TheJakartaPost

Please Update your browser

Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.

Jakarta Post

Small banks could be forced to merge under new regulation, OJK says

  • Mardika Parama, Yunindita Prasidya

    The Jakarta Post

PREMIUM
Jakarta   /   Tue, April 7, 2020   /  03:14 pm
The Jakarta Post Image
Bank Indonesia (BI) Governor Perry Warjiyo (center), accompanied by senior deputy governor Destry Damayanti (left) and deputy governor Erwin Rijanto, gives a press statement regarding measures to maintain monetary and financial stability amid the COVID-19 pandemic at the BI headquarters in Jakarta. (Antara/Indrianto Eko Suwarso )

To help protect financial institutions from collapse during the COVID-19 pandemic, President Joko “Jokowi” Widodo recently signed Government Regulation in Lieu of Law (Perppu) No. 1/2020 that will, among other measures, authorize the Financial Services Authority (OJK) to force small and struggling banks to consolidate. While this authority was actually given to the financial agency in the OJK Regulation (POJK) No. 41/POJK.03/2019, the Perppu allows for stricter enforcement against violations of merger instructions from the OJK, including imprisonment. Under the POJK, penalties are limited to administrative sanctions. “Perppu No. 1/2020 will form the legal foundation to grant the government, the OJK, Bank Indonesia and the Deposit Insurance Corporation (LPS) authorities that have not been established under current laws. Therefore, we could take preemptive measures ...