Indonesia Law No. 23 Concerning Bank Indonesia 1999

ANNEX I.
21
ACT OF THE REPUBLIC OF INDONESIA

NUMBER 23 OF 1999
CONCERNING
BANK INDONESIA
LAW OF THE REPUBLIC OF INDONESIA

NUMBER 23 OF 1999
CONCERNING
BANK INDONESIA
WITH THE BLESSING OF GOD ALMIGHTY
PRESIDENT OF THE REPUBLIC OF INDONESIA,
Considering :
a.
that in order to maintain the continuity of the implementation of the national development in order
to establish a just and prosperous Indonesian society based on Pancasila and the Constitution of
1945, the implementation of the economic development is aimed at the realization of a national
economy which sides with the people economy, equitable, independent, reliable, just and able to
compete in the international economic sphere;
b.
that in order to support the realization of the national economy as mentioned above and in line
with the challenges of a more complex economic development and establishment, a more
progressive financial system and a more competitive and integrated international economy, the
monetary policy shall be emphasized on efforts to maintain the stability of the rupiah value;
c.
that in order to formulate and implement an effective and efficient monetary policy, a sound,
transparent, reliable and accountable financial system is needed which is supported by a smooth,
expeditious, accurate and safe payment system, along with banking regulations and supervision
based on the prudential principles; d. that in order to assure the accomplishment of maintaining the
stability of the rupiah value, it is necessary to have an independent Central Bank;
e.
that in accordance with the abovementioned considerations, the Act Number 13 of 1968
concerning Central Bank is no longer appropriate and has to be replaced with a new Act on Bank
Indonesia;
In view of :
1.
Article 5 paragraph (1), Article 20 paragraph (1), Article 23, and Article 33 of the Constitution of
1945;
2.
Chapter IV letter A item 1a of the Decree of the Peoples Consultative Assembly of the Republic
of Indonesia Number X/MPR/1998;
3.
Article 3 of the Decree of the Peoples Consultative Assembly of the Republic of Indonesia
Number XI/MPR/1998;
4.
The Decree of the Peoples Consultative Assembly of the Republic of Indonesia Number
XVI/MPR/1998;
With the approval of

THE HOUSE OF REPRESENTATIVES OF THE REPUBLIC OF INDONESIA
HAS DECREED :
To enact : LAW ON BANK INDONESIA.
CHAPTER I
GENERAL PROVISION
Article 1
The terminologies used in this act shall have the following meaning :
1.
Board of Governors is the management of Bank Indonesia;
2.
Governor is the chairman of and concurrently a member of the Board of Governors;
3.
Senior Deputy Governor is the vice chairman and concurrently a member of the Board of
Governors;
4.
Deputy Governor is a member of the Board of Governors;
5.
Bank is a Commercial Bank and a Rural Bank as referred to in the prevailing banking Act;
6.
Payment system is a system which includes regulations, institutions, and mechanisms, used in
conducting a transfer of funds in order to fulfil an obligation arising out of an economic activity;
7.
Financing based on Syariah Principle is a provision of money or any claim which is similar as
such based on an agreement between Bank Indonesia and a Bank which requires such Bank to
repay the money or such claim after a certain period with a fee or production sharing;
8.
Bank Indonesia Regulation is a legal provision which is prescribed by Bank Indonesia and binds
every individual or entity and publisized in the State Gazette of the Republic of Indonesia;
9.
The Board of Governors Regulation is a legal provision which is prescribed by the Board of
Governors and contains internal regulations on, among other things, disciplines of the
implementation of tasks and authority of the Board of Governors, employment, and the
organization of Bank Indonesia;
10.
Monetary policy is a policy prescribed and implemented by Bank Indonesia in order to achieve
and maintain the stability of the value of rupiah which is conducted among other things through
the management of money circulation and or interest rate;
11.
General Reserves are funds derived from part of the surplus of Bank Indonesia which may be used
to cope any possible risk arising from the implementation of the tasks and authority of Bank
Indonesia;
12.
Special Purposed Reserves are funds derived from part of the surplus of Bank Indonesia which
may be used among other things for any replacement or renewal of fixed asset and equipment
needed in the implementation of the task and authority of Bank Indonesia as well as for any
investment.
Article 2
(1)
The currency unit of the Republic of Indonesia is rupiah abbreviated as Rp.
(2)
Rupiah currency is a legal tender in the territory of the Republic of Indonesia.
(3)
Any activity using money or having a purpose of payment, or any obligation which has to be
fulfilled by money, if it is conducted in the territory of the Republic of Indonesia, shall use rupiah
currency, except otherwise prescribed by Bank Indonesia Regulation.
(4)
Every person or entity in the territory of the Republic of Indonesia shall be prohibited to refuse the
rupiah currency for any payment or for any fulfillment of an obligation which should be
performed by using currency as referred to in paragraph (3).
(5)
The exception as referred to in paragraph (3) is allowed for any payment in a certain place or
region, for the purpose of payment, or fulfillment of any obligation which should be performed by
using foreign currencies based on a written agreement, which shall be prescribed by Bank
Indonesia Regulation.
Article 3
(1)
Rupiah currency shall not, in a certain amount, be brought outside or inside the custom territory of
the Republic of Indonesia except with the approval of Bank Indonesia.
(2)
The implementation of the provision as referred to in paragraph (1) shall be prescribed by Bank
CHAPTER II
STATUS, DOMICILE, AND CAPITAL
Article 4
(1)
Bank Indonesia is a Central Bank of the Republic of Indonesia.
(2)
Bank Indonesia is an independent state institution, which is free from any interferences of the
Government and or other parties, except for matters explicitly prescribed in this Act.
(3)
Bank Indonesia is a legal entity based on this Act.

Article 5
(1)
Bank Indonesia shall reside in the Capital of the Republic of Indonesia.
(2)
Bank Indonesia may have offices inside and outside the territory of the Republic of Indonesia.
Article 6
(1)
The capital of Bank Indonesia shall be at least Rp2.000.000.000.000,00 (two trillion rupiah).
(2)
The capital as referred to in paragraph (1) shall be increased up to 10% (ten percentage) of the
total monetary liabilities, the funds of which derived from General Reserves or other sources.
(3)
The procedure to increase the capital using the funds derived from the General Reserves or other
sources shall be prescribed by the Board of Governors Regulation.
CHAPTER III
OBJECTIVE AND TASKS
Article 7
The objective of Bank Indonesia is to achieve and maintain the stability of the rupiah value.
Article 8
Bank Indonesia shall, in order to achieve the objective as referred to in Article 7, have tasks as follows :
a.
to prescribe and to implement the monetary policy;
b.
to regulate and to safeguard the smoothness of the payment system;
c.
to regulate and to supervise Banks.

