Small Bank’s Possible Scenarios to Meet Minimum Core Capital

Summary

Small banks can be free of the Rp 3 trillion minimum core capital in 2022 in exchange for their independence. They have to become subsidiaries of bigger banks through acquisitions or mergers. Kontan.co.id reported that based on the Financial Services Authority’s bill on minimum core capital for conventional banks, the subsidiary banks only have to provide at least Rp 1 trillion of core capital. The obligation to have Rp 3 million of core capital will shift into the parent banks.

The Financial Services Authority will immediately formulate the policy to change the minimum core capital of conventional banks to Rp 3 trillion, currently below Rp 1 trillion. The financial regulator may apply a maximum sanction to the banks refusing to comply with the new regulation by degrading the status to microcredit banks. However, OJK will increase the minimum core capital gradually, Rp 1 trillion in 2020, Rp 2 trillion in 2021, and finally Rp 3 trillion in 2022.

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