Bank Indonesia revises the single presence policy for banks – Implications for the banking sector

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Background -

On 26 December 2012 (the “Effective Date”), Bank Indonesia (“BI”) published Regulation No. 14/24/PBI/2012 (“Regulation 14”) which contains a revised version of the single presence policy applicable to banks (the “Policy”). Regulation 14 has been much anticipated by market participants. It amends and supersedes the previous version of the Policy which was issued by BI in 2006.

Regulation 14, along with recent initiatives introduced by BI, is also a response to the ASEAN financial integration plan that was launched at the end of last year. The plan aims to increase the resilience and competitiveness of national banking systems in the region through the accelerated consolidation of institutions and improvements in the standards of governance and financial health of banks. Qualifying banks under the plan will be accorded more flexible access to the regional markets.

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