, at least contains:
    a. debtor criteria that determine as affected by COVID-19 outbreak; and
    b. sectors that affected by COVID-19 outbreak.
  5. Determination of asset quality, which are:
    a. credit in Conventional Bank;
    b. financing in Sharia Bank or Sharia Business Unit;
    c. provision of another funds in Conventional Bank, Sharia Bank or Sharia Business Unit;
    d. credit in Rural Credit Bank; and/or
    e. financing in Sharia Rural Financing Bank.
  6. For debtor that affected by COVID-19 outbreak with maximum plafond Rp10.000.000.000,- (ten billion Rupiah) could be based on accuracy payment of credit principal and/or interest or margin/profit sharing/ujrah.
  7. Plafond as aforementioned was applied for 1 (one) debtor or 1 (one) same project.
  8. Credit or financing quality that being restructured is determined as performing credit since restructured. This restructure could be applied for credit or financing that had given before or after debtor being affected by COVID-19 outbreak.
  9. Bank could give new credit, financing, and/or provisions of other funds to debtor that being affected by COVID-19 outbreak. Quality determination of credit, financing, and/or provisions of other funds must separately apply from previous quality of credit or financing and/or provisions of other funds that had been giving.
  10. Obligation for periodic report as implementation of this POJK from April 2020 to March 2021.
  11. This regulation would be prevailed until 31 March 2021.

Gaffar & Co. is an Indonesian Boutique Law Firm that focused on commercial law Area includes capital market, finance and investment regulatory.

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