Navigating the New Chapter of Bank’s Interest Rate Transparency:A Closer Look to OJK Reg 13/2024
Authors
Overview
Financial Services Authority (Otoritas Jasa Keuangan or “OJK”) Regulation Number 13 of 2024 (“OJK Reg 13/2024”) has recently been issued as a mandate from Article 8A of Law No. 7 of 1992 concerning Banking as lastly amended by Law No. 4 of 2023 concerning Development and Strengthening of the Financial Sector (“P2SK Law”) (“Banking Law”). The issuance of OJK Reg 13/2024 aims for transparency in the calculation of the Basic Credit Interest Rate (Suku Bunga Dasar Kredit, or “SBDK”). As a result, both consumers and financial institutions can benefit from a more informed and equitable banking environment.
Background and Past Practice
Prior to the enactment of the P2SK Law, provisions regarding transparency and disclosure by bank were regulated in Financial Services Regulation Number 37 of 2019 (“OJK Reg 37/2019”). In OJK Reg 37/2019, the type of report that must be made by the bank was a publication report which was mandatory to be published on the bank’s website and/or submitted to the OJK. However, with the enactment of OJK Reg 13/2024, provisions regulating such matters in OJK Reg 37/2019 are revoked and invalid.
The issuance of OJK Reg 13/2024 itself is based on Article 8A of Banking Law, which was recently introduced through the P2SK Law. This article mandates that commercial banks ensure transparency in interest rates to enhance the efficiency of setting these rates and support economic financing. To comply with this requirement, banks are now required to publish the SBDK, detailing components such as the cost of funds, margins, and overhead costs.
New Form of Publication Report
OJK Reg 13/2024 applies to all conventional commercial bank including bank branch offices domiciled overseas. In essence, the interest rate of banks must refer to the benchmark interest rate set by Bank Indonesia (“BI”) as the monetary authority and Deposit Insurance Corporation (Lembaga Penjamin Simpanan or “LPS”) as the deposit insurance authority.[1] Additionally, bank must also pay attention to the economic condition.
The information of SBDK is compiled in the SBDK publication report and SBDK detail report.[2] The SBDK publication report must be made available to the public. The information components in the SBDK publication report consist of (i) cost of fund; (ii) overhead cost; (iii) profit margin; and (iv) SBDK.[3]
Report Submission Obligations
The SBDK publication report must be announced on banks’ website prominently display them in their offices for easy customer access.[4] For banks with digital channels or electronic media, the latest SBDK report must also be published through those platforms.[5] In the event of any changes, banks are obligated to promptly update the SBDK report on both their website and in their office.[6]
Meanwhile, for the SBDK detail report, it must be submitted to the OJK. Furthermore, the information components in the SBDK detail report consist of (i) cost of fund; (ii) overhead cost; (iii) profit margin; (iv) SBDK; (v) estimation of risk premium; (vi) Credit Interest Rate (Suku Bunga Kredit or “SBK”); and (vii) weighted average of realized SBK.[7]
Administrative Sanctions
• Sanctions related to the SBDK publication report Banks that fail to publish and submit a detailed report, or maintain the announcement of the SBDK publication report is subject to administrative sanction in the form of a written warning.[8] If after receiving a written warning, the bank continues to violate these obligations, further sanctions may be imposed including, restrictions on issuing new products, expanding business activities, conducting new business activities, suspension of certain activities, or a downgrade in the governance assessment as a part of the bank’s health level assessment.[9]
Furthermore, if there are any incorrect information in the SBDK publication report, bank may be imposed with the same sanctions, with the possibility of further penalties such as fines and/or prohibition from acting as a principal party.[10]
• Sanctions related to the SBDK detail report In case that the OJK reporting system cannot be accessed and the banks do not submit the SBDK detail report directly to OJK, then the banks concerned may be subject to administrative sanctions in the form of a fine.[11]
Furthermore, if there are any misleading information in the SBDK detail report in the event that the OJK reporting system still cannot be accessed, banks is subject to administrative sanctions in the form of a fine.[12]
Banks may be exempted from the administrative sanctions if banks submit the correction of the SBDK detail report before the deadline of the submission and/or experiencing a force majeure.[13]
Article 3 of OJK Reg 13/2024. ↩︎
Article 6 (1) of OJK Reg 13/2024. ↩︎
Article 6 (2) of OJK Reg 13/2024. ↩︎
Article 7 (1) letter a of OJK Reg 13/2024. ↩︎
Article 7 (2) of OJK Reg 13/2024. ↩︎
Article 7 (3) of OJK Reg 13/2024. ↩︎
Article 6 (3) of OJK Reg 13/2024. ↩︎
Article 9 (1) of OJK Reg 13/2024. ↩︎
Article 9 (2) of OJK Reg 13/2024. ↩︎
Article 9 (5) of OJK Reg 13/2024. ↩︎
Article 10 (2) of OJK Reg 13/2024. ↩︎
Article 10 (3) of OJK Reg 13/2024. ↩︎
Article 10 (6) of OJK Reg 13/2024. ↩︎
Disclaimer:
This client update is the property of ARMA Law and intended for providing general information and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. ARMA Law has no intention to provide a specific legal advice with regard to this client update.
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