Regulations and Indonesian Banking System

Indonesian Banking System 

Banking laws in 1992 and 1998 divide the 2 types of banks in Indonesia. 
Commercial Bank offers a full service financial services including currency exchange. The Bank has access to the payment system and provide banking services in general. 
Perkreditan Bank Rakyat (BPR), is smaller than commercial banks, and generally operate in local. BPR can accept deposits but does not have access to the system of payment (clearing). 

Besides banks, there is a non-bank institutions such as the Village Credit Board (BKD) and rural credit unions (LDKP). 

Banking regulations → pesar developed since 1998 

Banking Act 1998 replaces the 1992 Banking Law: Defining the type of bank and its operating conditions and limits of each 
Bank Indonesia 1999: Set the BI as the central bank is independent and set up goals and tasks of the BI 
Audit and Compliance 1999: Defining the needs of the audit and compliance function in banks 
Commercial Bank 2000: Setting a permit and operational requirements of the commercial bank bank 
Know Your Customer Principles 2001: Defining the procedures and practices that should be used in identifying bank customers to monitor account activity and customer 
Fit and Proper Test 2003: Setting a fit and proper test conducted by BI mengkontrol to the shareholders and senior bank management 
Market Risk 2003: Defining the minimum capital requirement for commercial banks to consider the position of bank market risk 
Risk Management 2003: Defining the needs of bank risk management infrastructure 
Commercial Bank's Business Plan 2004: Setting a commercial bank must submit a business plan for the short & medium term 
BMPK 2005: Setting a concentration of credit risk of bank portfolios 
Information System debtor 2005: Require banks to report all information to the debtor, BI 
Sekuritisasi Assets 2005: Defining the principles to be followed by banks in their asset sekuritisasi 

BI also announced the Indonesian Banking Architecture (API) that define the direction, framework and structure of the banking industry working for 5 - 10 years. Changes will be implemented in stages to achieve the following: 
1. Strengthening the structure of the national banking system 
2. Improve the quality of banking regulation 
3. Improve the function of bank supervisors 
4. Improve the quality of bank operations and management 
5. Develop the banking infrastructure 
6. Improving the protection of customer