Article 9
(1)
Other parties shall not interfere with the implementation of the tasks of Bank Indonesia as referred
to in Article 8.
(2)
Bank Indonesia shall refuse and or ignore any form of interferences conducted by any parties in
the implementation of its tasks.
CHAPTER IV
THE TASK OF PRESCRIBING AND IMPLEMENTING THE MONETARY POLICY
Article 10
(1)
Bank Indonesia shall, in prescribing and implementing the monetary policy as referred to in
Article 8 letter a, be authorized to :
a.
prescribe monetary targets by taking into account the inflation rate target it has
determined;
b.
conduct a monetary control by using methods which includes but not limited to :
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1) open market operation in the money market, both rupiah and foreign exchange
market;
2) stipulation of the discount rate;
3) stipulation of the minimum reserve requirements;
4) management of credit and financing.
(2)
The methods of monetary management as referred to in paragraph (1) letter b may be conducted
based on Syariah Principle.
(3)
The implementation of the provision as referred to in paragraph (1) letter b and paragraph (2) shall
be prescribed by Bank Indonesia Regulation.
Article 11
(1)
Bank Indonesia may extend credit or financing based on Syariah Principle to a Bank for a
maximum period of 90 (ninety) days to overcome its short term financial difficulty (mismatch).
(2)
The implementation of such extention of credit or financing based on Syariah Principle as referred
to in paragraph (1), shall be guaranteed by the receiver Bank with a high quality and liquid
collateral which value shall be at least equal to the amount of the accepted credit or financing.
(3)
The implementation of the provision as referred to in paragraph (1) and paragraph (2) shall be
prescribed by Bank Indonesia Regulation.
Article 12
Bank Indonesia shall implement the exchange rate policy in accordance with the prescribed exchange rate
system.
Article 13
(1)
Bank Indonesia shall manage the foreign exchange reserves.
(2)
Bank Indonesia shall, in managing the foreign exchange reserves as referred to in paragraph (1),
implement various foreign exchange transactions.
(3)
Bank Indonesia may, in managing the foreign exchange reserves as referred to in paragraph (1),
receive foreign borrowing.
Article 14
(1)
Bank Indonesia may conduct a macro or micro survey, periodically or at any time it deems
necessary, to support the implementation of the tasks of Bank Indonesia as referred to in Article 8.
(2)
The implementation of such survey as referred to in paragraph (1) may be conducted by other
parties assigned by Bank Indonesia.
(3)
Every entity shall, in conducting such survey as referred to in paragraph (1), provide information
and data needed by Bank Indonesia.
(4)
Bank Indonesia or other parties as referred to in paragraph (2) shall keep confidential the source of
the data and the individual data as referred to in paragraph (3), except otherwise explicitly
stipulated in the prevailing acts.
(5)
prescribed by Bank Indonesia Regulation.
CHAPTER V
THE TASK OF REGULATING AND SAFEGUARDING THE SMOOTHNESS OF
THE PAYMENT SYSTEM
Article 15
(1)
(2)
Bank Indonesia shall, in regulating and safeguarding the smoothness of the payment system as
referred to in Article 8 letter b, be authorized :
a.
to implement, and grant approval and license of, the arrangement of the payment system
service;
b.
to require the operator of the payment system service to submit reports on its activities;
c.
to determine the use of payment instruments.
The implementation of the authority as referred to in paragraph (1) shall be prescribed by Bank
Article 16
Bank Indonesia shall be authorized to regulate the interbank clearing system both in rupiah and or foreign
currencies.
Article 17
(1)
The arrangement of the interbank clearing system both in rupiah and or foreign currencies shall be
conducted by Bank Indonesia or other parties upon the approval of Bank Indonesia.
(2)
The implementation of the provision as referred to in paragraph (1) shall be prescribed by Bank
Article 18
(1)
Bank Indonesia shall arrange the final settlement of interbank payment transaction both in rupiah
and or foreign currencies.
(2)
The arrangement of the final settlement of the interbank payment transaction as referred to in
paragraph (1) may be conducted by other parties upon the approval of Bank Indonesia.
(3)
The implementation as referred to in paragraph (1) and paragraph (2) shall be prescribed by Bank
Article 19
Bank Indonesia shall be authorized to prescribe the type, value, characteristic of currency to be issued, the
material used and the effective date of such money as a legal tender.
Article 20
Bank Indonesia shall be the sole institution which is authorized to issue and circulate rupiah currency as
well as to revoke, withdraw and destroy such currency from the circulation.
Article 21
The currency issued by Bank Indonesia shall be exempted from any stamp duties.
Article 22
Bank Indonesia shall not provide any compensation on any currency which is lost or destroyed because of
any reason.
Article 23
(1)
Bank Indonesia may revoke and withdraw rupiah money from the circulation with a compensation
of the same value.
(2)
In the event that within 5 (five) years after the date of revocation as referred to in paragraph (1)
there is still a sum of currency which has not been exchanged, the value of such currency shall
then be calculated as revenues of the current fiscal year.
(3)
The currency which was exchanged after the end of such term as referred to in paragraph (2) shall
be calculated as expenditures of the current fiscal year.
(4)
The right to claim the exchange of currency which has been revoked, shall no longer be valid after
a period of 10 (ten) years since the revocation date.
(5)
The implementation of such revocation and withdrawal of currency from the circulation as
referred to in paragraph (1) shall be prescribed by Bank Indonesia Regulation.
CHAPTER VI
THE TASK OF REGULATING AND SUPERVISING BANKS
Article 24
Bank Indonesia shall, in implementing the task as referred to in Article 8 letter c, prescribe regulations,
grant and revoke license of an institutional and certain business activities of a Bank, implement Banking
supervision and impose sanction on a Bank in accordance with the prevailing regulations.
Article 25
(1)
Bank Indonesia shall, in implementing the task to regulate Banks, be authorized to prescribe the
banking regulations which contains the prudential principles.
(2)
The implementation of the authority as referred to in paragraph (1) shall be prescribed by Bank
Article 26
Bank Indonesia shall, with regard to its authority in granting licenses as referred to in Article 24 :
a.
grant and revoke a business license of a Bank;
b.
grant a license on the opening, closing, and the changing of the address of a Banks office;
c.
provide an approval on ownership and management of a Bank;
d.
grant a license to a Bank to conduct certain business activities.

Article 27
Banking supervision conducted by Bank Indonesia as referred to in Article 24 shall be a direct and an
indirect supervision.
Article 28
(1)
Bank Indonesia shall oblige a Bank to submit reports, information and explanation in accordance
with the procedure prescribed by Bank Indonesia.
(2)
The obligation as referred to in paragraph (1) shall, if deemed necessary, also be imposed on a
Banks holding company, subsidiary company, related parties and affiliated parties.
Article 29
(1)
Bank Indonesia shall conduct an examination on a Bank, both periodically and at any time it
deems necessary.
(2)
The examination as referred to in paragraph (1) shall, if deemed necessary, also be conducted on
the Banks holding company, subsidiary company, related parties, affiliated parties and debtor.
(3)
The Bank and such parties as referred to in paragraph (2) shall provide to the examiner :
a.
the required information and data;
b.
an opportunity to examine the whole books, documents, and physical instruments related to
the Banks activities;
c.
other necessary things.

