Jokowi is considering returning bank supervision to Bank Indonesia

Reporter: Rizki Caturini | Editor: Rizki Caturini

KONTAN.CO.ID – JAKARTA. Indonesian President Joko Widodo (Jokowi) is considering issuing an emergency decree to restore banking regulations to the authority of the central bank. This is amid concerns about how the Covid-19 pandemic caused tension in the financial sector.

Sources briefed on the matter told ReutersOn Thursday (2/7), Joko Widodo had considered returning the role to Bank Indonesia (BI) due to dissatisfaction about the performance of the Financial Services Authority (OJK) while overcoming the impact of the Covid-19 pandemic.

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Currently banking supervision is under OJK, an institution established under the 2011 law to oversee financial institutions. Such a model follows the structure of British financial services regulation at the time. Previously the banking industry was under the supervision of BI until the end of 2013 after the OJK took over the role.

Still according to these sources, Indonesia now sees the structure of the financial industry of France, which has an independent administrative authority under a central bank that oversees banks.

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“BI is very happy about this … but there will be an addition to the key performance indicators (KPI): i.e. not only safeguarding currencies and inflation, but also overcoming unemployment,” said a second source.

Neither BI nor a spokesman for the President of the Republic of Indonesia were willing to comment. An OJK spokesman declined to comment at this time about the possibility.

An OJK spokesman said the OJK had begun to urge banks to restructure loans since February 26, and introduce incentives to financial institutions at the end of March 16 as a step in handling Covid-19. That is to prevent backup due to bad credit that has the potential to swell.