Client Newsflash


On November 19, 2014, the Financial Services Authority (Otoritas Jasa Keuangan – “OJK”) issued 20 regulations governing banking, capital markets, and non-bank financial institutions. Four of the regulations relate to the multi-finance sector (considered a non-bank financial industry), which was previously regulated by the Ministry of Finance (“MOF”).

The new regulations cover:

  1. Arrangement of Multi-Finance Company Business (Reg. No. 29/POJK.05/2014)
  2. Licensing and Organization of Multi-Finance Companies (Reg. No. 28/POJK.05/2014)
  3. Good Corporate Governance for Multi-Finance Companies (Reg. No. 30/POJK.05/2014)
  4. Arrangement of Sharia Multi-Finance Business (Reg. No. 31/POJK.05/2014)

(collectively, “New Regulations”)

The multi-finance sector was previously regulated under Presidential Regulation No. 9 of 2009 on MultiFinance Institutions and MOF Regulation No. 84/PMK.012/2006 on Multi Finance Companies (“Old Regulations”). The New Regulations elaborate more detailed requirements in response to the rapid growth in the multi-finance sector in recent years.


OJK 29/2014 defines a multi-finance company as an entity that finances the procurement of goods or services. Permitted business activities include: (i) investment financing; (ii) working capital financing; (iii) multipurpose financing; and/or (iv) any other financing business subject to OJK approval. Investment, working capital and multipurpose financing can be provided in various ways (subject to the regulations for each type), such as finance leasing, sale and leaseback, and factoring.

Unlike the Old Regulations, which classified multi-finance company operations as leasing, factoring, credit card, and consumer finance, the New Regulations allow a multi-finance company to provide operating leasing and fee-based activities (subject to OJK reporting obligations). Fee-based activities include marketing financial services products, such as mutual funds and micro-insurance.

Multi-finance companies are prohibited from engaging in banking, issuing promissory notes, or providing security, and they must maintain financial soundness at all times, including an equity ratio (comparison of adjusted capital and adjusted assets) of 10%, calculation of which will be further governed by OJK .

Several general requirements under the New Regulations are the same as under the Old Regulations:

  • maintaining a receivables to assets ratio of at least 40%
  • minimum equity of a multi-finance company in the form of PT is Rp100 billion and in the form of
    cooperative is Rp50 billion
  • submitting monthly reports and audited annual financial report to OJK


A multi-finance company must be established in the form of a cooperative or a limited liability company (PT),  in which the shareholding can be owned by (i) Indonesian citizens; (ii) Indonesian business entities; (iii) Indonesian legal entities; (iv) foreign entities or foreign institutions (v) Indonesian state government; and/or (vI) regional government. The maximum foreign shareholding (either direct or indirect) is 85% of the paid-up capital. Wording relating to financing (pembiayaan) must be included in the name of the company.

In order to commence operations, a multi-finance company must apply for a Multi-Finance Business License from OJK (“OJK License”). The application review period has been reduced from 60 days (under the Old Regulations) to 30 days (under the New Regulations). Upon issuance of the OJK License, the company must commence operations within two months.

A multi-finance company’s organizational structure must at least have the following functions: (i) administration and bookkeeping; (ii) marketing, financing feasibility analysis and collection; (iii) risk management, including internal control; and (iv) application of know-your-customer principles.


Multi-finance companies must follow basic principles of good corporate governance, including transparency, accountability, responsibility, independence and fairness. A guideline and standard operating procedure must be made in order to implement these principles.

In addition, the primary parties of the multi-finance company, i.e., controlling shareholders, directors, commissioners, foreign manpower, and sharia supervisory body (if applicable) are required to pass the OJK Fit & Proper test prior to holding their positions. Provisions on the Fit & Proper test come from OJK Regulation No. 4/POJK.05/2013 on Fit and Proper Test for the Primary Parties of Insurance Companies, Pension Funds, Multi-Finance Companies and Underwriting Companies.

A multi-finance company having assets of more than Rp200 billion to have, among others: (i) at least three Directors; (ii) two Commissioners and at least one Independent Commissioner; (iii) audit committee; (iv) a function assisting the Commissioners in monitoring and ensuring the effectiveness of the internal control system and the implementation of internal and external auditors’ duties. For multi-finance companies having assets less than Rp200 billion, the New Regulations only require them to have at least two Directors.

Multi-finance companies having foreign ownership (whether direct or indirect) must have at least 50% Indonesia-citizen directors. In the event there is an odd number of directors, the number of Indonesian-citizen directors must be greater than the number of foreign-citizen directors.


One of the substantial developments is a new separate regulation on sharia multi-finance business. General provisions on company establishment, equity requirements and restrictions are essentially the same as for general multi-finance companies; nevertheless, sharia-based principles are provided in details under the New Regulations, especially as relates to operations of sharia financing companies.

December 10, 2014

The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.

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