Article 30
(1)
Bank Indonesia may assign other parties, for and on behalf of Bank Indonesia, to exercise the
examination as referred to in Article 29 paragraph (1) and paragraph (2).
(2)
Other parties who exercise the examination as referred to in paragraph (1), shall keep confidential
the information and data obtained in such examination.
(3)
Requirements which should be fulfilled by other parties assigned by Bank Indonesia as referred to
in paragraph (1) shall be prescribed by Bank Indonesia Regulation.
Article 31
(1)
Bank Indonesia may instruct a Bank to temporarily terminate a part or the whole of a certain
transaction if, according to Bank Indonesias evaluation on such transaction, it is presumed that
such transaction is a banking crime.
(2)
Bank Indonesia shall, based on the evaluation as referred to in paragraph (1), send an investigation
team to examine the truth of the presumption.
(3)
In the event that the result of such investigation as referred to in paragraph (2) does not provide
sufficient evidence, Bank Indonesia shall, at the same day, revoke the instruction of termination of
such transaction as referred to in paragraph (1).
Article 32
(1)
Bank Indonesia shall regulate and develop interbank information system.
(2)
The information system as referred to in paragraph (1) may be extended by adding other entities in
the financial sector.
(3)
The arrangement of such information system as referred to in paragraph (1) and paragraph (2) may
be conducted by Bank Indonesia and or other parties upon the approval of Bank Indonesia.
Article 33
In the event that, according to Bank Indonesias evaluation, a condition of a Bank endangers the survival of
its business and or endangers the banking system or there occurs a banking problem which is detrimental to
national economy, Bank Indonesia may take any measures as stipulated in the prevailing banking act.
Article 34
(1)
The banking supervision tasks will be conducted by an independent supervisory board of financial
services sector which shall be established by an Act.
(2)
The establishment of such supervisory entity as referred to in paragraph (1) will be taken place not
later than December 31, 2002.
Article 35
As long as the supervisory entity as referred to in Article 34 has not been established, the banking
regulation and supervision task shall be conducted by Bank Indonesia.
CHAPTER VII
THE BOARD OF GOVERNORS
Article 36
Bank Indonesia shall, in implementing its tasks, be presided by the Board of Governors.
Article 37
(1)
The Board of Governors shall consist of a Governor, a Senior Deputy Governor, and at least 4
(four) or at the maximum of 7 (seven) Deputy Governors.
(2)
The Board of Governors shall be presided by the Governor, with the Senior Deputy Governor as
Vice Governor.
(3)
In the absence of the Governor and the Senior Deputy Governor, the Governor or the Senior
Deputy Governor shall appoint a Deputy Governor to preside the Board of Governors.
(4)
In the event that such appointment as referred to in paragraph (3) failed to take place for any
reason, a Deputy Governor who has held the longest term of office shall accordingly act as the
chairman of the Board of Governors.
Article 38
(1)
The Board of Governors shall implement the tasks and authority of Bank Indonesia as prescribed
in this act.
(2)
The discipline and the procedure for implementation of the works of the Board of Governors shall
be prescribed by the Board of Governors Regulation.
Article 39
(1)
The Board of Governors shall represent Bank Indonesia before and outside the court.
(2)
The authority to represent as referred to in paragraph (1) shall be conducted by the Governor.
(3)
The Governor may delegate the authority to represent as referred to in paragraph (2) to the Senior
Deputy Governor and or to one or more of Deputy Governors or one or more of Bank Indonesias
employees, and or other parties especially appointed for that purpose.
(4)
The delegation of such authority as referred to in paragraph (2) may be provided with a
substitution right.
Article 40
To enable for a nominee to be appointed as a member of the Board of Governors, such nominee shall meet
the requirements which, among other things, are :
a.
an Indonesian national;
b.
having an excellent personal quality and morality;
c.
having skill and experience in the field of economic, financial, banking, or law.
Article 41
(1)
The Governor and the Senior Deputy Governor shall be nominated and appointed by the President
upon the approval of the House of Representatives.
(2)
The Deputy Governor shall be nominated by the Governor and appointed by the President upon
the approval of the House of Representatives.
(3)
In the event that the the House of Representatives does not approve the nominees for Governor or
for Senior Deputy Governor as referred to in paragraph (1) or the nominees for Deputy Governor
as referred to in paragraph (2) the President or the Governor shall propose a new nominees.
(4)
In the event that the House of Representatives does not approve the nominees as referred to in
paragraph (3) for the second time, the President shall reappoint the Governor or the Senior Deputy
Governor or the Deputy Governor for the same office, or, upon the approval of the House of
Representatives, appoint the Senior Deputy Governor or the Deputy Governor for a higher office
in the structure of the Board of Governors by taking into account the provision as referred to in
paragraph (5) and paragraph (6).
(5)
The member of the Board of Governors shall be appointed for 5 (five) year term of office and may
be reappointed for the same office at the maximum of one subsequent term of office.
(6)
The replacement of member of the Board of Governors whose term of office has been terminated
shall be conducted periodically every year and at a maximum of 2 (two) persons.
Article 42
(1)
The Governor, Senior Deputy Governor, and Deputy Governors shall, prior to his/her
appointment, take an oath or vow in accordance with his/her religion before the Chief Justice of
the Supreme Court.
(2)
The oath or vow as referred to in paragraph (1) shall be read as follows.

I swear/promise that I, to become a Governor/a Senior Deputy Governor/a Deputy Governor of
Bank Indonesia shall, directly or indirectly under any name and for any reason, not give or
promise to give anything to anybody. I swear/promise that I shall, in conducting or refraining from
conducting something during this term of office, not receive, directly or indirectly from anybody,
any promise or gift in any form. I swear/promise that I will implement the tasks and obligation of
a Governor/a Senior Deputy Governor/a Deputy Governor of Bank Indonesia with my best effort
and with full responsibility. I swear/promise that I shall be loyal to the state, constitution, and the
state guideline.
Article 43
(1)
The meeting of the Board of Governors shall be held :

a.
at least once in a month in order to prescribe the general monetary policy which may be
attended by one minister or more representing the Government with a right to speak without
any voting right;
b.
at least once in a week in order to evaluate the implementation of the monetary policy as
referred to in letter a or to prescribe other principle and strategic policies.
(2)
The meeting of the Board of Governors shall be lawful if attended by at least more than half of the
member of the Board of Governors.
(3)
The decision making of the meeting of the Board of Governors as referred to in paragraph (1) shall
be taken through a deliberation to reach an agreement. If such agreement cannot be reached, the
Governor shall determine the final decision.
(4)
In a state of emergency and the meeting of the Board of Governors cannot be held since the
number of the member of the Board of Governors attended in the meeting does not fulfil the
provision as referred to in paragraph (2), the Governor or at least 2 (two) member of the Board of
Governors may prescribe a policy and or take a decision.
(5)
The policy and or the decision of the Governor or a Deputy Governor as referred to in paragraph
(4), shall be reported at the latest at the following meeting of the Board of Governors.
(6)
The discipline and procedure of the meeting of the Board of Governors shall be prescribed by the
Board of Governors Regulation.
Article 44
(1)
The Board of Governors shall appoint and discharge the employees of Bank Indonesia.
(2)
The Board of Governors shall prescribe regulations concerning employment, wages system,
reward, retirement and elderly allowance, as well as other income of the employees of Bank
Indonesia.
(3)
The implementation of such provision as referred to in paragraph (1) and paragraph (2) shall be
prescribed by the Board of Governors Regulation.
Article 45
The Governor, Senior Deputy Governor, Deputy Governors, and or an official of Bank Indonesia shall not
be punished for any decisions or policies taken in accordance with the tasks and authority as prescribed in
this Act, as long as it has been conducted with good faith.
Article 46
(1)
A consanguinity relationship up to the third degree and a relationship between parents-in-law

