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Indonesia sharpens legal framework for digital banking
The Financial Services Authority (OJK) launched three regulations aimed mainly at spurring the development of digital banks in the country.
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The Financial Services Authority (OJK) building in Jakarta is seen in this undated file photo. The oversight body issued three new regulations on Aug. 19 to spur the development of digital banking in Indonesia. (Kontan/Baihaki)
T
he Financial Services Authority (OJK) has launched three regulations largely aimed at providing the legal basis for digital banking as the COVID-19 pandemic accelerates the adoption of online services.
OJK Regulation No. 12/2021 on commercial banks simplifies and speeds up licensing procedures for establishing new banks, including digital banks. The regulation requires digital banks to have at least a head office.
The OJK requires a minimum capital of Rp 1 trillion (US$69.14 million) for establishing a new digital bank as part of a banking group, Rp 3 trillion for a digital bank resulting from the conversion of a traditional bank and Rp 10 trillion for an entirely new digital bank.
“The pandemic has made the digital transformation in the banking sector an inevitability,” OJK banking supervision commissioner Heru Kristiyana was quoted in a press release as saying on Thursday.
“This requires banks to prioritize the digital transformation and make it one of the strategies for improving their competitiveness.”
The regulation comes at a time when digital transactions are expected to surge amid the pandemic, as reflected in the value of digital banking transactions that is forecast to grow 19.1 percent to Rp 32.2 quadrillion this year, according to Bank Indonesia (BI).
Read also: Indonesia to see double-digit growth in digital transactions this year: BI
