Indonesia’s Financial Services Authority (FSA) recently enacted the FSA Regulation No. 17 of 2023 concerning the Application of Governance for Commercial Banks (the New Regulations) on 14 September 2023.

In the New Regulations, the FSA amends some existing regulations to bolster the governance standards for commercial banks. Amendments include the replacement and dismissal procedures for the board of directors and the board of commissioners, the classification of committees and work guidelines, the implementation of risk management, and the updating the dividend policy. These provisions will need to be incorporated into commercial banks’ internal guidelines and procedures. The New Regulations provide administrative sanctions for breach.

In addition, the FSA aims to consolidate the general governance of commercial banks under a single FSA regulation. The New Regulations outline the entire compliance framework for both conventional and sharia banks, bringing the current regime, consisting of at least 19 different regulations, under one legislative umbrella. In the event of a conflict between the provisions of the New Regulations and the current regulatory regime, the provisions of the New Regulations will apply