Jakarta. Indonesia's Financial Authority, the OJK, signed a bilateral agreement with Malaysian central bank Bank Negara Malaysia under the Asean Banking Integration Framework on Monday (01/08), allowing greater access for lenders from both parties to operate in respective jurisdictions.

"The bilateral agreement is a strategic cooperation, especially to increase the role of local banking in the Asean which is promoted in ABIF," Muliaman D. Hadad said in a statement.

The Asean Banking Integration Framework (ABIF) — which aims to liberalize the banking market by 2020 — provides a guideline for the Asean member countries to support the Asean Economic Community (AEC).

ABIF seeks to provide market access and operational flexibilities for the Asean banks that have met the requirements agreed by the Asean members. These banks are called the Qualified Asean Banks, or QAB.

According to the agreement — which is a detailed follow-up to the initial agreement in 2014 — Malaysia will allow three Indonesian banks to operate in the country and Indonesia will do the same to Malaysian banks. The agreement covers guideline to open bank branches, ATMs, QABs' access to electronic payment, capital and customer funds guarantee.

Three of Indonesia's biggest state-controlled lenders by assets — Bank Mandiri, Bank Rakyat Indonesia and Bank Negara Indonesia — have expressed their intention to expand its businesses to Malaysia, Muliaman said as quoted by Antaranews.com.

These banks, however, have yet to officially inform the OJK regarding such plan.

Bank Negara Malaysia, in a separate statement, said it looks forward to seeing Indonesian banks start operating in the country.

"The increased banking and financial integration will further deepen the potential for mutually reinforcing growth and greater shared prosperity between both countries and within the region," the statement said.

So far, two Malaysian banks Maybank and CIMB Niaga have opened its fully operational offices in Indonesia. RHB Capital, one of Malaysia's largest banking groups, has mentioned its willingness to open its business in Indonesia through mergers and acquisitions.