Indonesia's many banks are governed by several important laws. These laws ensure that the banking system of Indonesia remains stable and able to provide for all who use it. They also reduce the likelihood that banks will commit immoral acts which might cause harm to their customers.


The banking system of a country supports the economy of the country. If the banks of the country fail, this failure would create a problem for the people who live there as well as the companies which have placed much money in those banks. Banks may fail if the management of the banks makes poor financial decisions or if sufficient amounts of money do not circulate within the economy. These circumstances may in turn lead to an economic crash and subsequently a protracted recession in the country where the banks are located.

Therefore, in order to prevent such negative circumstances from taking place, regulation of banks is required. Regulation of banks oversee the investment decisions of banks. Regulations that govern banks in a given country also state the minimum or maximum capital required to be held by banks during a financial year. These regulations generally allow the banks to avoid any unexpected failures. The regular audits and economic changes required for the improvement of the banks’ condition also come from government regulations. Therefore, regulations help major banks to better serve account holders.

Laws Governing Indonesian Banks

Several laws govern the functioning of international and local banks alike in Indonesia. Bank Indonesia (BI) regulates the banking industry in Indonesia. It implements various monetary policies and maintains the stability of the rupiah.

Banks in Indonesia are governed by Law No. 7 of 1992 which has since been amended by Law No. 10 of 1998. Law No. 7 was created to support Islamic banking practices. Law No. 10 allows commercial banks and rural banks alike to operate on Islamic banking principles. Law No. 21 of 2011 oversees regulations concerning monetary policies. It also regulates and supervises the banking institutions, keeps a check on banks’ solvency status, and carries out examinations of banks.

BI has issued Regulation No. 14/24/PBI/2012 which addresses the Single Presence Policy (SPP). This regulation improves the competitiveness of the banking system in Indonesia by raising the standards of supervision while also streamlining the ownership of banks. There are certain criteria which banks in Indonesia must fulfill in order to comply with this regulation. One of these criteria is that any foreign exchange from exports must be received through a foreign exchange bank in Indonesia within three months of the receiving of the foreign exchange. Exporters are also to report all export declarations related to any export which is worth more than US$10,000. Any foreign exchange received through an offshore loan must also be withdrawn through a foreign exchange bank in Indonesia and reported to BI.

There are a few other new laws made which allow private banks to sell their shares to the public. These new laws also enable foreigners to purchase shares of the domestic banks listed on the Indonesia Stock Exchange.

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Authorities Responsible for Overseeing Indonesian Banks

BI and Otoritas Jasa Keuangan (OJK) are the foremost authorities which oversee Indonesian banks. In 2013, the OJK through Law No. 21 of 2011 assumed control of the regulatory and supervisory functions of the financial services sector of Indonesia. This sector includes the banking functions of BI.

Banks of Indonesia are subject to supervision under BI and obliged to report about foreign loans and the influx of foreign currency to BI. Other than BI and OJK, there are several other authorities which are involved in overseeing bank regulation in Indonesia. These are the Financial Transaction Reporting and Analysis Center (PPATK) as well as the Indonesian Deposit Insurance Institution (LPS). The OJK, BI, PPATK, and LPS work together in order to keep a watch over the various functions of banks as they relate to areas such as credit cards, foreign exchange, deposits, and withdrawals, among others.

Common Violations of Bank Laws in Indonesia

The government of Indonesia has created several new regulations which concern banking laws. It has also begun to punish people who are found to be in violation of these new laws. Some of the common violations of bank laws in Indonesia include instances which involve exporters who do not keep foreign exchange earnings from natural resources in Indonesian banks. According to current bank laws existing in Indonesia today, the exporters need to keep their foreign exchange earnings earned via natural resources in the Indonesian banks. Another common violation of Indonesian bank laws is that of carrying excessive amounts of foreign banknotes while crossing the border. One of Indonesia’s banking laws today limits the carrying of foreign banknotes into the country on behalf of either Indonesian citizens or foreigners. Some banks have even committed the offense of leaking of depositors’ personal data. This offense causes a bank’s senior managers to be held equally responsible for the same. Banks are only allowed to share the personal data of customers when such is required by a government agency or court.

Punishments for Misbehaving or Errant Banks in Indonesia

If one or more senior management employees of any Indonesian bank has committed a misdemeanor or indulged in any suspicious activities, there will be suitable punishments imposed. According to Law No. 7 of 1992 as amended by Law No. 10 of 1998, the directors, commissioners, and employees of the bank in question may be subject to a fine of between five billion and 100 billion rupiah, imprisonment for a term of anywhere between three and eight years, or both. Staff members will be punished in either of these ways if they fail to operate the banking system in a proper manner. If bank employees violate the bank’s secrecy rules, the employees in question will be fined 200 billion rupiah.


The banking laws and regulations of Indonesia control and monitor all banking affairs in the country. The banks of Indonesia have to abide by these rules so that the money of individuals and companies will be kept safe. The banking laws of Indonesia have done much to improve the condition of the country’s many banks.

Laws Governing the Banks of Indonesia FAQs

How well-regarded are Indonesia’s banks internationally?2020-04-02T15:50:54+08:00

The global reputation of the banks of Indonesia has risen in recent times. This is because Indonesia has several leading banks that have placed Indonesian banks in the spotlight at the international level.

However, there are several problems faced by many banks in Indonesia which threaten to damage the global reputation of the country’s banks. One of these problem areas is that of foreign exchange rates. Foreign exchange rates in Indonesia are important because the country has nearly 15% of its loans in the form of foreign currency. Thus, to maintain the positive international reputation of Indonesia’s banks, the banks of Indonesia have to re-assess their strategies as foreign exchange rates change. Therefore, foreign banks, Indonesian banks, and the Indonesian government must work together in order to achieve the best possible outcome for the banks of the country. By doing so, they will increase the revenue and level of investment which enters Indonesia. This in turn will serve as a significant boost to the international reputation of Indonesian banks.

What are some details regarding banks in Indonesia?2020-04-02T15:49:56+08:00

Banks in Indonesia function on weekdays and Saturdays. Their opening hours are regulated by the country’s banking authorities. Usually, the opening hours of banks on weekdays are from 8am to 3pm. On Saturdays, they are usually 8am to 1pm.

Bank accounts in Indonesia can be opened in just one day. Those who have opened a bank account in Indonesia may either receive an ATM card or debit card on the same day that the account is opened. Before anyone can open a bank account at any major bank in Indonesia, a minimum deposit must usually be made. This minimum deposit is typically 500,000 rupiah or more.

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