Licenses and Regulatory Approvals Issued by Bank Indonesia

2025-03-03

Bank Indonesia (BI) oversees various licenses across banking, fintech, payment systems, foreign exchange, and other financial services. This article covers a list of each license type, purpose, and other key details

Bank Indonesia (BI) oversees various licenses across banking, fintech, payment systems, foreign exchange, and other financial services. This article covers a list of each license type, purpose, and other key details. Since 2013, some banking licenses have been administered by the Financial Services Authority (OJK) as mandated by law, but they are included here for completeness.

Banking Licenses

Commercial Bank Business License (Izin Usaha Bank Umum)

Purpose

Authorization to operate as a conventional commercial bank in Indonesia. This license permits an institution to collect public deposits, lend funds, and provide other banking services as defined in the Banking Law.

Eligibility

• Must be an Indonesian legal entity
• Meet minimum capital requirements
• Founders, controlling shareholders, and management must pass fit-and-proper tests.
• A sound business plan and risk management framework are required.

Key Regulations

• Governed by the Banking Law (Law No. 7/1992 as amended by Law No. 10/1998).
• Since 2013, OJK has the authority to issue new bank licenses and supervise banks.
• BI previously regulated bank licensing policies.
• Minimum capital for a national bank is IDR 10 trillion under recent digital bank rules.

Other Details

• Application is made to OJK (with BI consultation on macro-prudential aspects).
• Once licensed, banks must comply with prudential ratios and reporting regulations.
• License transfers or changes (e.g., mergers) require regulatory approval.

Largest companies with this license

The largest banks in Indonesia holding this license are:

1. Bank Mandiri: Established in 1998, Bank Mandiri is the largest bank in Indonesia by total assets. 
2. Bank Rakyat Indonesia (BRI): Founded in 1895, BRI focuses on micro, small, and medium enterprises, making it a leading financial institution in Indonesia. 
3. Bank Central Asia (BCA): Established in 1955, BCA is the largest private bank in Indonesia, offering a wide range of banking services. 
4. Bank Negara Indonesia (BNI): Founded in 1946, BNI is one of Indonesia’s major banks, providing various financial services to individuals and businesses.
5. Bank Tabungan Negara (BTN): Specializing in housing finance, BTN plays a significant role in supporting Indonesia’s housing sector.

Sharia (Islamic) Commercial Bank License (Izin Usaha Bank Umum Syariah)

Purpose

Authorization to operate a Sharia commercial bank, conducting banking activities according to Islamic (Sharia) principles, including profit-sharing financing and Sharia-compliant deposit accounts.

Eligibility

• Similar requirements to conventional banks.
• Operations must comply with Islamic Banking Law (Law No. 21/2008).
• Must have a Sharia Supervisory Board.
• Products/contracts (murabahah, mudarabah, etc.) must adhere to fatwa from the National Sharia Board.

Key Regulations

• Governed by Law No. 21/2008 on Islamic Banking.
• Licensing and supervision authority now lies with OJK.

Other Details

• Application involves additional review for Sharia compliance frameworks.
• Subject to dual oversight: OJK/BI for financial soundness and the National Sharia Board for product compliance.

Largest companies with this license

In Indonesia, several banks hold this license, including

1. Bank Syariah Indonesia (BSI): Established: February 1, 2021, Assets: IDR 357.9 trillion (Q1 2024). Formed through the merger of three state-owned Islamic banks—Bank Syariah Mandiri, BRI Syariah, and BNI Syariah—BSI is the largest Islamic bank in Indonesia and the seventh-largest bank overall.
2. Bank Muamalat Indonesia : Established: 1991. Indonesia’s first fully Islamic bank, offering a wide range of Sharia-compliant banking services.
3. Bank Mega Syariah : Parent Company: Bank Mega. Provides various Islamic banking products and services, including financing and savings.
4. Bank BCA Syariah : Parent Company: Bank Central Asia (BCA). A subsidiary of BCA, focusing on Sharia-compliant financial services, including deposits and investments.
5. Bank Panin Dubai Syariah : Parent Company: Panin Bank & Dubai Islamic Bank. A joint venture between Panin Bank and Dubai Islamic Bank, providing Sharia banking solutions.
6. Other Notable Conventional Banks with Islamic Banking Units - CIMB Niaga Syariah (Islamic banking arm of Bank CIMB Niaga), Danamon Syariah (Islamic banking division of Bank Danamon)

Rural Bank License – BPR (Izin Usaha Bank Perkreditan Rakyat)

Purpose

License to operate as a Rural Credit Bank (BPR), serving local communities with deposit and lending services but restricted from foreign exchange and payment system services.

