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JAKARTA (TheInsiderStories) – The Financial Services Authority (FSA) encourages the banking consolidation to create a strong banking structure, expand the business scale and increase competitiveness through innovation capabilities, and give a significant contribution to the national economy. The program can be done through a consolidation, merger or acquisition.

“To deal with the changes in the ecosystem and the demands of massive innovation, the consolidation of the banking sector has become a necessity,” said FSA’ chief executive, Heru Kristiyana, in a written statement released on Tuesday (03/24).

To smooth the plans, the agency has issued FSA Regulation Number 12/POJK.03/2020 concerning Consolidation of Commercial Banks which took effect on March 17, 2020. He rated. this is a strategic policy that has been established since early 2020 and is very relevant to the economic dynamics due to the downside risk from the spread of COVID-19.

This regulation generally consists of two main regulations, concerning bank consolidation policies, as well as arrangements regarding increasing minimum core capital for commercial banks and increasing Capital Equivalency Maintained Assets (CEMA) minimum for branch offices of banks domiciled abroad, that is, each becomes at least Rp3 trillion (US$187.5 million) by Dec. 31, 2022.

The bank consolidation policy also stipulates that a controlling shareholder only allows have one bank or several banks by fulfilling a consolidation scheme. The consolidation scheme was not only directed through a merging or interbank integration scheme, but also expanded through the scheme of forming a Bank Business Group.

“Consolidation is not intended to eliminate or marginalize small banks. On the contrary, through this consolidation small banks have room to strengthen themselves through a merging, merging or holding scheme on a larger bank business group. This will create a larger, more resilient, more contributive, innovative and competitive bank structure through increasing business scale and capital,” he claimed.

This policy also provides incentives for those who have implemented a consolidation scheme and fulfilled the minimum core capital through the exclusion of the single present policy and the maximum shareholding and other related provisions.

FSA believes that this consolidation and capital increase policy is a minimum and a minimum CEMA can benefit the banking industry, reduce competition costs, make banks more efficient and contributory to the Indonesian economy as a whole.

US$1: Rp16,000

Written by Staff Editor, Email: theinsiderstories@gmail.com