Since the issuance of Law Number 4 of 2023 on Financial Sector Development and Strengthening (P2SK Law), Bank Perkreditan Rakyat (BPR, or Rural Bank) has changed its name to Bank Perekonomian Rakyat (BPR, or Rural Bank). Bank Perekonomian Rakyat (BPR, or Rural Bank) is a Bank that carry out business activities conventionally or based on Sharia Principles and which in its activities do not directly provide services in demand deposit flow. BPR's activities are much narrower than those of commercial bank because BPR are prohibited from receiving reserves in the form of demand deposit, carrying out business activities in foreign currency (with the exception of foreign currency exchange business activities), carrying out insurance business (with the exception of the marketing of insurance products in the framework of cooperation), and many more as regulated in Law Number 7 of 1992 as amended several times, most recently by Law Number 4 of 2023 on The Development and Strengthening of The Financial Sector. However, BPR may cooperate with Commercial Banks in the distribution of Credit of Sharia-Based Financing for Micro-, Small-, and Medium-Scale Enterprises.
BPR's Business Activities
Here are some businesses that a BPR may perform:
collection of funds in the form of Deposits which take form of Saving Deposit and Time Deposit and/or other forms equivalent to them;
distribution of funds in the form of Credit or Sharia-Based Financing;
carrying out fund transfer activities for their own interests or the interests of Customers;
placing funds in other Banks, borrowing funds from other Banks, or lending funds to other Banks;
carrying out business activity of foreign currency exchange;
carrying out capital participation in BPR supporting institutions in accordance with the restrictions set out in provisions of laws and regulations;
conducting cooperation with other LJK and cooperate with non-LJK in the provision of financial services to Customers;
carrying out receivables transfer activities; and/or
carrying out other activities with the approval of the Financial Services Authority .
