Regulation and Supervision on Banking Sector Transferred to the OJK
Today (31/12), the central bank of Indonesia (Bank Indonesia) officially transfers its authority to regulate and supervise the banking sector to the Financial Services Authority (Otoritas Jasa Keuangan, abbreviated OJK). Muliaman D. Hadad, Chairman of the Board of the OJK, said that all functions, duties as well as powers of regulation and banking supervision, licensing, inspection, investigation and consumer protection have been transferred to the 35 (regional) offices of the OJK.
About 1,150 employees of Bank Indonesia are also transferred to the OJK where they will work for at least three years. After this three-year period, each individual can choose whether to continue working at the OJK or return to the central bank.
Below we present the joint press release by Bank Indonesia and Financial Services Authority (OJK), which was released on 31 December 2013:
Bank Indonesia (BI) and Financial Service Authority (OJK) on this day, 31 December 2013 are signing a record of transfer (BAST-Berita Acara Serah Terima) on the function of Banks supervision and regulation from Bank Indonesia to OJK which will be signed directly by the Governor of Bank Indonesia, Agus D.W. Martowardojo and the Chairman of Board of Commissioners of Financial Service Authority, Muliaman D. Hadad. In this official report, BI is also to handover the Book of Bank Indonesia Function Implementation Report in the Sector of Regulation, Licensing and Supervision of Banks as an overview of the implementation of the function and supervision duties of banks by BI to date.
In accordance with the Act No. 21 Year 2011 concerning Financial Service Authority (OJK), effective as of 31 December 2013, marked by the signing of BAST between Bank Indonesia and the Financial Service Authority, the duties on banking regulation and supervision are to be transferred from Bank Indonesia to OJK. As of the date of 31 December 2013, supervision to individual banks (micro prudential) shall be conducted by OJK. However, supervision to macro prudential shall remain to be conducted by Bank Indonesia, in coordination with OJK.
The Governor of Bank Indonesia, Agus D.W. Martowardojo said that Bank Indonesia is transferring the function of banking supervision to OJK in a sound banking condition under the right regulation. “In the future, Bank Indonesia and the Financial Service Authority will continue to work together so that the right balance related to the policy mix between macro prudential and micro prudential can be expected in order to maintain financial system stability,” added Agus.
The transfer of the banking supervision and regulation done today has gone through a long process marked by the forming of OJK Task Force Team in Bank Indonesia and Banks’ Supervision Function Transfer Transition Team in OJK as of the beginning of 2013. Through the two Teams, Bank Indonesia and OJK have done an excellent coordination, not only related to the transfer of human resources, but also in relation to the transfer of documents, data and information system as well as the utilization of Bank Indonesia buildings as OJK offices both in the Head Office and regionals. “With the smooth operations in the process of transferring banks’ supervision and regulation function from Bank Indonesia to OJK, banks’ business processes are still running as they should and the public especially customers can make banking transaction activities as when the supervision was still conducted by Bank Indonesia”, said the Chairman of OJK Board of Commissioners, Muliaman D. Hadad. “Through this transfer of function of banks’ supervision and regulation to OJK, it is to be expected that in the future supervisory function toward financial institutions is conducted in a more integrated manner in order to support the creation of a more stable and solid financial system,” added Muliaman.
Further, in association with this transfer of the function of banks’ supervision and regulation, all activities on banks’ supervision and regulation by OJK in the Head Office still remains addressed to Bank Indonesia Office Complex, Radius Prawiro Tower, Jl. MH. Thamrin No.2 Jakarta Pusat. For further information, including in relation to the supervision of banks in the regionals can be downloaded through the OJK website.