Bank Indonesia Provides an Incentive for Banks During COVID-19 Outbreak

In order to mitigate the uncertain economic situation due to the COVID-19 outbreak in Indonesia, Bank Indonesia (“BI”) issued a new Regulation No. 22/4/PBI/2020 dated March 26, 2020 on the Incentives for Banks Granting Provision of Funds For Specific Economic Activities to Support the Handling of Economic Impacts due to Corona Virus Outbreak (“BI Reg. 22/2020”).

Through BI Reg. 22/2020, BI provides an incentive (as described below) for conventional banks, sharia banks and sharia business units (altogether “Banks”) carrying out certain funding activities.

  • Type of Funding Activities

Banks will be entitled to receive an incentive as stipulated under BI Reg. 22/2020 if it carries out the following funding activities:

  1. Export activities (e.g., export credit or financing);
  2. Import Activities (e.g., productive import credit or financing);
  3. L/C;
  4. Micro, small and medium business activities (e.g., micro, small and medium credit or financing); and/or
  5. Other prioritized economic activities as stipulated by BI.
  • Type of Incentive

BI will grant the incentive in the form of a relaxation on the fulfillment obligation of daily Minimum Statutory Reserves (Giro Wajib Minimum) in Rupiah and foreign currency that must be fulfilled by Banks (the “Incentive”). The Incentive will be granted to Banks on a monthly basis and will commence on April 16, 2020. The granting of the Incentive will be valid until December 31, 2020.

  • Procedure of the Incentive Granting

For BI to determine the eligibility of Banks in receiving the Incentive, Banks need to provide the relevant data with respect to the above funding activities to BI on a monthly basis. The relevant data may be sourced from:

  1. Conventional banks’ monthly report;
  2. Monetary and financial system monthly stability report of sharia banks and sharia business units;
  3. Conventional banks’ integrated report; and/or
  4. Other reports or data as stipulated by BI.

BI will use the reported data as a basis in granting the Incentive to Banks. BI may also liaise with the government and/or the Financial Services Authority (Otoritas Jasa Keuangan, OJK) in granting the Incentive to the Banks.

More detailed provisions on BI Reg. 22/2020 will be further regulated in a Regulation of Members of Board of Governors.

 

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April 14, 2020

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