CENTRAL BANK TO HAND OVER BANK SUPERVISION TO OJK

By Andi Abdussalam

Jakarta, Dec 23 (Antara) - Beginning January, the Indonesian central bank, Bank Indonesia (BI) will hand over the bank supervision task to the Financial Service Authority (OJK) based on Law No. 23 /2011.          "The transfer of the supervision authority from the central bank to the OJK will be implemented on December 31, 2013," stated Ari Lajiji, group supervision head of the OJK for Sulawesi, Maluku, North Maluku, Papua and West Papua (Sulampua), in Ambon, Maluku, on Thursday last week.          He noted that the OJK, which was set up in accordance with the Law No. 23/2011, has been operational since January 1, 2013. But, Bank Indonesia has not yet handed over the banking supervision task to the OJK.          However, the supervision of financial services, such as the capital market, insurance firms, and other financial services, has been handed over to the OJK.          The OJK aims to guide all activities in the financial services sector to ensure that they develop in a fair, orderly, stable, and accountable manner to protect the interests of consumers and the public, in general.          "Therefore, beginning January 1, 2014, the OJK will begin supervision of all financial service providers, including banks," Lajiji remarked.            The OJK has a wider supervision function as compared to that of Bank Indonesia, stated Division Head of the OJK's Strategic Planning Directorate Anita Sukarman.          "We will supervise financial service companies, both banks and non-banking institutions, so that we will have a wider supervision authority to protect the consumers and the people from various issues related to banks and non-banking financial institutions," Anita added.          Such an authority and task are broader than those previously carried out by Bank Indonesia. With the enhanced authority, the OJK will oversee the conglomeration of financial service firms. The OJK will be able to provide protection from the beginning.          As an example, a private bank does business not only in the banking sector, but also in the insurance, financing, and other sectors. In these firms, the OJK will have the authority to supervise the flow of consumers or company funds so that problems are tackled as soon as they emerge.         "For instance, if an insurance firm A faces a problem, then it will be seen if it has an impact on the bank of the concerned company. If it does have an effect, then we will issue a warning and an early protection to the concerned consumers," Anita explained.          So, the OJK function is to implement integrated supervision arrangement, including financial auditing and investigation of all financial sector activities to prevent consumer losses.          Chairman of the Board of Commissioners of the OJK Muliaman D Hadad noted that Indonesia is capable of fending off negative external sentiments in order to improve the conditions of domestic financial institutions.       "The Indonesian financial institutions have a good risk management system in place, yet they should not become complacent. The OJK will continue to develop prudent principles as a means to drive financial management in Indonesia," Muliaman D Hadad added on Friday.          He informed that analysis on Indonesia, conducted by several survey institutions, indicated a high level of trust in the Indonesian economic fundamental resilience.          "Indonesia has a strong fundamental economy. But, we still face many challenges. We need to pay attention to the domestic economic slowdown.  We want to end the year 2013 on a good note, which will reflect our readiness to face 2014," the OJK top official stated.          In connection with the personnel who came from the BI, Lajiji said that they will carry out their duties for a three-year period.          "From December 2013 to December 2016, all supervisors of the BI will be assigned to the OJK," Lajiji added.          However, by the end of 2015, a decision will be made on whether the BI supervisors will stay with the OJK or return to BI.          "Irrespective of whether they choose to stay with the OJK or return to BI, they will carry out their tasks until December 2016," Lajiji stated.          In anticipation of its wider responsibilities, the OJK is planning to open 35 offices across the country after it receives the transfer of bank supervision authority from Bank Indonesia on December 31, 2013.          "The opening of 35 offices across the country will mark the beginning of OJK's role of supervising banks, issuing licenses, and imposing sanctions on bank and non-banking financial institutions in the region," added Ari Lajiji.          He noted that creating a financial system in the region was intended to attain sustainable and stable growth to support economic development and to protect consumer interests.          The OJK will also provide advisory services to regional governments with regard to financial services of banks and non-banking financial institutions.          Effective December 31, the function of bank supervision will be transferred from BI to the OJK.          Thus, the OJK will become fully operational to carry out its tasks of supervising and handling banks and non-banking financial institutions, Ari explained.     ***3*** (T. A014/INE/B003) EDITED BY INE (T.A014/A/BESSR/Bustanuddin) 23-12-2013 23:2