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Indonesian Bank
ing B
ook let
2013
Figure 1 - Bank Indonesia Organization Structure
B AB 2
BANKING
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II. BANKING
Banking is everything pertaining to banks, covering institution, business activities, and also the nature and process
in conducting their business operations. In carrying out its duties, Indonesian Banking is based on
economic democracy and utilizes prudential principle. Primary function of Indonesian banking is as the collector
and distributor of public funds, also aims to support the implementation of national building in order to enhance the
equalization of development and its results, economic growth and national stability, toward the improvement of the quality
of people’s life. The banking system has a strategic position, i.e. supporting
the smooth operation of the payment system, implementing monetary policy and achieving inancial system stability.
Hence, it requires banks that are sound, transparent and can be accounted for.
A. Deinition
1. Banks are business entities that collect funds from the society in the form of savingsdeposits and distribute
them to the society in the form of credits and or other form in order to improve the living standard of the
people.
2. Conventional Banks are Banks that conduct their business operations conventionally and based on
their type consist of Conventional Commercial Banks and Rural Banks.
3. Sharia Banks are Banks that conduct their business operations based on Sharia Principles and according
to their type consist of Sharia Commercial Banks and Sharia People Financing Bank.
4. Sharia Principle is a principle in the Islamic Laws on banking activities based on fatwa legal decision
issued by the institution that has the authority in giving fatwa in sharia ield.
B. Operations of Banks Operations of Conventional Commercial Banks
1. Collecting funds from the society in the form of demand deposits giro, time deposists, certiied
deposits, savings, andor other forms equivalent;
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2. Extending credits; 3. Promissory notes;
4. Purchasing, selling or guaranteeing upon own risk or for the interest and the order of their customers:
• DraftsBills of exchange, including drafts accepted by bank which validity period should not be
longer than the common practice in the trading of such drafts;
• Promissory notes and other commercial papers which validity period should not be longer than
the common practice in the trading of such notes; • State treasury bills and government securities;
• Certiicates of BI SBI; • Bonds;
• Future trading securities with a validity period up
to one 1 year; • Other securities with a validity period up to 1 one
year; 5. Transferring money both for own interest and the
interest of customers; 6. Placing funds in, borrowing funds from, or lending
funds to other banks, whether by using letters, telecommunication facilities, or sight drafts, cheques
or other means; 7. Receiving payment of bills on securities and settling
accounts with or between third parties; 8. Providing safe deposit boxes for valuable things and
securities; 9. Undertaking
custodial activities for the interests of other parties based on contracts;
10. Undertaking placement of funds from customers to other customers in the form of commercial papers
securities not listed in the stock exchangemarket; 11. Conducting factoring activities, credit card businesses
and trustee services; 12. Providing inancing and or conducting other activities
based on Sharia Principle, in accordance with the regulations stipulated by BI;
13. Conducting other activities normally undertaken by banks provided that such activities shall not be in
contraventions with the Act concerning Banking and
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the applicable laws and regulations; 14. Conducting foreign exchange activities by complying
with the provisions set by BI; 15. Conducting equitycapital participation in other
banks or companies operating in inancial sector, such as leasing, venture capital, securities companies,
insurance, and also clearing houses for settlements and custodians, in compliance with the regulations
stipulated by BI;
16. Conducting activities of temporary capital investment based on Sharia Principles to overcome failures in
credit and inancing bad debtsinancing, on the condition that the temporary equity be withdrawn
in due time, in compliance with the regulations stipulated by BI;
17. Acting as pension funds founders and managers in accordance with the provisions of the applicable laws
and regulations of pension funds; and 18. Conducting bank business operations in the form of
Custodial with Management Trust.
