Law Number 7 of 1992 on Banking as amended several times, most recently by Law Number 4 of 2023 on The Development and Strengthening of The Financial Sector, defines Bank as a a business entity which collects funds from the public in the form of savings and distribute it to the public in the form of credits and or other forms within the framework of improving the living standard of the public at large..
Commercial bank is a Bank that carries out business activities conventionally and/or based on Sharia Principles which in its activities provide services in payment flow.
Commercial Bank Business Activities
Business activities that a commercial bank may carry out:
Collection of funds from the public in the form of Deposit, Demand Deposit, Time Deposit, Certificate of Deposit, and/or other equivalent forms;
Distribution of funds in the form of Credit or Sharia-Based Financing;
Carrying out activities in the payment system sector;
Placing funds in other Banks, borrow funds from other Banks, or lend funds to other Banks, either by using a letter, telecommunication facilities or by Bankers sight draft (wesel unjuk), cheque, or other means;
Issuing and/or implementing Securities transactions for the benefit of Banks and/or Customers;
Providing a place to store goods and Securities;
Carrying out business activities in foreign currencies;
Conducting receivables transfer activities;
Carrying out the Custody of goods and Securities activities; and
Carrying out other activities with the approval of the Financial Services Authority
Commercial Bank may also:
Undertake capital participation in an LJK and/or other companies that support the Banking industry by fulfilling provisions set out by the Financial Services Authority;
Undertake temporary capital participation activities outside of an LJK in order to overcome the consequences of Credit or Sharia-Based Financing failure, on condition that the participation must be withdrawn;
Act as a founder of Pension Fund and administrator of Pension Fund in accordance with provisions of laws and regulations on Pension Fund; and/or
Cooperate with other LJK and cooperate with non-LJK in the provision of financial services to the Customer.
