The Financial Services Authority (OJK) will massively cut the number of People’s Economic Banks (BPR) in Indonesia. Currently, the number is considered too large, causing various problems.
Chief Executive of OJK Banking Supervision Dian Ediana Rae said the number of BPRs would be reduced to around 1,000 from the current 1,600. He confirmed that there would be no new permits for BPR.
“Reducing the number of BPRs is something that we cannot avoid because the number of BPRs creates its own problems because it is already too large. Without new permits, of course we will continue to reduce this 1,600, so we estimate that perhaps the ideal number that is systemically manageable is around 1,000 BPRs to serve the entire country of Indonesia,” said Dian in a virtual press conference, Monday (4/12/2023).
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Dian said that in aggregate the condition of BPR was quite good and was approaching the condition before the COVID-19 pandemic. Gradually, OJK will take consolidation steps towards BPR.
First, the problematic BPR will be closed and the settlement of rights and obligations will be handed over to the Deposit Insurance Corporation (LPS). “We are continuing to carry out intensive investigations and there is really no way. If it is related to violations of the law, it must be closed,” explained Dian.
Second, individuals or groups that have more than 1 BPR will be deducted. “They are only allowed to establish 1 BPR with branches,” he added.
Third, BPRs are required to meet minimum capital requirements. “There are still many BPRs that do not meet the requirements and of course we have to take consolidation steps. These BPRs must carry out mergers or acquisitions and consolidation. Later we will see which ones are possible,” he concluded.
Throughout this year, the OJK has revoked the permits of 4 BPRs due to violating applicable regulations. Consisting of PT BPR Persada Guna, BPR Karya Pemuda Indramayu, BPR Indotama UKM Sulawesi, and BPR Bagong Inti Marga.
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