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View all search resultsOJK sharpens legal framework for digital banking with new rules
The Financial Services Authority (OJK) launched three regulations aimed mainly at spurring the development of digital banks in the country.
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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
The authority also introduced OJK Regulation No. 13/2021 on the digitalization of banking products and services, including speeding up licensing procedures for product development.
OJK chairman Wimboh Santoso said the regulations were necessary given the changing banking landscape and ecosystem, not just at home but also at the global level. The regulations are expected to be more flexible and forward-looking, thus encouraging innovation in the industry.
“The implementation of commercial banking products is expected to be more innovative and dynamic so as to meet the needs of the public, including consumer protection,” Wimboh said.
Publicly listed Bank Central Asia (BCA), Indonesia's largest private bank, was the latest lender to join the digital banking trend. BCA launched in July BCA Digital, which focuses on payment services such as e-wallet top-ups and bill payments. The bank has announced plans for an initial public offering of its digital banking subsidiary.
