Background - On 2 January 2013, Bank Indonesia (“BI”) issued Regulation 14/26/PBI/2012 on the business activities and branch or office networks of banks (“Regulation 14”). Regulation 14 has been keenly anticipated by market participants, particularly as it introduces a multiple licensing policy for banks operating in Indonesia.
Regulation 14 is one of a series of regulations and policies that have been issued by BI in the last few months. For example, BI recently issued Regulation 14/8/PBI/2012 on the ownership of Indonesian banks as well as Regulation 14/24/PBI/2012 on the revised single presence policy. Along with Regulation 14, these recent initiatives demonstrate an intention on the part of BI to bolster the country’s banking sector by promoting consolidation and improving governance in the sector.
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