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Fact ors t hat w ould result in dow ngrading of bank rat in g t o u n so u n d in clu d e: in t ern al co n f lict s,
i n t er f eren ce b y p ar t i es o u t si d e t h e b an k ’s management , w indow dressing, bank-w it hin-bank
pract ices, suspension f rom clearing, and ot her b an k in g p ract ices t h at w o u ld jeo p ard ize t h e
sust ainabilit y of bank operat ions.
E. Self-Regulatory Banking SRB Regulations
1. Guidelines for Formulation of Bank Credit Policy
Banks are required t o inst it ut e w rit t en credit policy guidelines elaborating at least the follow ing key points
st ipulat ed in t he Guidelines f or Formulat ion of Bank Credit Policy:
a. Prudent ial principles in credit operat ions. b. Organization and management of credit operations.
c. Credit approval policy. d. Credit document at ion and administ rat ion.
e. Credit cont rol and set t lement of problem loans. Banks are required t o maint ain consist ent compliance
w it h t he f ormulat ed Guidelines on Bank Credit Policy.
2. Internal Audit Unit at Commercial Banks
Commercial Banks are required to establish an Internal Audit Unit as part of t he applicat ion of St andard
Pract ices f or t he Bank Int ernal Audit Funct ion. The Int ernal Audit Unit is a unit direct ly responsible t o t he
president direct or. The Int ernal Audit Unit has t he f ollow ing t asks and responsibilit ies:
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A ssi st t h e p resi d en t d i r ect o r an d b o ard o f co m m i ssi o n er s i n t h ei r su p er vi so r y t ask s b y
elaborat ing in operat ional t erms t he planning and im plem ent at ion of audit and t he m onit oring of
audit f indings;
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Co n d u ct an alysis an d evalu at io n in f in an ce, accounting, operations, and other activities through
on-sit e examinat ion and off -sit e supervision;
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Ident if y all possibilit ies f or improving eff iciency in t he use of resources and f unds;
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Pr o vi d e o b j ect i ve reco m m en d at i o n s f o r i m p r o vem en t an d i n f o r m at i o n o n act i vi t i es
examined at all levels of management .
3. Compliance Director
Banks are required t o appoint a member of t he Board of Directors or of the head of management of Foreign
Bank Branch Office as Compliance Director, responsible f or:
a. Est ablishing t he necessary measures f or ensuring t he compliance of t he Bank w it h all Bank Indonesia
r eg u l at i o n s an d o t h er p revai l i n g l aw s an d regulat ions w it hin t he f ram ew ork of upholding
prudent ial principles; b. M onit oring and ensuring t hat bank operat ions do
not deviat e f rom prevailing regulat ions; c. M onit oring and ensuring t he compliance of t he
bank w it h all agreement s and commit ment s made by t he bank w it h Bank Indonesia.
4. Business Plan and Annual Budget Commercial Bank
a. Ban k m u st f o rm u lat e a realist ic b u sin ess p lan addressing ext ernal f act ors aff ect ing t he cont inuit y
of t he bank’s operat ion w it h consist ent regard t o prudent ial and healt hy banking principles. The
business plan shall at least cover t he f ollow ing:
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Execut ive summary
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Current perf ormance
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Risk management implement at ion
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M anagement policies and st rat egies
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Financial project ion
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Fund collection plan
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Funds disbursement plan
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Capit al plan
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Project ed rat ios and cert ain it ems
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Organization and human resources development plan
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New product and act ivit y development plan
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Change in off ice net w ork plan
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Ot her inf ormat ion b. The board of directors must implement the business
plan eff ect ively and communicat e t o shareholders of t he bank and all organizat ional levels w it hin t he
bank. c. The board of com m issioners m ust oversee t he
implement at ion of business plan. d. Bank must submit a business plan to Bank Indonesia
no lat er t han 1 one mont h af t er t he beginning of calendar year. Bank must submit a quart erly report
on business plan realizat ion and six-mont ly report on oversght of business plan.
Rural bank
a. Rural Bank must f ormulat e a realist ic business plan and annual budget , st at ing at least t he f ollow ing:
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Plan f or f unding
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Plan f or f und channelling, consist of w orking cap i t al cred i t , i n vest m en t cred i t , an d
consumption credit
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Balance sheet and income statement projections in 2 t w o semest ers
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Human resources development plan; and
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Act ion f or improving bank perf ormance, consist of resolut ion of non perf orming loan, plan f or
recover of f inancial loss, and ot hers. b. Business plan should be arranged by t he board of
direct or or t he execut ive off icer in equal level and should be approved by t he board of commissioners
c. The board of direct ors is required t o implement t he business plan and t he board of commissioners is
required t o supervise it s implement at ion. d. The business plan m ust be subm it t ed t o Bank
Indonesia in t he end of January. The board of com m isioners m ust subm it six-m ont ly report of
business plan realizat ion.
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5. Information System Technology IT
