Law No. 10/1998 on banking defines bank as a business that gathers fund from society in the form of savings and distributes the fund to the society in the form of credits and/or others in order to improve people’s standard of living.

Commercial bank is a bank that performs business activities conventionally and/or based on Sharia principles, with activities that provide services in payment transferring.

Business activities of commercial bank

• Gather fund from society in the forms of demand deposit, time deposit, deposit certificate, savings, and/or other forms of fund equivalent to those.
• Give credit.
• Issue promissory notes.
• Buy, sell and assure under bank’s risks or for the interests and on behalf of its customers:
  • Bills of exchange, including bills of exchange that have been accepted by the bank with period of validity that is not longer than the related customary trading notes.
  • Promissory notes and other commercial papers with period of validity that is not longer than related customary trading notes.
  • Treasury bill and government insurance notes.
  • Bank Indonesia Certificate (SBI).
  • Bonds.
  • Commercial papers with period of validity until one (1) year.
  • Other securities instruments with period of validity until one (1) year.
• Transfer money both for the bank’s interests or customer’s interests.
• Place fund, borrow fund, or lend fund to other banks, whether by using papers, means of telecommunication or demand draft.
• Receive payment of bill over securities and calculating terms with third party.
• Provide place to deposit valuable items and securities.
• Perform deposit service for the interest of other parties based on a contract.
• Perform fund placement from a customer to another in the form of securities that are unlisted in stock market.
• Perform factoring company activities, credit card business and bare trustee activities.
• Provide financing and/or perform other activities based on Sharia law, in accordance with provisions stipulated by Bank Indonesia.
• Perform other activities that are common bank practice, as long as they are not against applicable law and regulations.

Commercial bank may also:

• Perform activities in foreign exchange by complying with provisions stipulated by Bank Indonesia.
• Perform co-financing activities on bank or company in financial business, such as leasing, venture capital, securities company, insurance, and clearing settlement and deposit institution, by complying with provisions stipulated by Bank Indonesia.
• Perform temporary co-financing activities to cope with failures in credit and financing under Sharia law, with the condition that the bank must withdraw its equity participation and complying with provisions stipulated by Bank Indonesia.
• Act as pension fund establisher and pension administrator according to provisions in the applicable pension fund regulations.​