Indonesia Financial Authority (Otoritas Jasa Keuangan/”OJK”) has issued Regulation No. 27 of 2022, which amends OJK Regulation No. 11/POJK.03/2016 concerning the Obligation of Minimum Capital Provision for General Banks. The regulation aligns Indonesian law with international standards.

Banks are now required to comply with BASEL III Reforms to strengthen their risk management and adjust their calculation of risk-weighted assets (ATMR). Banks also need to apply international standards on capital requirements for exposures to central counterparties, and margin requirements for non-centrally cleared derivatives.

The principal change in the new regulation is the obligation on certain banks to form capital conservation buffers and the obligation to disclose the potential profit/loss from the fair value of financial assets as a disclosed reserve.

Under the new regulation, the disclosed reserve must now be interpreted as a financial asset measured at fair value in accordance with generally accepted accounting principles for financial instruments.