Among the many topics covered by the so-called “P2SK Law” or the Omnibus Law for the financial sector (i.e., Law No. 4 of 2023 on the Development and Strengthening of the Financial Services Sector) are rural banks (bank perekonomian rakyat or commonly called BPR) and sharia rural banks (bank perekonomian rakyat syariah or commonly called BPRS). The P2SK Law, which became effective in early 2023, solidify the roles and functions of rural banks in growing the nation’s economy, particularly with respect to small and medium enterprises.
In July of this year, the Financial Services Authority (Otoritas Jasa Keuangan or “OJK“) issued OJK Circular Letter No. 10/SEOJK.03/2023 on the Implementation of Sharia Rural Banks’ Products (“Circular“). The Circular is the implementing regulation of OJK Regulation No. 25/POJK.03/2021 on the Implementation of rural banks and sharia rural banks’ products, and replaces OJK Circular Letter No. 37/SEOJK.03/2015 on Products and Activities of Rural Banks.
The Circular is also issued under the framework of the P2SK Law. Its abstract states that the Circular is issued to realise rural banks that are highly competitive and able to contribute significantly to the national economy and social development. Moreover, the Circular is aimed to align with other regulations to stimulate the development of products by sharia rural banks, by considering adequate capital, effective risk management, and prudential principles.
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