ANL 14.75 Increased By ▲ 0.18 (1.24%)
ASC 14.00 Increased By ▲ 0.45 (3.32%)
ASL 15.10 Increased By ▲ 0.50 (3.42%)
BOP 8.60 Increased By ▲ 0.18 (2.14%)
BYCO 6.69 Increased By ▲ 0.19 (2.92%)
FCCL 18.80 Increased By ▲ 0.70 (3.87%)
FFBL 26.50 Increased By ▲ 0.20 (0.76%)
FFL 11.19 Increased By ▲ 0.04 (0.36%)
FNEL 10.89 Decreased By ▼ -0.01 (-0.09%)
GGGL 15.70 Increased By ▲ 0.45 (2.95%)
GGL 32.11 Increased By ▲ 0.31 (0.97%)
HUMNL 6.35 Increased By ▲ 0.14 (2.25%)
JSCL 17.26 Decreased By ▼ -0.03 (-0.17%)
KAPCO 33.25 Increased By ▲ 1.85 (5.89%)
KEL 3.23 Increased By ▲ 0.02 (0.62%)
MDTL 2.27 Increased By ▲ 0.07 (3.18%)
MLCF 36.45 Increased By ▲ 2.34 (6.86%)
NETSOL 102.16 Increased By ▲ 3.66 (3.72%)
PACE 4.40 Increased By ▲ 0.14 (3.29%)
PAEL 23.55 Increased By ▲ 0.40 (1.73%)
PIBTL 7.70 Increased By ▲ 0.10 (1.32%)
POWER 6.76 Increased By ▲ 0.11 (1.65%)
PRL 13.93 Increased By ▲ 0.23 (1.68%)
PTC 9.07 Increased By ▲ 0.20 (2.25%)
SILK 1.35 No Change ▼ 0.00 (0%)
SNGP 41.80 Increased By ▲ 1.09 (2.68%)
TELE 16.93 Increased By ▲ 0.50 (3.04%)
TRG 90.51 Increased By ▲ 3.66 (4.21%)
UNITY 25.30 Increased By ▲ 0.10 (0.4%)
WTL 2.15 Increased By ▲ 0.01 (0.47%)
BR100 4,654 Decreased By ▼ -5.8 (-0.12%)
BR30 18,760 Decreased By ▼ -44.39 (-0.24%)
KSE100 45,216 Decreased By ▼ -114.47 (-0.25%)
KSE30 17,516 Decreased By ▼ -34.86 (-0.2%)

Coronavirus
LOW Source: covid.gov.pk
Pakistan Deaths
28,728
1024hr
Pakistan Cases
1,284,840
47524hr
1.12% positivity
Sindh
475,616
Punjab
443,094
Balochistan
33,479
Islamabad
107,689
KPK
179,995
Markets

Indonesia considers putting banking regulation under central bank

  • Bank Indonesia (BI) acted as regulator and supervisor of banks in Southeast Asia’s largest economy until the end of 2013 when the Financial Services Authority (OJK) assumed the role.
02 Jul 2020

JAKARTA: Indonesian President Joko Widodo is considering issuing an emergency decree to return banking regulation to the central bank’s remit, amid concern about how the COVID-19 pandemic is exposing strain in the financial sector, sources told Reuters.

Bank Indonesia (BI) acted as regulator and supervisor of banks in Southeast Asia’s largest economy until the end of 2013 when the Financial Services Authority (OJK) assumed the role.

The president has been considering returning the role to BI due to dissatisfaction about OJK’s performance during the pandemic, said two people briefed on the matter, who asked not to be identified due to the sensitivity of the issue.

OJK was established under a 2011 law to oversee financial institutions. It was modelled on Britain’s then financial services regulatory structure.

Indonesia is now looking at the French structure, which has an independent administrative authority under the central bank which oversees banking, one of the people said.

“BI is very happy about this ... but there will be an addition to its KPIs: it will be told to not only look after currency and inflation, but also unemployment,” said the second person, referring to key performance indicators (KPIs).

Neither BI nor a spokesman for Widodo responded to requests for comment. An OJK spokesman declined to comment at this time on the possible transfer of regulatory authority.

The OJK spokesman said the OJK began urging banks to restructure loans on Feb. 26, and introduced incentives toward that end on March 16, thereby preventing the need for banks to prepare sizeable provisions for bad loans.

DISBAND

The development comes as the government negotiates central bank help to fund a fiscal deficit that is ballooning due to its COVID-19 response.

At a June 18 cabinet meeting, Widodo said he would reshuffle his cabinet or disband government agencies if he felt they had not done enough to tackle crises brought about by the pandemic.

Indonesia’s supreme audit board earlier this year called OJK’s supervisory role “weak”, pointing to loopholes in its oversight of seven banks. OJK said in response it would improve.

The seven included mid-sized PT Bank Bukopin Tbk (BBKP.JK) which last month said it had a negative cash flow and was limiting withdrawals.

Bukopin this week said it planned a rights issue after which South Korea’s KB Kookmin Bank would own a controlling stake. OJK also urged customers of Bukopin and other banks to ignore social media posts calling on them to withdraw deposits.

The banking industry on aggregate is secure, OJK Chairman Wimboh Santoso said on Monday, citing a higher capital adequacy ratio than international standards at 22.2% in May, a non-performing loan ratio of 3.01% and high liquidity indicators.

OJK expects 15.12 million debtors will need to restructure 1,373.7 trillion rupiah ($96.03 billion) worth of loans due to the pandemic, with 695.34 trillion rupiah being restructured as of June 22.

We love hearing your feedback, please help us improve by answering these few survey questions

Comments

Comments are closed.