OJK to Strengthen Branchless Banking

 
Fathan Qorib, Andin Aditya Rahman
 
Followinginitial efforts by Bank Indonesia (BI)to expand branchless banking, the Financial Services Authority (OJK) has said it will be ready to issue a regulation on branchless banking at the end of this year. Branchless banking itself is a system that enables certain payments and banking services to be provided via third parties (agents) and is seen as a way to provide enhanced banking services to the Indonesian public particularly those in remote regions.
 
“In its implementation, the number of banks will be increased so that there will be an amplified impact for the public,” added Muliaman D. Hadad, Chairman of the OJK Board of Commissioners, in Jakarta last Thursday.
 
The plan, continued Mr. Hadad, is to provide branchless banking service licenses to all banks that fall under the BUKU I, II, and III categories. BUKU is the Indonesian acronym for Bank Umum Berdasarkan Kategori Usaha, a system that classifies commercial banks into four categories based on their core capital (for more information, see ILD No. 292, and ILB No. 2083).
 
Parties wishing to provide branchless banking services are not required to become a digital financial service agent (LKD) as required under BI Regulation No. 11/12/PBI/2009 of 2009on Electronic Money, as amended by BI Regulation No. 16/8/PBI/2014 of 2014(ILB No. 2388). However, Mr. Hadad added that these parties are required to establish concrete policies on mitigating risks associated with branchless banking services.
 
“For branchless banking, it doesn’t have to be an LKD agent. We will have a discussion on who can be agents with the banking sector as these agents will be under the management of banks,” he explained.
 
Mr. Hadad further continued that the OJK will encourage other types of businesses, such as pawn shops and post offices, to provide branchless banking services.
 
“We can use other entities that are already well-penetrated into society,” he stated.
 
As part of this initiative, Tifatul Sembiring, Minister of Communications and Information Technology, emphasized the importance of sufficient infrastructure to accommodate branchless banking services to guarantee security for consumers.
 
“It is important that consumers are protected,” asserted Mr. Sembiring.
 
Tifatul also stressed the significance of a deeper understanding between the OJK and his institution regarding the responsibilities and functions of telecommunications and banking corporations in the branchless banking framework.
 
“This will be detailed with the OJK in a cooperation agreement based on prevailing laws and regulations,” he concluded.
 
(hot/kc)