Bank Indonesia (?BI?) has issued Regulation No. 16/20/PBI/2014 on Implementation of Prudential Principles for the Management of Foreign Loans of Non-Bank Corporations? (?Regulation?). The Regulation aims to prevent foreign loans from hampering the stabilization of the macroeconomy, by providing guidelines for non-bank corporations (?Company?) to implement prudent principles in managing their foreign currencies loans with overseas parties (?Foreign Loans?).

The 2014 Regulation sets out procedures for BI to take regulatory and supervisory measures in preventing systematic financial risks (?systemic risks?) arising. Such measures are referred to as ?macro- prudential? policy, in contrast to ?micro-prudential? policy which are measures to enhance the safety and soundness of financial institutions and consumer protection.

The Amendment was issued to guarantee the value of the rupiah against foreign currency by setting out general guidelines on hedging transactions covering types of hedging transactions, procedures, value, period, and reporting obligations, as well as sanctions against banks that violate the Regulation.

To strengthen the national banking industry in anticipation of continued increased global competition, the House of Representatives (?House?) has initiated a Draft Bill on Banking (?Draft Bill?).

Bank Indonesia (?BI?) has issued Regulation No. 16/12/PBI/2014 on Sharia Monetary Operations (?Regulation?) setting out guidelines on carrying out monetary operations based on sharia principles, known by its abbreviation as ?OMS? (Operasi Moneter Sharia).

As a follow up to Financial Services Authority (?OJK?) Regulation No. 8/POJK.03/2014 on Health Level Assessments for Sharia Commercial Banks and Sharia Business Units (?Regulation"), the OJK has issued Circular Letter No. 10/SEOJK.03/2014 (? Circular Letter?). The Circular Letter further elaborates on the 4 indicators that must be used by Sharia banks and Sharia business units (collectively ?Banks?) when carrying out a self-assessment of their soundness level, namely: a) risk profile; b) good corporate governance; c) earnings; and d) capital.

The Second Amendment aims to stabilize the domestic foreign exchange market. This is achieved by providing banks flexibility on hedging future earnings, specifically ?dividend? with a foreign party.

In essence, the Amendment aims to broaden the use of electronic money (?E-Money?) in the retail sector and realize the concept of branchless banking for people who rely heavily on cash or do not have access to banking services.

The 2014 Regulation is of relevance to foreign creditors and government institutions that require funding that is sourced from foreign loans, the funds of which will be used to organize the procurement of goods and services, such as Ministries, Regional Governments and state-owned enterprises (collectively referred to as ?Procuring Institutions?).

The 2014 Regulation sets out the procedures for selling shares of commercial or rural banks that have been determined as failing banks (?Failed Banks?) by the Financial System Stability Committee and the Financial Services Authority (?OJK?).