Settings, Controlling, and Guidance of Microfinance Institution by

“To implement the assignment of the task of regulation referred to in Article 6, the FSA has the authority to; a. Establishing the Implementing regulation of this law; b. Establishing the law and regulation legislation on the sector of financial service; c. Establishing regulation and decree of FSA; d. Establishing regulation on the supervision in the sector of financial service; e. Establishing the policy on the assignment implementation of FSA; f. Establishing regulation on establishment procedures the written instruction for Financial Service Institution and certain party; g. Establishing regulation on establishment the statutory manager in the Financial Service Institution; h. Establishing organization structure and infrastructure, as well managing, maintaining, and administering on the wealth and liability; and i. Establishing regulation on the imposition procedures of sanction in the accordance with the provision of the law and regulation in the sector financial service.” And also in further provisions are set forth in article 9 of Law FSA are: 8 “To implement the assignment of supervision as set forth in Article 6 above, FSA has authority on: a. Establishing the operational supervision policy toward the activity of financial service; b. Supervising the implementation of supervisory duties performed by the Chief Executive; c. Conducting Supervision, examination, investigation, consumer protection, and other measures towards Financial Service Institution, agent, andor supporting financial service as set forth in the law and regulation in the sector of financial service; d. Providing the written instructions to Financial Service institution andor certain party; e. Making appointment statutory management; 8 Indonesia, the Law number 21 of 2011 on Financial Services Authority section 9 f. Establishing the utilization of statutory management; g. Establishing administrative sanction to the parties commit violation against law and regulation on the financial sector; and h. Granting, andor revoke : Business license; Business license for individual; The effectiveness of registration statement; Registered certificate; Approval to perform business activity; Legislation; Approval and the establishment of dissolution; and Other establishment, as set forth in law and regulation in the sector of financial service.”

3. Supervision and Development of Microfinance Institutions are based

on Financial Services Authority Regulations No. 14POJK.052014 on Guidance and Supervision of Microfinance Institution This law explain in more detail on how the guidance and supervision of Microfinance Institutions by the financial services authority. a. Guidance and supervision of MFIs conducted by the FSA In Chapter II Article 2 mentions: 1 Guidance, Regulation, and Supervision of MFIs are conducted by the FSA 2 In conducting the guidance and supervision, the FSA conduct coordination with the ministry which organizes the Cooperative and the Cooperative and the Interior Ministry. 3 Guidance and supervision as referred to in paragraph 1 delegated to the districtcity 4 In the event that the district governmentscity is not ready, the FSA may delegate the guidance and supervision to another party designated. Chapter 3 of this rule also explains that in order to accomplish their functions and duties of guidance and supervision of MFIs, local government in district or city preparing human resources and infrastructure. Preparations include: a. Appoint government officials district or city to carry out the functions and duties of Guidance and Supervision of MFIs. b. Assign employees appointed for training organized by the FSA c. Prepare means of operational Support and Supervision. Besides supervision is assigned to the local government districtcity includes several things, namely: a. Acceptance of the financial statements and impute data into the application system b. Conduct analysis of MFI’s financial statements c. Receive and analyze another report d. Do the follow up on other reports e. Prepare a work plan examinations, investigations, and follow up on the results of MFIs f. Impose of administrative sanctions to MFIs in addition to revoke the business license and fined g. Undertake measures appropriate response to MFIs experiencing liquidity problems and solvency were harmful to business continuity b. Examination Authority MFIs by financial services 1 In the framework of the implementation of the function of supervision, the FSA conduct an examination of the MFI 2 The examination of the MFI as referred to in paragraph 1 is delegated to the districtcity in region where MFI operates or other parties appointed by the FSA. 3 If necessary, the FSA can make a direct examination of the MFI either individually or jointly with local government districtcity or other parties appointed 4 The examination aims to: a. Obtain assurance regarding the actual condition of MFIs. b. Examine the suitability of conditions MFIs with legislation and practices regarding business healthy MFIs; and c. Ensure that MFIs have made efforts to fulfill its obligation to its customers. Article 9 describes the implementation of the examination will be undertaken of the MFI is based on: