epajak.or.id – Strengthening Commercial Bank Governance, OJK Issues New Rules , The Financial Services Authority (OJK) issued Financial Services Authority Regulation (POJK) Number 17 of 2023 concerning the Implementation of Governance for Commercial Banks (Governance).
OJK Chief Executive of Banking Supervision Dian Ediana Rae revealed, this POJK was issued considering that governance is very fundamental in managing the business activities of a bank to be able to develop in a healthy and sustainable manner by prioritizing values, ethics, principles, and upholding integrity.
According to him, through the POJK, his party wants to emphasize again to the controlling shareholder as the owner or controller of the bank, so as not to take various actions that are not proper. Starting from issuing policies, making decisions or other actions against banks that are not in accordance with, contradict / violate OJK provisions and provisions of laws and regulations in the financial services sector, or carry out unhealthy bank management.
OJK Issues New Rules
“So that it has the potential to harm the bank, and or cause problems at the Bank,” he said in the socialization of the issuance of POJK Governance, quoted Wednesday (20/09).
He added that the implementation of good governance is also one of the main factors in creating a financial sector with more integrity, competitiveness and resilience that can add value to company performance and the economy.
“We also hope that all parties involved in the bank’s business activities correctly understand their respective positions, roles and responsibilities so that the enforcement of professionalism and integrity in the banking system can run optimally. The implementation of good governance is one of the surest ways to ensure the sustainable growth of the banking business and encourage higher economic growth in Indonesia,” he added.
Furthermore, Dian said that it is well realized that the banking industry is currently growing very rapidly supported by an increasingly dynamic digital ecosystem. Financial technology support has given birth to a variety of digital product and service innovations that are increasingly diverse with a variety of new accompanying risks.
“These various changes have encouraged OJK to review and update the provisions of commercial bank governance with the aim of providing a reference for the banking industry to develop in a healthy, prudent, integrity, always holding the principles of governance and upholding market disciplines,” she added.
In addition, the issuance of POJK Governance is also a follow-up to the mandate of Law Number 4 of 2023 concerning Development and Strengthening of the Financial Sector. This refinement of governance rules has referred to and aligned with various international standards including the Basel Committee on Banking Services (BCBS), the Organization for Economic Cooperation and Development (OECD), or the International Finance Corporation (IFC).
One of the important aspects of the POJK Governance is to encourage the strengthening of the Bank’s management and provide a clearer regulatory corridor regarding the behavior and authority of shareholders, especially controlling shareholders of the Bank.
In general, the substance of POJK Governance regulates the Bank’s obligation to implement good governance in the implementation of business activities which is realized in several aspects, among others, namely: implementation of duties, responsibilities, and authorities of the Board of Directors and Board of Commissioners, completeness and implementation of committee duties, handling conflicts of interest, and implementation of compliance functions.
Then, it also regulates internal audit, external audit, implementation of risk management, remuneration, provision of funds to related parties and provision of large funds, integrity of reporting and information technology systems, the Bank’s strategic plan, shareholder aspects including dividend policy, implementation of anti-fraud strategies, implementation of sustainable finance, and implementation of governance in bank business groups.
In carrying out its supervisory duties and to ensure that banks implement good governance, OJK can impose sanctions on governance violations in an effective, proportionate, and dissuasive manner.
“This is done to maintain the commitment of all parties so that the implementation of governance is truly guided and implemented appropriately and consistently by banks in the implementation of business activities,” he said.
Meanwhile, Chairman of the OJK Board of Commissioners Mahendra Siregar emphasized that OJK strongly supports the strengthening of governance in Commercial Banks through the issuance of this Governance POJK, considering that failures in the implementation of governance are often the main cause of bank problems and can cause systemic crises.
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He also said that the consistent implementation of governance in financial services institutions will be able to support inclusive and sustainable national economic growth in realizing a prosperous, advanced and dignified society.
Not only that, the implementation of good governance in banks is strongly influenced by the tone from the top of all bank administrators.
“Through a strong commitment in the implementation of good governance by the controlling shareholders, Board of Directors, Board of Commissioners, and all parties affiliated with the bank as a whole in every business activity and line of defense of the Bank, it is expected to make a positive contribution in supporting the strengthening, competitiveness, and resilience of banks and upholding the integrity of the financial system,” Mahendra said.