B

ank Indonesia (BI) and the Financial Services Authority (OJK) have agreed to strengthen coordination on the debtor information system (SID) to support the banking industry.

The institutions agreed that their coordination would extend to the country'€™s entire financial sector, including the insurance industry, in the future.

BI Governor Agus Martowardojo and OJK chairman Muliaman D. Hadad on Thursday signed a memorandum of understanding on the cooperation.

The agreement is part of efforts to transfer specific authorities, including management of the SID, from the central bank to the OJK.

Based on the 2011 law on the establishment of the OJK, the central bank began to hand over management of the SID to the OJK on Dec. 31, 2013.

Full transfer of authority from the central bank to OJK is expected to be completed by Dec. 31, 2017. By then, the system is to be developed into the Financial Industry Service System (SLIK) to cover the whole financial sector, not just the banking industry.

'€œThe OJK has been ordered to build an integrated information system on debtors and customers across the whole financial industry that can also be accessed by BI and the Deposit Insurance Corporation [LPS],'€ Muliaman said in his speech after the signing of the MoU at BI headquarters.

BI Governor Agus said the SID enhancement could also help the central bank in completing its work on a large information database called the Information System Enterprise Architecture, which is expected to be completed in the first quarter of next year.

'€œThe information database will include statistics on all of Indonesia'€™s foreign debts as well as central and regional administrations'€™ balance sheets,'€ Agus said.

With an enhanced SID, Muliaman said the OJK could support private credit bureaus that would make use of the agency'€™s raw data in the future. Those private credit bureaus would offer more detailed information on prospective debtors and customers.

Muliaman said the OJK had received permit applications from five private credit bureaus, also known as '€œenhancers'€, and had issued licenses to three of them as of November, while the remaining two companies were still being assessed.

'€œThose private credit bureaus can also conduct credit-scoring activities, which can increase banks'€™ efficiency in loan approval,'€ he said.

Indonesia has offered permits for private credit bureaus since BI issued Regulation No. 15/1/PBI/2013 on credit bureaus, which includes a number of requirements for any entity that sets up a credit-rating bureau, also called the Credit Information Management Bureau (LPIP).

BI requires, among other things, that the founders of credit bureaus must be institutions rather than individuals, that the bureau must be run under a public-private partnership (PPP) model, that the maximum shareholding for a single entity is 51 percent, and that the maximum level of foreign ownership is 20 percent.

Previously, banks and other financing bodies could only check their prospective and current debtors through the SID, which is provided by the central bank free of charge.

BI allows private credit bureaus in an effort to provide more comprehensive credit-risk profiles of debtors besides the SID and to reduce the volume of non-performing loans.

State credit-agency PT Pemeringkat Efek Indonesia (Pefindo) is one of the three credit bureaus that has already obtained a permit for its subsidiary, PT Pefindo Biro Kredit (Pefindo Credit Bureau).

Pefindo president director Ronald T. Andi Kasim said previously that Pefindo Biro Kredit would adopt a credit-rating information system practiced by Creditinfo, an Iceland-based credit bureau and information services group with operations in 16 countries.