T

he Financial Services Authority (OJK) issued a total of 20 new and revised regulations '€” covering banking, non-banking and the capital market '€” that it expects will deepen and strengthen the current financial market.

All of the regulations will become effective as of Jan. 1, 2015.

In banking, the financial superbody introduced six regulations on integrated governance and integrated risk management for financial conglomerates, branchless banking (Laku Pandai), rural development banks (BPR), minimum capital requirements for sharia banks, and asset quality for sharia banks and sharia business units.

According to OJK commissioner on banking supervision Nelson Tampubolon, major financial companies that have been identified as conglomerates will be required to address 10 risk types that may affect their businesses.

Some of the risks include credit, market, liquidity and operations. '€œAs a whole, these risks can entangle and affect financial services firms under one conglomerate,'€ he said during a press briefing on Wednesday.

The OJK has so far identified 31 financial conglomerates, most of which are headed by banks. The conglomerates '€” such as Mandiri Group, Bank Central Asia (BCA) Group, Citibank Group and Permata Group '€” currently control around 70 percent of the banking industry'€™s total assets.

Under the integrated risk management regulation, conglomerates are required to submit their risk profiles twice a year, in June and December.

Groups that are headed by BUKU IV banks, whose minimum core capital exceeds Rp 30 trillion (US$2.47 billion) each, are obliged to submit their risk profile reports earliest, in June 2015, followed by other conglomerates in December.

In the branchless banking regulation, the OJK stipulates that only banks already operating Internet and mobile banking services can participate in the program.

These lenders can extend their banking activities by recruiting individuals and legal entities as agents, who will provide micro-saving and loan services for unbanked and underbanked people.

According to Nelson, BUKU I banks, whose core capital stands at below Rp 1 trillion that don'€™t have an electronic banking platform, may join the Laku Pandai, provided they acquire an electronic banking license first from Bank Indonesia (BI). BI is currently in charge of supervising payment systems.

Meanwhile, in non-banking, the OJK introduced seven regulations.

OJK commissioner on non-banking supervision Firdaus Djaelani said that it had decided to extend the business scope of multifinance firms in its effort to provide greater financing access to people.

Starting in 2015, multifinance firms will be able to provide financing to the productive segment, including infrastructure, and venture into other financing forms with approval from the OJK.

'€œThe firms may also offer insurance and mutual funds to their customers at their branch offices or outlets,'€ Firdaus said.

In the capital market, the OJK also introduced seven regulations.

OJK commissioner on capital market supervision Nurhaida acknowledged that the regulations were implemented to strengthen the domestic capital market ahead of the ASEAN Economic Community (AEC) next year.

In one of the regulations, the OJK introduced asset-backed securities to assist secondary mortgage providers with financing for their businesses.

Contacted separately, executives at financial firms said they welcomed the regulations. Bank Mandiri micro and retail banking director Hery Gunardi said the lender would participate in the Laku Pandai program next year.