In response to global financial products development, for several times, the Basel Committee on Banking Supervision (BCBS) has revised its approach to credit capitalization calculation, especially the one related to securitisation. The use of securitisation that has reached global scale and the highly complex nature of securitization transactions have prompted the Basel Committee to pay special attention in formulating capitalization calculation.
In December 2014, the Basel Committee issued a document on revision of securitization framework, which was one of the credit risk calculation standards—part of the Basel III framework. The revision amended the securitization framework published in Basel II and Basel 2.5 documents. Indonesia, as a BCBS member, has a commitment to adopt the banking provisions issued by the Basel Committee. Therefore, the country has planned to adopt the framework, but on the same time it will consider such framework's impacts on Indonesia banking industry. The framework is meant to be applied to all commercial banks.
This consultative paper was produced to seek for input from various parties on the securitization framework published by the BCBS before regulations concerning the framework are issued. The expected input include the following matters:
1. Scope of implementation;
2. Coverage and definition of transactions under the securitization framework;
3. General definition and terms;
4. Operating requirements for acknowledgment of risk transfer;
5. Due Diligence requirements;
6. Treatment of securitisation exposures;
7. Treatment of resecuritisation exposures;
8. Implicit support;
9. Treatment of credit risk mitigation for securitisation exposures; and
10. Market discipline for securitisation exposures.
In order to make sure that banks apply prudential principles in running their operation, the OJK will prepare steps for excellent implementation of securitization framework for Indonesia's banking industry, to see that application of the provisions will run smoothly and produce positive contribution to the future development of the country's banking industry. Therefore, participation from various parties in giving ideas and input to this paper will be exceedingly helpful for preparing everything.
