OVERVIEW

Given its importance to the smooth operation of the economy, the banking industry is one of the most highly regulated business sectors in any country including Indonesia. The banking industry plays a critical role that impacts on most sectors of the economy as it provides access to financial resources, supports commercial transactions and commerce, and allows the public to keep their funds safe.  This important sector also operates to disburse loans and finance investment projects for the private and public sectors at both domestic and international levels.

Learning from the 1997 crisis, the government, acting through Bank Indonesia (BI) and the Financial Services Authority (OJK), in recent years has taken actions to address the critical issues facing the banking sector and implemented initiatives to tackle them efficiently and to prevent similar crises from happening again. To date BI and the OJK have issued numerous regulations, establishing strict requirements for establishing banks, including maintaining bank capital adequacy ratios to safeguard the public funds they hold and provide for the healthy continuous operation of banks.