New Capital Requirements for Rural Banks

The Financial Services Authority (“OJK”) recently issued Regulation No. 5/POJK.03/2015 on Mandatory Minimum Capital and Core Capital for Rural Banks (“2015 Regulation”).

The stated aim of the 2015 Regulation is to develop strong, sound, productive, and competitive national rural banks. This objective is achieved by stipulating comprehensive changes to the capital structure and minimum capital requirements that must be satisfied by rural banks (“RuralBanks”). The2015 Regulation also sets out administrative sanctions on Rural Banks that fails to fulfill the prescribed capital requirements within the required time period.