among the members of the Board of Governors shall be prohibited.
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(2)
In the event that after the appointment, it is proved that the relationship as referred to in paragraph
(1) exists or occurs between the members of the Board of Governors, one of those members shall,
within 7 (seven) working days after such relationship is proved to be existed or occurred, resign
from his/her office.
(3)
In the event that one of the members of the Board of Governors as referred to in paragraph (2) is
not willing to resign, the President shall decide that both members resign from their office.
Article 47
(1)
(2)
The member of the Board of Governors shall, individually or collectively, be prohibited from :
a.
having any direct or indirect interests on any enterprises;
b.
holding any other position concurrently in other entities, except his/her tasks require him/her
to hold such position;
c.
holding a position in the management of and or being a member of a political party.
A member of the Board of Governors shall, in the event that he/she violates one of the prohibition
as referred to in paragraph (1) letter a, letter b, and letter c, resign from his/her office.
Article 48
Any member of the Board of Governors shall not be discharged during his/her term of office, unless it is
conducted upon a resignation of such member, or upon any evidence which proves that such member have
committed a crime, or permanently prevented from serving his/her office.
Article 49
In the event that a member of the Board of Governors is presumed to commit a crime, a prior written
approval of the President shall be obtained in order to summon, to hold a hearing, and to conduct an
investigation.
Article 50
(1)
In the event of any vacancy of the office of the Governor, Senior Deputy Governor, and or Deputy
Governor caused by any reasons as referred to in Article 46 paragraph (2) and paragraph (3),
Article 47 paragraph (2), and Article 48, the President shall appoint a new Governor, Senior
Deputy Governor, and or Deputy Governor in accordance with Article 41 paragraph (1), paragraph
(2), paragraph (3), paragraph (4), for the rest of the term of office of such office.
(2)
In the event that vacancy of the office of the Governor as referred to in paragraph (1) has not been
occupied, the Senior Deputy Governor shall implement the tasks of the Governor as an acting
Governor.
(3)
In the event that the Senior Deputy Governor as referred to in paragraph (2) is also prevented from
occupying such office, a Deputy Governor who has held the longest term of office shall implement
the tasks of the Governor as an acting Governor.
Article 51
(1)
Salary, other income and facilities of the Governor, Senior Deputy Governor and Deputy
Governor shall be prescribed by the Board of Governors.
(2)
The amount of such salary and other income of the Governor as referred to in paragraph (1), shall
be determined at the maximum 2 (two) times the salary and other income of an employee of the
highest rank in Bank Indonesia.
(3)
prescribed by the Board of Governors Regulation.
CHAPTER VIII
RELATIONSHIP WITH THE GOVERNMENT
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Article 52
Bank Indonesia shall act as the account holder of the Government.
Article 53
Bank Indonesia may, for and on behalf of the Government, receive foreign borrowing, administer, as well
as settle the claim and financial liabilities of the Government toward foreign parties.
Article 54
(1)
The Government shall request Bank Indonesias opinion and or invite Bank Indonesia in a cabinet
meeting which discusses economic, banking and financial matters related to the tasks of Bank
Indonesia or other matters within the authority of Bank Indonesia.
(2)
Bank Indonesia shall provide an opinion and consideration to the Government concerning the
State Budget and other policies related to the tasks and authority of Bank Indonesia.
Article 55
(1)
The Government shall, in the event that the Government will issue the state debt securities, hold a
prior consultation with Bank Indonesia.
(2)
The Government shall, before issuing the state debt securities as referred to in paragraph (1),
consult with the House of Representatives.
(3)
Bank Indonesia may assist the issuance of the state debt securities issued by the Government as
referred to in paragraph (1).
(4)
Bank Indonesia shall not purchase for itself the state debt securities as referred to in paragraph (1),
except in a secondary market.
(5)
The legal act of Bank Indonesia of purchasing the state debt securities other than in a secondary
market as referred to in paragraph (4), shall be null and void.
Article 56
(1)
Bank Indonesia shall not provide any credit to the Government.
(2)
In the event that Bank Indonesia violate the provision as referred to in paragraph (1), the
agreement to extend credit to the Government shall be null and void.
CHAPTER IX
INTERNATIONAL RELATIONS
Article 57
(1)
Bank Indonesia may cooperate with other Central Banks and international organizations and
entities.
(2)
In the event that it is required that a member of an international entity and or multilateral entity as
referred to in paragraph (1) shall be a state, Bank Indonesia may act as a member for and on behalf
of the state of the Republic of Indonesia.
CHAPTER X
ACCOUNTABILITY AND BUDGET
Article 58
(1)
Bank Indonesia shall disclose information to the public through mass media at the beginning of
every fiscal year, which contains :
a.
an evaluation on the implementation of the monetary policies of the previous year;
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b.
a proposal of monetary policies and the prescription of the following year monetary targets by
taking into account the inflation rate targets as well as the development of the economic and
financial condition.
(2)
The information as referred to in paragraph (1), shall also be submitted in writing to the President
and the House of Representatives.
(3)
Bank Indonesia shall submit a report on the development of the implementation of its tasks and
authority to the House of Representatives every 3 (three) months.
(4)
Without prejudice to the obligation as referred to in paragraph (3), Bank Indonesia shall submit an
explanation on the implementation of its tasks and authority if requested by the House of
Representatives.
Article 59
The Supreme Audit Board may conduct special examination on Bank Indonesia at the request of the House
of Representatives if deemed necessary.
Article 60
(1)
The fiscal year of Bank Indonesia is a calendar year.
(2)
The Board of Governors shall, at the latest of 15 (fifteen) days prior to the beginning of a fiscal
year, prescribe the annual budget of Bank Indonesia which should be submitted to the House of
Representatives and the Government along with the evaluation of the budget implementation of
the current year.
(3)
Every increase of the amount of required expenditures in the current year shall have a prior
approval from the Board of Governors.
Article 61
(1)
Bank Indonesia shall, at the latest 30 (thirty) days after the expiration of a fiscal year, complete the
compiling of the annual financial report of Bank Indonesia.
(2)
Bank Indonesia shall, at the latest 7 (seven) days after the report as referred to in paragraph (1) has
been compiled, submit the report to the Supreme Audit Board which will examine the report.
(3)
The Supreme Audit Board shall, at the latest 90 (ninety) days since the examination as referred in
paragraph (2), submit the report to the House of Representatives.
(4)
Bank Indonesia shall publicize the annual financial report of Bank Indonesia to the public through
mass media.
Article 62
(1)
The surplus derived from the activities of Bank Indonesia shall be distributed as follows :
a.
30% (thirty percentage) for the Special Purpose Reserves;
b.
the rest of the surplus shall be accumulated as a General Reserves so that the total amount of
the capital and the General Reserves reaches 10% (ten percentage) of all monetary liabilities
as referred to in Article 6 paragraph (2).
(2)
The rest of the surplus shall, after the distribution referred to in paragraph (1), be submitted to the
Government.
(3)
The Government shall, in the event that the capital becomes less than Rp2.000.000.000.000,00
(two trillion rupiah) as referred to in Article 6 paragraph (1), cover the shortage upon the approval
of the House of Representatives.
(4)
The surplus of Bank Indonesia as referred to in paragraph (1) shall be exempted from any income
taxes.
Article 63
13
Bank Indonesia shall make a condensed weekly balance sheet which shall be publicized in the State
Bulletin of the Republic of Indonesia.
Article 64
(1)
Bank Indonesia may only conduct an equity participation in any legal entities or any other entities
deemed necessary in the implementation of the tasks of Bank Indonesia upon the approval of the
House of Representatives.
(2)
The funds required for such investment as referred to in paragraph (1) may only be obtained from
the Special Purpose Reserves.
CHAPTER XI
CRIMINAL PROVISIONS AND ADMINISTRATIVE SANCTIONS
Article 65
Whoever wilfully violates the provision as referred to in Article 2 paragraph (3), shall be subject to a
confinement for a minimum of 1 (one) month and a maximum of 3 (three) months and a fine for a
minimum of Rp2.000.000,00 (two million rupiah) and a maximum of Rp6.000.000,00 (six million rupiah).
Article 66
Whoever wilfully violates the provision as referred to in Article 2 paragraph (4), shall be subject to an
imprisonment for a minimum of 1 (one) year and a maximum of 3 (three) years, and a fine for a minimum
of Rp1.000.000.000,00 (one billion rupiah) and a maximum of Rp3.000.000.000,00 (three billion rupiah).
Article 67
Whoever interferes the implementation of the tasks of Bank Indonesia as referred to in Article 9 paragraph
(1), shall be subject to an imprisonment for a minimum of 2 (two) years and a maximum of 5 (five) years
and a fine for a minimum of Rp2.000.000.000,00 (two billion rupiah) and a maximum of
Rp5.000.000.000,00 (five billion rupiah).
Article 68
The member of the Board of Governors and/or an official of Bank Indonesia who violates the provision of
Article 9 paragraph (2), shall be subject to an imprisonment for a minimum of 2 (two) years and a
maximum of 5 (five) years and a fine for a minimum of Rp2.000.000.000,00 (two billion rupiah) and a
maximum of Rp5.000.000.000,00 (five billion rupiah).
Article 69
Any entity which does not comply with the obligation as referred to in Article 14 paragraph (3) shall be
subject to a fine of a maximum of Rp50.000.000,00 (fifty million rupiah).
Article 70
(1)
Any violation to the provision as referred to in Article 55 paragraph (4) shall be subject to an
imprisonment for a minimum of 1 (one) year and a maximum of 3 (three) years, and a fine for a
minimum of Rp6.0000.000.000,00 (six billion rupiah) and a maximum of Rp15.000.000.000,00
(fifteen billion rupiah).
(2)
A prosecution for the violation as referred to in paragraph (1), shall be conducted against those
who give the instruction, commit the action, or act as the leader in such action, or, against all of
those who conduct the abovementioned actions.
Article 71
(1)
The Governor, Senior Deputy Governor, Deputy Governor, employees of Bank Indonesia, or other
parties assigned or approved by Bank Indonesia to perform a certain task who illegally disclose
any confidential information and other data which is obtained due to his/her position, shall be
subject to an imprisonment of a minimum of 1 (one) year and to a maximum of 3 (three) years and
14
a fine for a minimum of Rp1.000.000.000,00 (one billion rupiah) and a maximum of