Eligibility

• Must be incorporated as an Indonesian legal entity (PT or cooperative).
• Lower minimum capital than commercial banks (varies by region).
• Founders and managers must pass fit-and-proper tests.

Key Regulations

• Governed by the Banking Law and OJK regulations.
• OJK Regulation No. 20/POJK.03/2014 (updated by POJK 62/2020) details licensing requirements.

Other Details

• BPRs have geographical and business scope limitations.
• Upgrading a BPR to a commercial bank requires a new license and higher capital requirements.

Largest companies with this license

Indonesia is divided into 38 provinces, each with its own unique administrative structure. Rural Banks operate within these provinces to provide financial services at the local level. The ten provinces with the highest number of BPRs are East Java, West Java, Central Java, Bali, West Sumatra, Banten, North Sumatra, the Special Region of Yogyakarta, and Riau. 

Sharia Rural Bank License – BPRS (Izin Usaha Bank Pembiayaan Rakyat Syariah)

Purpose

License to operate a Sharia Rural Bank (BPRS), which provides Sharia-compliant microfinance services.

Eligibility

• Must be an Indonesian legal entity.
• Capital requirements are similar to BPRs but follow Sharia principles.
• Must have a Sharia Supervisory Board.

Key Regulations

• Governed by Law No. 21/2008 and OJK regulations.

Other Details

• Subject to Sharia compliance audits.
• Limited business area and stricter ownership change regulations.

Largest companies with this license

These banks serve micro to small-scale enterprises in rural areas. A study focusing on West Java evaluated BPRS based on the Maqashid Shariah Index, which assesses adherence to Islamic objectives. The top-performing banks in this region were: 

1. BPRS Al Salaam Amal Salman: Achieved the highest Maqashid Shariah score, reflecting strong implementation of Sharia principles. 
2. BPRS PNM Mentari: Ranked second, demonstrating commendable adherence to Islamic financial objectives.
3. BPRS Almadinah Tasikmalaya Perseroda: Secured the third position in the Maqashid Shariah Index evaluation. 

Payment System Licenses

Payment Service Provider (PJP) License

Purpose

Allows an entity to provide payment transaction services, including e-money issuance, payment gateways, and remittances.

Eligibility

• Banks and non-bank entities can apply.
• Non-banks must be an Indonesian legal entity (PT) and meet capital requirements.
• Minimum capital depends on activity scope (e.g., IDR 15 billion for full-scope PJP).

Key Regulations

• BI Regulation No. 22/23/PBI/2020 reclassified payment service providers into PJP and PIP.

Categories

PJPs are categorized into three license categories by Bank Indonesia, based on the scope of activities they are permitted to perform: 

License Category One

Permitted activities include Administration of fund sources, Provision of information on fund sources, Payment initiation and/or acquiring services, Remittance services.

License Category Two

Permitted Activities includes Provision of information on fund sources, Payment initiation and/or acquiring services

License Category Three

Permitted Activities include Remittance services and other activities as determined by Bank Indonesia 

Largest companies with this license

Some of the largest companies holding a Category 1 PJP license in Indonesia include:

1. GoPay: It started as a wallet for Gojek, an on-demand multi-service platform operating in multiple Southeast Asian countries.
2. OVO: A digital payment service based in Jakarta, recognized as Indonesia’s first finance-tech unicorn. 
3. Doku: Indonesia’s first payments technology company, providing online payment solutions with robust fraud management systems. 
4. Xendit: A leading payment gateway in Southeast Asia, offering services such as payment processing and disbursements. 

Payment System Infrastructure Provider (PIP) License

Purpose

License for entities operating core payment infrastructures such as ATM networks and clearing houses.

Eligibility

• Typically issued to institutions with large-scale payment networks.
• Non-bank entities can apply if they meet stringent BI requirements.

Key Regulations

• Defined under BI Regulation No. 22/2020 on Payment Systems.

Other Details

• PIP licenses are critical for Indonesia’s financial infrastructure.

Largest companies with this license

Some of the largest companies with this license include

1. PT Artajasa Pembayaran Elektronis (Artajasa) : They a pioneer in Indonesia’s electronic transaction market, providing network infrastructure for banking and payment industries. Established on February 10, 2000, Artajasa manages ATM Bersama, an ATM system infrastructure shared by multiple banks, allowing customers to access facilities across member banks. ATM Bersama has 91 members, including state banks, national private banks, foreign banks, regional development banks (BPD), rural banks (BPR), and non-bank institutions, with over 77,000 ATM terminals nationwide.
2. PT Rintis Sejahtera : They operate the ATM Prima network, which is controlled by Bank Central Asia (BCA), one of Indonesia’s largest private banks. The ATM Prima network facilitates interbank transactions, enabling customers to perform various banking activities across different banks’ ATMs.
3. PT Alto Network - They serve as one of Indonesia’s switching providers, offering infrastructure that connects various banks and financial institutions, thereby facilitating seamless electronic transactions across the country.
4. PT Jalin Pembayaran Nusantara : They operating under the brand name Jalin, and is a switching provider established to support the National Payment Gateway initiative. Jalin focuses on enhancing the interoperability of payment systems, ensuring efficient and secure transactions across different payment channels and instruments.

