The Indonesian Financial Services Authority (OJK) has issued a regulation that enables commercial banks to make equity participation including temporary investment in fintech companies.
The move intends to boost the national banking resilience, competitiveness and efficiency.
With the new regulation, commercial banks are allowed equity participation in activities related to business development, information technology, and financial sector ecosystems.
Effective immediately, it enables banks to invest up to 35% of its capital in fintech firms, reported Reuters.
Some Indonesian lenders, however, have made investments through their venture capital units in fintechs.
Furthermore, the banks are required to launch formal procedure to manage their investment risks.
OJK was quoted by the news agency as saying: “Capital injection has to be balanced with a higher quality of risk management to anticipate potential risks … that could affect the bank’s sustainability.”
According to the Indonesian regulator, the regulation is applicable to the banks’ direct investments or purchases through the stock exchange.
Furthermore, the regulator issued a new rule related to the oversight of the Public Housing Savings Management Agency (BP Tapera).
As per the new rule, BP Tapera’s external supervision will be carried out by the Tapera Committee while OJK will serve as independent supervisor of BP Tapera.
OJK said in a statement: “Meanwhile, the scope of OJK’s supervision of BP Tapera includes the implementation of BP Tapera compliance supervision of the laws and regulations in the field of Tapera and the internal provisions of BP Tapera which include the activities of implementing Tapera, BP Tapera asset management, as well as the implementation of BP Tapera governance and risk management.”