Rp3.000.000.000,00 (three billion rupiah).
(2)
In the event that such violation as referred to in paragraph (1) is conducted by an entity, such
entity shall be subject to a fine of a minimum of Rp3.000.000.000,00 (three billion rupiah) and a
maximum of Rp6.000.000.000,00 (six billion rupiah).
(3)
The confidential information and other data as referred to in paragraph (1) shall be prescribed by
the Board of Governor Regulation.
Article 72
(1)
Without prejudice to the criminal provision as referred to in Article 65, Article 66, Article 67,
Article 68, Article 69, Article 70, and Article 71, the Board of Governors may impose an
administrative sanction on Bank Indonesias employees and other parties who do not perform
his/her obligation in accordance with this Act.
(2)
The administrative sanction as referred to in paragraph (1) may be in the form of :
(3)
a.
a fine; or
b.
a warning; or
c.
a revocation or an annulment of a business license by a competent institution if the violation

is conducted by an entity; or
d.
an imposition of a disciplinary sanction if such violation is conducted by a business entity.
Further provision on the administrative sanction shall be prescribed by Bank Indonesia Regulation
or the Board of Governors Regulation.
CHAPTER XII
TRANSITIONAL PROVISIONS
Article 73
All assets and liabilities of Bank Indonesia under Act Number 13 of 1968 concerning Central Bank shall,
based on this act, become assets and liabilities of Bank Indonesia under this Act.
Article 74
(1)
The Liquidity Credit of Bank Indonesia extended as program credit which is still outstanding and
has not reached the maturity period, which has been approved but has not been disbursed, shall be
transferred based on an agreement to a State Owned Enterprise designated by the Government
within 6 (six) months since the effective date of this act.
(2)
The State Owned Enterprise as referred to in paragraph (1) may manage the funds obtained from
the installment payment and or the pay off of the principal debt and the interest of the credit
liquidity up to the expiration of such credit liquidity term.
(3)
Interest subsidy of such credit liquidity within the management of the State Owned Enterprise as
referred to in paragraph (2) shall remain in the account of the Government.
Article 75
(1)
With the coming into force of this Act, the Managing Directors who have been appointed based on
Act Number 13 of 1968 concerning Central Bank shall be discharged and reappointed as members
of the Board of Governors under the following arrangement :
a.
The Governor and a Deputy Governor shall be reappointed for 4 (four) years of the first term
of office;
b.
2 (two) Deputy Governors shall be reappointed for 1 (one) year of the first term of office;
c.
2 (two) Deputy Governors shall be reappointed for 2 (two) years of the first term of office;
15
d.
2 (two) Deputy Governors shall be reappointed for 3 (three) years of the first term of office.
(2)
At the latest 3 (three) weeks since the effectiveness of this Act, the President shall propose a
candidate of Senior Deputy Governor in accordance with Article 40 and Article 41 for the first
term of office for 5 (five) years.
(3)
The member of the Board of Governors as referred to in paragraph (1) letter b, letter c, and letter d
shall be approved by the House of Representatives upon the nomination of the Governor.
Article 76
(1)
The provision which prohibits Bank Indonesia to purchase for itself the state debt securities as
referred to in Article 55 paragraph (4) shall be effective at latest January 1, 2000, except for the
financing of banking restructuring.
(2)
Bank Indonesia may, for any claims on the state debt securities which have been directly
purchased by Bank Indonesia and still have not reached the maturity period, extend the term of the
claims at a maximum of 10 (ten) years since the maturity date if it is deemed necessary by the
Government upon the approval of the House of Representatives.
(3)
The Government shall, in the event that the term of the claims has to be extended, propose the
application of the term extention of such claims at the latest 30 (thirty) days prior to the due date
of such claims.
Article 77
Bank Indonesia shall, within a maximum of 2 (two) years term after the effective date of this Act, divest all
of its investment in legal or other entities which is not in accordance with the provision as referred to in
Article 64 paragraph (1).
Article 78
(1)
With the coming into force of this Act, Act Number 13 of 1968 concerning Central Bank and
other implementing regulations which are in contrary with this act shall be no longer valid.
(2)
The implementation regulation of Act Number 13 of 1968 concerning Central Bank and other
implementation regulations shall, as long as they have not been renewed and are not in contrary
with this Act, remain in force.
CHAPTER XIII
FINAL PROVISIONS
Article 79
This Act shall come into force on the date of its enactment.
For the public to be informed, it is instructed to promulgate this Act in the State Gazette of the Republic of
Indonesia.
Executed in Jakarta
On 17 May, 1999
PRESIDENT OF THE REPUBLIC OF INDONESIA
signed
BACHARUDDIN JUSUF HABIBIE
Enacted in Jakarta
16
On 17 May, 1999
MINISTER OF STATE OF STATE SECRETARY OF THE REPUBLIC OF INDONESIA
PROF. DR. H. MULADI, SH
STATE GAZETTE OF THE REPUBLIC OF INDONESIA OF 1999 NUMBER 6
17
ELUCIDATION
OF
ACT OF THE REPUBLIC OF INDONESIA
NUMBER 23 OF 1999
CONCERNING
BANK INDONESIA
GENERAL
The Indonesian national development in order to realize a just and prosperous society based on Pancasila
and the Constitution of 1945 has reached various progress including those in the economic and monetary
field, which is reflected in a relatively high economic growth and managable inflation rate. Meanwhile,
there are weaknesses existing in the Indonesian economic structure and system in such development which
cause deviations in the form of, among other things, imprudence and deceitful banking practices in
managing funds, which is worsened by the insuficient of legal instruments, weaknesses of legal
enforcement along with undemocratic political system which, among other things, cause a distortion in the
practice of market economy which in turn weaken the national economy.
On the other hand, the development of the international economy has undergone fast and fundamental
changes, which is headed toward a global economic system characterized by a more integrated world
financial markets which facilitates the movement of capital flow coupled with stringent competition in the
international sphere. Free flow of capital provides an advantage for national economic growth, but at the
same time increases the volatility of the national economy. Accordingly, a solution should be sought which,
all at once, can place a solid foundation of the economy through a proper development strategy in realizing
a national economy which is characterized by equitable people economy, independent, reliable, just and
open economy in order to enable the domestic economy to compete in the international economic arena.
In order to establish a solid economy, it is necessary to make an adjustment on various economic and
monetary policies which have been adopted by Indonesia. Monetary policy, which is one of important
policies of the national economic development policy, should be more directed toward an effort to create
and maintain the monetary stability. The proposal and the formulation of the monetary policy has so far
been conducted by the Monetary Board. Meanwhile Bank Indonesias status and role is to assist the
Government in the implementation of the monetary policy which has been formulated and determined by
the Monetary Board based on Act Number 13 of 1968.
