At the end of 2024, Indonesia’s Financial Services Authority or OJK issued a new regulation aimed at giving banks more flexibility to offer a wider range of services while maintaining compliance with prudential principles. OJK Regulation No. 26 of 2024 on the Expansion of Banking Business Activities (“POJK 26/2024“), which took effect on 13 December 2024, introduces several key provisions on, among others:
- Capital participation activities by commercial banks;
- Loan sale;
- Provision of guarantee by commercial banks;
- Banks acting as operators of foreign exchange business activities (Kegiatan Usaha Penukaran Valuta Asing or “KUPVA”); and
- Electronic signatures (e-signatures) and electronic agreements (e-agreements).
This regulation takes an interesting approach, as it not only expands the business lines available to banks but also consolidates several operational matters into a single regulatory framework.
With the introduction of this regulation, several existing regulations are now repealed and replaced:
- Decree of the Bank Indonesia (“BI“) Board of Directors No. 23/72/KEP/DIR of 1991 on Bank Guarantees;
- Decree of BI Board of Directors No. 23/88/KEP/DIR of 1991 on Bank Guarantees;
- BI Regulation No. 5/6/PBI/2003 of 2003 on Domestic Documentary Letters of Credit (Surat Kredit Berdokumen dalam Negeri or “SKBDN“), as amended by BI Regulation No. 10/5/PBI/2008 of 2008 (“BI Regulation 5/2003“); and
- BI Regulation No. 12/22/PBI/2010 of 2010 on Foreign Exchange Traders.
Additionally, this regulation repeals Articles 3, 4, 36, 37, and 38 of OJK Regulation No. 22 of 2022 on Capital Participation Activities by Commercial Banks (“POJK 22/2022“).
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