JAKARTA (TheInsiderStories) – Financial Service Authority (FSA) postponed the implementation of Basel III for Indonesian Bank. as part of the agency’ stimulus for the financial sectors. In the official statement released on Thursday (05/28), the regulator said, the policy which include calculation of weighted assets for credit valuation adjustment, operational, credit, and market risk will postponed to Jan. 1, 2023.
Then, the minimum capital provisions until the December 2022 data period. To that, said the FSA, the banks are still referring to the existing rule. The regulator also hopes that the financial services players can immediately realize the “new normal”, said the chairman, Wimboh Santoso in a virtual meeting with them on Wednesday (05/27).
At the meeting, he delivered a further stimulus package policies in the banking sectors, such as relaxation policy for conventional and Sharia commercial banks. Accordance to POJK No.11/POJK.03/2020 concerning stimulus for COVID-19 periode, he stated, that the loan restructuring excluded from the calculation of Loans at Risk in assessing the soundness of a bank.
The agency also relaxed the obligations to fulfill the Capital Conservation Buffer in the capital component 2.5 percent of Risk Weighted Assets for bank in the category of BOOK 3 and BOOK 4 will be temporarily removed until March, 31, 2021. Obligations to fulfill Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) for BOOK 3, BOOK 4, and foreign banks must be maintained as low as 85 percent up to March 31, 2021, hea adds.
Santoso explained, the lenders are required to formulate an action plan to restore LCR and NSFR compliance to 100 percent no later than April 30, 2021. He continued, assessment of Foreclosed Quality of Collateral based on term time of ownership may be suspended until March 31, 2021.
“After the deadline, the quality assessment of ORE has returned refer to the provisions regarding the assessment of bank asset quality based on the period of ownership by the bank since OREO was executed without take into account the period of relaxation,” he asserted.
FSA also give a relaxation for rural banks and sharia rural banks. For both, the agency allowed them to form an allowance for Earning Asset Losses less than 0.5 percent or does not form the general the losses for productive assets with good quality in the form of placements at other banks and credit or financing with current quality for monthly report since April 2020.
In addition, provision of funds in the form of interbank Fund Placement for liquidity problems in the rural banks are exempt a maximum of 30 percent of their capital for all related and unrelated parties. The policy valid until March 31, 2021.
Previously, the FSA had issued a credit restructuring policy for banking and loan restructuring in finance companies. Until position May 18, 95 banks have implemented a credit restructuring on 4.9 million debtors with an outstanding value of Rp458.8 trillion (US$30.58 billion). While for the leasing financing, out of 183 finance companies have already done and restructed 2.1 million contracts with an outstanding amount of Rp66.78 trillion.
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