OJK Reregulates Provision on Bank Business Plans

The Financial Services Authority (“OJK”) has issued Regulation No. 5/POJK.03/2016 (“OJK Regulation”)on Bank Business Plans. In essence, the OJK Regulation specifies the various aspects which must be elaborated upon by conventional and sharia-based banks (“Bank”) when formulating their business plans. Furthermore, the OJK Regulation also sets out procedures for banks as regards the reporting of their business plans and reporting of the realization of their business plans to the OJK.
 
Prior to the issuance of the OJK Regulation, these matters were regulated under Bank Indonesia (“BI”) Regulation No. 12/21/PBI/2010 on Bank Business Plans (“BI Regulation”).[1]
 
The OJK Regulation is of relevance to both conventional and sharia-based banks.
 
Annual Business Plans
The OJK Regulation mandates that Banks’ boards of directors should draw up business plans on an annual basis.[2] During the preparation of said business plans, Banks must take into consideration any internal or external factors which could ultimately affect business sustainability, prudential and healthy banking principles, and risk-management measures.[3] Once a plan has been drawn up, a Bank’s board of directors must then secure approval from its board of commissioners and communicate the business plan to all of its stockholders and across every level of its organizational structure.[4]
 
Details of what should be covered in a Bank’s business plan are outlined below:[5]