The status and the role of Bank Indonesia based on the abovementioned Act is deemed no longer
appropriate to face the recent and the future development challenges and the dinamics of the national and
international development. The said Act should therefore be replaced with a new Act which provides a
more appropriate status, objective and tasks for Bank Indonesia as a monetary authority.
It is stipulated in this Act, that Bank Indonesia has one single objective, namely to reach and to maintain
the stability of the value of rupiah. A reasonable stable value of rupiah and exchange rate constitutes part of
the requirements for the accomplishment of a continuous economic growth, which will in turn increase the
peoples welfare. The reorientation of Bank Indonesias objective constitutes part of the policy to restore
and reform the national economy in order to overcome the economic crisis now experienced by Indonesia.
This all at once shall place a solid foundation for the implementation and the development of Indonesian
economy in the midst of the world economy which becomes more competitive and integrated. On the
contrary, the failure to maintain the stability of the value of rupiah as reflected in the increased price may
cause a damage since it will reduce the real income of the people and weaken the competitiveness of the
national economy in the world economy sphere.
The objective of Bank Indonesia to reach and maintain the stability of rupiah value should be supported by
three main pillars, namely a monetary policy equiped with prudential regulations, an expeditious and
appropriate payment system, as well as a sound banking and financial system.
18
In formulating and implementing the monetary policy, Bank Indonesia is authorized to stipulate the
monetary targets and conduct a monetary control in a manner prescribed in this Act. In this regard, Bank
Indonesia implements the exchange rate policy in accordance with the prescribed exchange rate system,
manages the foreign exchange in order to meet its foreign liabilities, maintains the stability of the balance
of payment and may also receive foreign loan. The Governments foreign borrowings is used in order to
strengthen the national economy, should be exercised upon the approval of the House of
Representatives. On the other hand, foreign loan of the private sector shall be its own responsibility and
monitored by Bank Indonesia functionally and transparent. In order to achieve the monetary targets, Bank
Indonesia also has the function of a lender of the last resort and implement the program credit which has
been approved but still has not been disbursed. In implementing its function as a lender of the last resort,
Bank Indonesia merely assists the Bank to cope with a mismatch caused by a credit risk or a financing risk
which is based on Syariah Principles, management risk, and market risk. In line with Bank Indonesias
status as an independent monetary authority, the extension of program credit shall no longer be the task of
Bank Indonesia. To anticipate the development of banking which is based on Syariah Principle, the task
and function of Bank Indonesia needs to accommodate the Syariah Principles.
According to the Constitution of 1945, Bank Indonesia has been assigned as an institution authorized to
issue and regulate the circulation of rupiah currency as a legal tender. Since the smoothness of the payment
system is very important for the implementation of the monetary policy, Bank Indonesia has been given an
authority to regulate and safeguard of the smoothness of the payment system. In order that the task may be
carried out effectively, it is necessary that Bank Indonesia is given a broad authority and responsibility to
regulate and to implement the clearing activity and fund transfer services, as well as the final settlement of
the interbank payment transactions. In addition, Bank Indonesia has also been given an authority and
responsibility related to the supervision on the payment system services to enable the society to obtain an
efficient, expeditious, appropriate and safe payment system services.
In the implementation of the task of banking supervision, Bank Indonesia is authorized to prescribe a
regulation and license for banking entities and activities as well as to impose sanction on Bank in
accordance with the prevailing regulations. The regulation task of Bank Indonesia is also intended to cover
among other things, the priority of funds extension to the economically weak entrepreneurs and
cooperatives.
The authority vested to Bank Indonesia is also intended to immediately overcome the economic crisis
aimed at controlling rupiah exchange rate at a reasonable rate. This is in line with what has been stated in
Chapter IV letter A item 1a of the Decree of the Peoples Consultative Assembly of the Republic of
Indonesia Number X/MPR/1998. As stipulated in the Decree of the Peoples Consultative Assembly of the
Republic of Indonesia, Bank Indonesia as a monetary authority is required to build a strong and
independent institutional system in managing and utilizing efficiently the foreign exchange. In order to
manage a sound national finance, Bank Indonesia as a central bank should be independent, free from the
interferences of the Government and other parties, while its performance can be supervised and is
accountable.
The position of Bank Indonesia as an independent state institution is outside the Government
administration as prescribed by this act. This independence brings about a logical legal consequences that
Bank Indonesia also has the authority to regulate or make/issue a regulation which constitutes an
implementation of an Act which extends the entire society and the state territory of Indonesia. In this
regard, Bank Indonesia as an independent state institution may issue a regulation with an administration
sanction.
The Board of Governors shall, in exercising its tasks and function, avoid corruption, collusion and
nepotism practices as mandated in Article 3 of the Decree of the Peoples Consultative Assembly Number
XI/MPR/1998.
For the purpose of policies coordination between the monetary authority and fiscal authority as well as with
the real sector, the Board of Governors meeting may be attended by a minister or a Government official.
The Governor, on the other hand, may also attend a cabinet meeting. The aforementioned coordination, has
shown that the existence of the Monetary Board is no longer necessary.
19
To assure that the independence given to Bank Indonesia is implemented with full responsibility, Bank
Indonesia is required to be transparent and accountable in prescribing its policy and open for any
supervision by the public. Such transparency and public accountability principle is implemented by
submitting a policy proposal of the following years and an evaluation on the implementation of the
monetary policy of the previous year as well as the development of the economic, financial and banking
conditions to the President and the House of Representatives. Information related to the economic,
monetary and banking development shall be issued periodically and openly.
ARTICLE BY ARTICLE
Article 1
Self explanatory
Article 2
Paragraph (1)
One rupiah consists of 100 (one hundred) cent.
Paragraph (2)
The meaning of the territory of the Republic of Indonesia is the entire territory of the
Republic of Indonesia including any ship with an Indonesian flag.
Paragraph (3)
The main substances of the provisions on the exemption as referred to in this paragraph
will be prescribed by Bank Indonesia which comprises among other things :
a.
a quotation of prices of goods and services in foreign currencies in a certain

