OVERVIEW

As part of a movement to better regulation of the Indonesian financial sector, and to improve it, the House of Representatives and the Government agreed to pass a bill to establish the Financial Services Authority (Otoritas Jasa Keuangan – OJK). This new institution was officially formed on 22 November 2011, when the President signed the bill into a law, and registered it as Law No. 21 of 2011 on the Financial Services Authority (“OJK Law”).

The enactment of the OJK Law created a significant shift for the financial services sector, as it integrated the regulatory oversight function that was previously conducted by two different institutions, Bank Indonesia (BI) and the Capital Market Supervisory Agency (Badan Pengawas Pasar Modal dan Lembaga Keuangan – Bapepam-LK). The banking sector fell under the supervision of BI, while Bapepam-LK was in charge of overseeing capital markets and non-bank financial institutions.