New Provision on Minimum-Capital Requirements for Commercial Banks

The Financial Services Authority (Otoritas Jasa Keuangan – “OJK”) has issued Regulation No. 11/POJK.03/2016 on the Mandatory Minimum-Capital Requirements for Commercial Banks (“2016 Regulation”).
 
The 2016 Regulation updates provisions relating to commercial-bank obligations to maintain certain levels of funds which relate to their risk profiles, and also states that the OJK is to replace Bank Indonesia (BI) as the regulatory and monitoring body for financial institutions.[1]
 
Previously, these matters were regulated under BI Regulation No. 15/12/PBI/2013 (“2013 Regulation”), and BI Circular No. 9/31/DPNP dated 12 December 2007 on Guidelines for Using Internal Models for Calculating Minimum-Capital Requirements for Commercial Banks By Taking into Account the Market Risk (together referred to as “Previous Regulations”).[2]
 
The 2016 Regulation is of relevance to all commercial banks, including the branch offices of foreign commercial banks.
 
Minimum-Capital Requirements
All commercial banks are required to be in possession of specific minimum amounts of capital according to their risk profile grade, as detailed under OJK Regulation No. 4/POJK.03/2016 on Health-Level Assessments for Commercial Banks.[3] The amount of this capital is calculated based on the percentage of a bank’s risk-weighted assets (aset tertimbang risiko – “ATMR”), as detailed below:[4]