place and for a certain business activity;
b.
a utilization of ASEAN currencies for export and or import conducted in the

ASEAN region;
c.
an anticipation of the possibility of economic integration.
Paragraph (4)
If there is any suspicion about the genuineness of rupiah money, the party who suspects
may request a clarification from Bank Indonesia. The disagreement between parties
conducting any transaction shall not be deemed as a refusal to accept rupiah.
Paragraph (5)
The main substance of the provision which will be prescribed by Bank Indonesia
Regulation comprises among other things :
a.
a determination of a certain territory and or region;
b.
a certain business place or business activity;
c.
an agreement on trade of goods and services.
Article 3
Paragraph (1)
Self explanatory
Paragraph (2)
The main substances of the provision which will be prescribed by Bank Indonesia
20
a.
a prescription of the amount of rupiah currency which may be brought outside

and inside the territory of Indonesia;
b.
a procedure of obtaining an approval to bring rupiah currency outside and inside

the territory of Indonesia;
c.
administrative sanctions on any violation of the provision concerning a transfer

of rupiah currency from or to other countries.
Article 4
Paragraph (1)
The meaning of a Central Bank is a state institution which is authorized to issue a legal
tender of a state, formulate and implement the monetary policy, regulate and safeguard
the smoothness of the payment system, regulate and supervise banks, and implement the
function as a lender of last the resort.
A Central Bank has the objective to achieve and maintain the stability of the value of
rupiah and does not conduct activities of intermediacy such as those generally conducted
by banks. However, in supporting the central banks tasks, a Central Bank may conduct
banking activities if it is deemed necessary. In accordance with the elucidation of Article
23 paragraph (3) of the Constitution of 1945 there is only one Central Bank in Indonesia
which is Bank Indonesia.
Paragraph (2)
Bank Indonesia is a state institution which is independent in implementing its tasks, and
is outside the Government administration and other institutions as prescribed in this Act.
In implementing its tasks, Bank Indonesia provide the House of Representatives with
reports. Additionally, the financial report of Bank Indonesia shall be audited by the
Supreme Audit Board. The result of the auditing conducted by the Supreme Audit Board
shall be submitted to the House of Representatives.
Paragraph (3)
Bank Indonesia is declared as a legal entity by this Act, so that there will be a clarity
about the authority of Bank Indonesia in managing its own assets separated from the
State Budget. In addition, Bank Indonesia shall, as a public legal entity, be authorized to
issue regulations and impose sanctions within its authority.
Article 5
Paragraph (1)
Self explanatory
Paragraph (2)
The meaning of offices inside and outside the territory of the Republic of Indonesia are
branch offices of Bank Indonesia in the regions, and representative offices of Bank
Indonesia overseas. Bank Indonesia conduct its activities in such offices in accordances
with its tasks and authority.
Article 6
Paragraph (1)
The capital of Bank Indonesia as referred to in this paragraph taken from asset separated
from the state asset, which constitutes the totalling of capital, General Reserves, Special
Purposed Reserves and part of the profit that has not been distributed in accordance with
Act Number 13 of 1968 concerning Central Bank before this Act comes into force.
Paragraph (2)
21
The meaning of other sources to increase of the capital are any sources which may come
from asset revaluation and or capital derived from asset separated from the state asset.
In addition, other sources are also intended to accommodate the possibility of any
changes of the financial accounting standard on capital.
The meaning of monetary liability is a liability of Bank Indonesia to the public, Banks,
and the Government which comprises the circulated currency, credit balance of an
account of a Bank, the Government, and other parties such as employees savings
recorded in Bank Indonesia as well as debt securities issued by Bank Indonesia.
Paragraph (3)
The main substances of the provision will be prescribed by the Board of Governors
Regulation which comprises among other things :
a.
accounting treatment of Bank Indonesias capital;
b.
requirement and procedure of asset revaluation;
c.
requirement to increase the capital which derives from other sources.
Article 7
The stability of the value of rupiah meant in this article is the stability of rupiah value against
goods and services, as well as against foreign currencies. The stability of rupiah value against
goods and services shall be measured with or reflected from the development of inflation rate. The
stability of the value or rupiah against foreign currencies shall be measured with or reflected from
the development of rupiah exchange rate against foreign currency.
The stability of the value of rupiah is very important to support the continuous economic
development and to enhance the peoples prosperity.
Article 8
The implementation of the tasks as referred to in this article has an interrelatedness with
achievement of the stability of the value of rupiah. The task of prescribing and implementing the
monetary policy shall be conducted by Bank Indonesia through, among other things, the
controlling of circulated money and interest rate. The effectivity of the task implementation needs
a support of an efficient, expeditious, safe, and reliable payment system, which is the target of the
implementation of the task of regulating and supervising of the smoothness of the payment
system. The efficient, expeditious, safe, and reliable payment system needs a sound banking
system, as a target of the task of banking regulation and supervision. Furthermore, a sound
banking system will support the monetary control since the implementation of the monetary policy
is conducted primarily through the banking system.
Article 9
Paragraph (1)
The meaning of other parties is all parties outside Bank Indonesia, including the
Government and or other institutions.
The meaning of any form of interferences is any conduct of other parties which, directly
or indirectly, may influence the policy and task implementation of Bank Indonesia.
This provision is intended to enable Bank Indonesia to implement its tasks and authority
in accordance with this Act effectively.
Not considered as interference is a cooperation with other parties or technical assistance
provided by other parties based on an assignment of Bank Indonesia in supporting the
implementation of Bank Indonesias tasks as instructed in this Act.
Paragraph (2)
22
Self explanatory
Article 10
Paragraph (1)
Letter a
The target of inflation rate shall be prescribed by Bank Indonesia based on
calendar year by taking into account the development and prospect of macro
economy. The inflation rate target is prescribed primarily by taking into account
the price development which is affected directly by the monetary policy.
The inflation rate target which is prescribed by Bank Indonesia may differ with
the inflation rate assumption made by the Government when formulating the
State Budget based on the fiscal year.
If there is a difference between the inflation rate target and the inflation rate
assumption, Bank Indonesia may provide an explanation openly if requested by
the House of Representatives.
Letter b
Number 1
The definition of open market operation stipulated in this paragraph
includes an intervention in the foreign exchange market conducted by
Bank Indonesia in maintaining rupiah stability.
Number 2
The meaning of stipulation of discount rate is the prescription of a
certain interest rate adopted by Bank Indonesia among other things in
the open market operation in extending credit of Bank Indonesia and in
implementing Bank Indonesias function as lender of the last resort.
Number 3
Self explanatory
Number 4
The meaning of managing credit or financing is a prescription of the
growth of credit or financing by the whole banking entities in relation
to the monetary control.
Paragraph (2)
Open market operation in relation to the monetary control through a Bank based on
Syariah Principle is performed by stipulating the profit sharing ratio or fee in lieu of the
discount rate prevailed in a conventional Bank.
Paragraph (3)
The main substances of the provision which shall be prescribed by Bank Indonesia
Regulation covers among other things :
a.
the procedure of open market operation in rupiah money market;
b.
the procedure of foreign exchange intervention in stabilizing rupiah;
c.
instruments used in the open market operation;
d.
the procedure of the stipulation of discount rate;
e.
the stipulation of the type and the aggregate of minimum reserve requirement which
should be adopted by a Bank, both in rupiah currency and in foreign currency;
23
f.
the stipulation of administrative sanction against the violation of the minimum

