Banking Legislation in the Pipeline

OVERVIEW

It is widely accepted that banks are crucial to the economy. This can be seen in the simplest transactions, such as paying school tuition, financing home or auto vehicle purchase, or even for paying grocery shopping. Banks are basically intermediary institutions for economic activities.    

To depict the crucial role to the development of the national economy, in February 2013, commercial and rural banks in Indonesia have collectively lent out a total of IDR 4,221,657 billion.[1]

The legal foundation of Indonesia’s national banking system is currently regulated under Law No. 7 of 1992 on Banking, as amended by Law No. 10 of 1998 (“Banking Law”). Many circles see that Banking Law is no longer sufficient to regulate the complex practice of the players in banking sector.