On 28 December 2018, the Financial Services Authority (Otoritas Jasa Keuangan – “OJK”) of the Republic of Indonesia issued the new OJK Regulation No. 35/POJK.05/2018 on the Business Activities of Financing Companies (“POJK 35/2018”), which revokes the following regulations:
- OJK Regulation No. 29/POJK.05/2014 on the Business Activities of Financing Companies (“POJK 29/2014”);
- Article 49 of the OJK Regulation No. 30/POJK.05/2014 on Good Corporate Governance for Financing Companies;
- OJK Circular Letter No. 47/SEOJK.05/2016 on Down Payment Rates for Motor Vehicle Financing for Financing Companies; and
- Point V 2.c (number 4 to 8) of OJK Circular Letter No. 1/SEOJK.05/2016 on Financial Soundness Level for Financing Companies.
The implementing regulations of POJK 29/2014, however, remain in force to the extent that they do not conflict with the provisions of POJK 35/2018.
With the enactment of POJK 35/2018, OJK aims to enhance the role of financing companies in the national economy, the implementation of prudential principles, and also consumer protection in consumer financing industry.
Key changes under POJK 35/2018 include:
Source of funding
There are several major changes to the provisions on the source of funding that need to be noted under POJK 35/2018. Pursuant to POJK 35/2018, financing companies now can only receive funding in the form of the following: