New Guidelines Set for Commercial Banks for Calculations of Risk-Weighted Assets for Credit Risk Using the Standardized Approach

Under Regulation of the Financial Services Authority (Otoritas Jasa Keuangan – “OJK”) No. 11/POJK.03/2016 on the Minimum Capital Adequacy Requirements for Commercial Banks, which was subsequently amended by Regulation of the OJK No. 34/POJK.03/2016 (collectively referred to as “Regulation 3/2016”),[1] banks are required to take risk-weighted assets in relation to credit risk into account when calculating their minimum capital adequacy requirement ratios. In order to further elaborate upon these matters, the OJK subsequently issued Circular No. 42/SEOJK.03/2016 on Guidelines for the Calculation of Risk-Weighted Assets for Credit Risk Using the Standardized Approach, which was later amended by Circular of the OJK No. 11/SEOJK.03/2018[2] (collectively referred to as “Circular 42/2016”).[3]