Fintech Licenses and Approvals

Financial Technology Provider Registration (Penyelenggara Teknologi Finansial)

Purpose

These entities utilize technology to offer innovative financial products, technologies, that can impact monetary stability, financial system stability, efficiency, smoothness, security, or reliability of payment systems. Their activities encompass various categories, including payment systems, market support, investment management and risk management, lending, financing, capital provision, and other financial services. Financial Technology Providers are required to register with Bank Indonesia, except for those already licensed as Payment Service Providers by Bank Indonesia or those under the authority of other regulators. 

Scope & When Required

• Applies to fintech providers offering new financial technologies affecting the financial system.
• Payment system fintech falls under BI’s domain, while lending and investment fintech is under OJK.

Eligibility

• Must be a legal business entity (PT) with an innovative product or service.
• May require participation in BI’s regulatory sandbox.

Key Regulations

• Initially governed by BI Regulation No. 19/12/PBI/2017.
• Updated under BI Regulation No. 23/6/2021 (Payment Service Provider regulation).

Other Details

• Fintech providers must comply with consumer protection and data security guidelines.
• Successful sandbox trials can lead to BI advising the fintech to apply for a full license.

Foreign Exchange and Remittance Licenses

Money Changer License (KUPVA BB)

Purpose

Permits a non-bank company to operate as a money changer for foreign exchange transactions.

Eligibility

• Must be a limited liability company (PT) with a focus on foreign exchange trading.

Key Regulations

• Governed by BI Regulation No. 18/20/PBI/2016 on Non-Bank Foreign Exchange Business Activities.

Largest companies with this license

Several prominent companies hold this license, including:

1. PT Central Kuta: Established in 1985, Central Kuta Money Exchange has built a strong reputation for offering fair rates without hidden fees. They have multiple branches across Bali, including in Kuta, Seminyak, and Nusa Dua. 
2. PT Bali Maspintjinra (BMC): Known as Bali Money Changer, BMC has been operating since 1993 and offers competitive rates with transparent services. They have branches in Seminyak, Canggu, Ubud, Legian, and more. 

Fund Transfer Operator License (Izin Penyelenggara Transfer Dana)

Purpose

Allows non-bank companies to provide domestic and international money transfer services.

Eligibility

• Must be a financial institution or legal entity meeting BI’s technical and security criteria.

Key Regulations

• Governed by Law No. 3/2011 on Fund Transfers and BI Regulation No. 14/23/PBI/2012.

Largest companies with this license

Notable Companies with Fund Transfer Operator Licenses:

1. TranSwap: A Singapore-based cross-border payment platform, TranSwap has secured a Fund Transfer Operator License from Bank Indonesia, enabling it to offer international payment solutions to Indonesian businesses and individuals.
2. Xendit: An Indonesian fintech company specializing in payment solutions, Xendit holds a Funds Transfer Services Provider License (Category 3) from Bank Indonesia, allowing it to offer fund transfer services alongside its payment gateway offerings. 

Other Regulatory Approvals by Bank Indonesia

Credit Bureau License (Izin Lembaga Pengelola Informasi Perkreditan – LPIP)

Purpose

Allows an entity to operate a Credit Bureau for collecting and providing borrower credit information.

Eligibility

• Must be a PT with a high minimum paid-up capital (IDR 50 billion).

Key Regulations

• Governed by BI Regulation No. 14/1/PBI/2013 on Credit Information Management.

Largest companies with this license

Some companies with this license include

1. PT Kredit Biro Indonesia Jaya (KBIJ): Established to provide comprehensive credit information services, KBIJ assists financial institutions in making informed lending decisions by offering accurate and up-to-date credit data. 
2. PT PEFINDO Biro Kredit: A subsidiary of the Indonesian Rating Agency (PEFINDO), this bureau specializes in compiling credit information to support risk assessment and credit analysis for various financial entities.
3. PT CRIF Lembaga Informasi Keuangan (CLIK): Part of the global CRIF group, CLIK leverages international expertise to deliver credit information solutions, aiding in the evaluation of credit risk and financial credibility.