(Beritasatu Photo/David Gita Roza)

OJK Wants to Retain Oversight Role of Indonesian Banks


SEPTEMBER 02, 2020

Jakarta. The Financial Services Authority, or OJK, insisted on Wednesday that it should retain a key role to supervise and regulate Indonesian financial institutions, amid ongoing attempts by lawmakers to return the task to the central bank.

Renowned financial market analyst Ryan Kiryanto, currently hired by the OJK as lead analyst, argued that the rapid development in financial markets and the complex challenges to keep the highly dynamic businesses within the law require an “integrated oversight system” which has been applied by the OJK since its establishment.

"If we had a flashback to the past financial crises in 1998 and 2008, we would need an integrated regulatory entity to oversee financial markets, an oversight body like the OJK today,” Ryan said in a statement published by the OJK.

“[Integrated oversight system] has become the OJK’s flagship. Thanks to it, the overall financial system is currently well-guarded and solid,” he said.

The OJK has been trusted as an oversight body of Indonesian banks since 2013, taking over the role from Bank Indonesia.

Ryan said the agency would not interfere in the ongoing discussions at the House of Representatives on the possibility of returning the oversight role to the central bank, indicating the OJK has no control over it. 

"It’s the political domain so we cannot get involved,” he said.

Ryan said further the dynamic in financial industry has created overlapping business units that require new approaches in regulations. For instance, insurance products are being marketed through banks that make customers think they classify as bank products.

"Things like this must be closely watched so that problems can be detected early and preventive measures can be taken in the right time before they become a wide-scale crisis,” Ryan said.

"The 1997-98 financial crisis stemmed from highly volatile exchange rates that delivered impact to the financial sector, hurting banks and eventually triggering an economic crisis. The OJK takes a lesson from that for more prudent and more specific overseeing measures against all individuals in the financial sector -- primarily conglomerations," he said.

His remarks came amid reports that the House legislation body is drafting a law to reappoint Bank Indonesia as the sole oversight body of banks by 2023.