Basel Framework Implementation in Indonesia
Indonesia has adopted the Basel III capital framework. The capital framework for commercial bank has been adopted and is mainly regulated through POJK No. 11/POJK.03/2016 of 2016 as further amended by POJK No. 34/POJK.03/2016 of 2016 and POJK No. 27/2022. The regulations cover (i) the quality of regulatory capital, (ii) setting a minimum Tier 1 and CET 1 ratio of 6.0% and 4.5%, and (iii) building-up of adequate buffers above the minimum capital requirement based on risk profile (including a capital conservation buffer, countercyclical buffer and capital surcharge for D-SIBs).
With regards to the calculation of risk weighted asset (RWA), Indonesia has adopted the revised credit risk, market risk, and operational risk using standardized approach in accordance with the final Basel III framework. These regulations apply to all commercial banks in Indonesia.
- Regulations concerning the revision to the calculation of RWA for operational risk using standardized approach was issued in 2020 through SEOJK 6/SEOJK.03/2020 and it came to force on Jan 2023.
- The calculation of credit risk using standardized approach was adopted through SEOJK 24/SEOJK.03/2021 and it effectively came to force on Jan 2023.
- The counterparty credit risk using standardized approach and securitization framework were adopted through SEOJK 48/SEOJK.03/2017 and SEOJK 11/SEOJK.03/2019 consecutively.
- The regulation concerning the calculation of RWA for market risk, including credit valuation adjustment, was issued in 2022 (SEOJK 23/SEOJK.03/2022) and come to force in 1 January 2024.
Meanwhile, the calculation of the interest rate risk in the banking book, OJK issued SEOJK 12/SEOJK.03/2018 concerning risk management and risk measurement of interest rate in the banking book using standardized approach
The Basel III Implementation Template gives an overview of BCBS Members' implementation status of Basel III standards. Indonesia has implemented most of the Basel III reforms standard as shown in this Basel III implementation.
Access to BCBS Basel III Implementation Dashboard: https://www.bis.org/bcbs/implementation/rcap_reports.htm