Operations of Sharia Commercial Banks 1. Collecting funds in the form of Demand Deposits,
Savings, or other forms equivalent based on wadi’ah agreement or other agreements not in contravention
with the sharia principle; 2. Collecting funds in the form of investment of Demand
Deposits, Savings, or other forms equivalent based on mudharabah agreement or other agreements not in
contravention with the sharia principle; 3. Distributing proit sharing inancing based on
mudharabah and musyarakah agreements, or other agreements not in contravention with the sharia
principle; 4. Distributing inancing based on murabahah, salam,
and istishna’ agreements, or other agreements not in contravention with the sharia principle;
5. Distributing inancing based on qardh agreement or other agreements not in contravention with the sharia
principle; 6. Distributing movable or immovable goods inancing
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to customers based on ijarah agreement andor lease purchase in the form of ijarah muntahiya bittamlik or
other agreements not in contravention with the sharia principle;
7. Conducting debts taking-over based on hawalah agreement or other agreements not in contravention
with the sharia principle; 8. Conducting debit cards business andor inancing
cards based on the sharia principle; 9. Purchasing, selling, or guaranteeing on own risk,
any third party securities issued based on the real transactions in accordance with the sharia principle,
among others ijarah, musyarakah, mudharabah, murabahah, kafalah, or hawalah agreements;
10. Purchasing securitiescommercial papers based on the sharia principle issued by the government andor
BI; 11. Receiving payment of bills on securities and
conducting settlement with or between third parties based on the sharia principle;
12. Undertaking custodial activities for the interest of other parties pertaining to an agreement based on
the sharia principle; 13. Providing safe deposit box for valuable things and
commercial papers based on sharia principle; 14. Transferring money, both for own interests and
customers’ interests based on the sharia principle; 15. Undertaking trusteeship functions based on wakalah
agreement; 16. Providing letter of credit or bank guarantee based on
the sharia principle; 17. Conducting other activities normally undertaken
in the ields of banking and social provided that it is not in contravention with the sharia principle and
pursuant to the provisions in the laws and regulations; 18. Conducting foreign exchange operations based on
the sharia principle; 19. Conducting capitalequity participation activities in
Sharia Commercial Banks or inancial institutions that conducting business activities based on the sharia
principle;
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20. Conducting temporary capital participation activities based on the sharia principle to overcome inancing
failures, with the requirement to withdraw its participation;
21. Acting as the founder and caretaker of pension funds based on the sharia principle;
22. Conducting activities in capital market as long as not in contravention with the sharia principle and the
provisions of laws and regulations in capital market ield;
23. Organizing activities or bank products based on the sharia principle using electronic facilities;
24. Issuing, ofering, and trading short-term securities based on the sharia principle, both directly and
indirectly through money market; 25. Issuing, ofering, and trading long-term securities
based on the sharia principle, both directly and indirectly through capital market; and
26. Providing products or conducting other sharia commercial banks activities based on the sharia
principle.
Operations of Conventional Rural Banks 1. Collecting funds from the society in the form of
deposits comprising of time deposits, savings, andor other forms equivalent;
2. Extending credit; 3. Placing its funds in BI Certiicates SBI, time deposits,
certiicates of deposit, andor savings in other banks.
Operations of Sharia Rural Banks 1. Collecting funds from the public in the form of:
• Deposits in the form of savings or equivalent based on wadi’ah agreement or other agreements
not in contravention with the sharia principle; and • Investment in the form of deposits or savings or
other forms equivalent based on mudharabah agreement or other agreements not in
contravention with the sharia principle; 2. Distributing funds to the communities in the form of:
• Proit sharing inancing based on mudharabah
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agreement or musyarakah; • Financing for buy and sell transaction based on
the agreements of murabahah, salam, or istishna; • Financing based on qardh agreement;
• Financing of moveable or immovable goods leasing operations to customers based on ijarah
agreement or lease purchase in the form of ijarah muntahiya bittamlik; and
• Debts takeover based on hawalah agreement; 3. Placing funds in other Sharia Banks in the form of
deposits based on wadi’ah agreement or investment based on mudharabah agreement andor other
agreements not in contravention with the sharia principle;
4. Transferring money, both for own interest and for customers’ interests through the account of Sharia
Banks BPRS in the Sharia Commercial Banks BUS, Conventional Commercial Banks, and Sharia Business
Units UUS; and
5. Providing products or conducting other Sharia Bank business activities in accordance with the Sharia
Principle based on BI approval.
Supporting Business Operations Business Supporting Operations are other activities
conducted by banks outside business operations of the Banks. The business supporting operations among
others are related to human resources, risk management, compliance, internal audit, accounting and inance,
information technology, logistic and security.
C. Prohibition of Bank Business Operations Prohibition of Business Operations of Conventional
Commercial Banks 1. Conducting capital investments, except for
conducting operations as referred to in No. 15 and 16 of Conventional Commercial Bank business activities
described above; 2. Conducting insurance business;
3. Conducting other businesses apart from those referred to in letter B above.
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Prohibition of Business Operations of Sharia Commercial Banks
1. Conducting business activities in contravention with the sharia principle;
2. Conducting trading activities of shares directly in the capital market;
3. Conducting equity participation, except for as referred to in number 19 and 20 of the Sharia Commercial Bank
business operations; 4. Undertaking insurance business activities, with the
exception as marketing agent of sharia insurance products.
Prohibition of Business Operations of Conventional Rural Banks
1. Accepting deposits in the form of demand deposit and participating in the payment traic;
2. Conducting foreign exchange business operations other than as foreign exchange traders PVA;
3. Conducting capital investments; 4. Conducting insurance business operations;
5. Undertaking business operations other than activities as referred to in letter B above.
Prohibition of Business Operations of Sharia Rural Banks
1. Conducting business operations in contravention with the sharia principle;
2. Accepting deposits in the form of demand deposits and participating in the payment traic;
3. Conducting forex business operations except for money changer operations subject to BI approval;
4. Conducting insurance business activities except as marketing agents of sharia insurance products;
5. Conducting capital investments, except for institutions that are established to resolve Rural Banks liquidity
problems; and 6. Conducting other business aside from activities of
Sharia Banks business as referred to in letter B above.
B AB 3
REGULATION AND SUPERVISION OF
BANKS
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