reserve requirement;
g.
the restriction of credit and financing including any form of loan facility extended
through rupiah market and foreign exchange market;
h.
the regulation related to matters in letter c, letter d, and letter g based on Syariah
Principle, concerning primarily the stipulation of profit sharing ratio or fee.
Article 11
Paragraph (1)
The extension of credit and financing based on Syariah Principle to a Bank in this article
is conducted only in order to overcome a Banks mismatch. The meaning of day in this
paragraph is a calendar day.
The maximum period of 90 (ninety) days as referred to in this paragraph is a possible
maximum period including its extension.
If a Bank fails to repay a credit or financing based on Syariah Principle at the maturity
date, Bank Indonesia shall have the right to sell the collateral which is in its possession in
accordance with the prevailing regulations.
A Bank which is able to obtain a liquidity assistance is a Bank which meets the
requirement prescribed by Bank Indonesia, for example, based on information obtained
by Bank Indonesia, a Bank is in fact experiencing a short term liquidity problem, and has
sufficient collateral, and if necessary, a further examination will be conducted against the
Banks condition.
Paragraph (2)
The meaning of collateral of high quality and liquid collateral includes securities and or
claim issued by the Government or other high rated legal entities based on the evaluation
of a competent rating institution, which can be sold at any time to the market to get a cash
payment.
The meaning of financing based on Syariah Principle is for example a profit sharing or a
risk sharing, borne collectively and proportionally.
Paragraph (3)
a.
the requirement and procedure of extending credit or financing based on Syariah

Principle, including a soundness requirement of a receiver Bank.
b.
the period, interest rate or profit sharing ratio and other costs;
c.
the type of collateral in the form of securities and or a high rated claim;
d.
the procedure to secure the collateral.
Article 12
Bank Indonesia implements the exchange rate policy based on the exchange rate policy prescribed
in accordance with the adopted exchange rate system which, among other things, are:
a.
in a fixed exchange rate system, in the form of devaluation or revaluation against oreign
currencies;
b.
in a floating exchange rate system, in the form of market intervention;
c.
in a managed floating rate system, in the form of stipulation of daily exchange rate and a
width of intervention band.
24
The prescription of such policies is intended to achieve Bank Indonesias tasks as referred to in
this Act.
Article 13
Paragraph (1)
The meaning of foreign exchange reserves is a state foreign exchange reserves under
Bank Indonesias possession, which is recorded as assets in the balance sheet of Bank
Indonesia in the form of, among other things, gold, foreign banknotes and other claims in
foreign exchange against foreign parties which can be used as foreign payment
instrument.
Bank Indonesia shall take any measures which will enable the foreign exchange reserves
reach an amount which is deemed sufficient by Bank Indonesia for the implementation of
monetary policies.
Paragraph (2)
The management of foreign exchange reserves by Bank Indonesia conducted through
various types of foreign exchange transactions namely selling, purchasing, and or
investing foreign exchange, gold, and securities through a cash and forward payment,
including providing loan. The management and maintenance of foreign exchange
reserves is based on a security and awareness principle in performing current liability
without ignoring the principle of gaining an optimal income. The purpose of managing
and maintaining the foreign exchange reserves constitutes an integral part of any
measures of safeguarding the exchange rate system.
Paragraph (3)
Foreign borrowing received by Bank Indonesia in this paragraph is foreign borrowing
received on behalf of and under the responsibility of Bank Indonesia as a legal entity.
This loan shall merely be used in the management of foreign exchange in strengthening
the balance of payment position as part of the implementation of monetary policy. In this
regard, this loan shall not be part of the State Budget. The amount of such loan shall be
adjusted to the capacity of Bank Indonesia to repay its debt. The implementation of such
loan may be monitored by the House of Representatives through the audit result
conducted by the Supreme Audit Board of the Republic of Indonesia.
Article 14
Paragraph (1)
The survey stipulated in this article may be in the form of collecting an information in a
macro or micro nature such as survey on business activities, survey on consumer, survey
on asset price development and other surveys, needed in the implementation of Bank
Indonesias tasks and authority including survey conducted in making and completing the
statistic of the balance of payment.
Paragraph (2)
The meaning of other parties in this paragraph is an independent, competent and
professional survey institution.
Paragraph (3)
Information and data requested by Bank Indonesia is not for the purpose of an
examination, rather it is for the purpose of statistics.
Paragraph (4)
The meaning of an Act in this paragraph is an Act which requires a party to disclose
confidential information and data in accordance with the prevailing regulations.
25
Paragraph (5)
Regulation comprises among other things:
a.
the procedure of collecting and submitting of data;
b.
the coordination and cooperation in collecting data conducted with other parties
if necessary;
c.
the requirements for other parties who conduct a survey.
Article 15
Paragraph (1)
Letter a
Payment system services which may be implemented by Bank Indonesia among
other things is a fund transfer service in a large amount. The requirement of
obtaining a prior approval on the arrangement of payment system services is
granted in order that the arrangement of the payment system services by other
parties will meet the requirements, especially security and efficiency
requirement.
Letter b
The obligation to submit a report shall prevail on any provider of the payment
system services. This is meant that Bank Indonesia may monitor the provision of
the payment system. Information obtained in the provision of such payment
system is also needed in supporting the implementation of Bank Indonesias
tasks as referred to in Article 8.
Letter c
The determination of the use of the payment instrument is intended to insure that
the payment instrument meets the security requirement. This authority includes
to restrict the use of certain payment instruments within the framework of
prudential principle.
In implementing the authority as referred to in paragraph (1), Bank Indonesia
may conduct an examination against the payment system services provider.
Paragraph (2)
comprises:
a.
the type of the provision of the payment system services which needs Bank
Indonesias approval and the procedure of granting the approval by Bank Indonesia;
b.
coverage of the authority and responsibility of the payment system services provider
including any responsibility related to risk management;
c.
the security and efficiency requirement in the provision of payment system services;
d.
the payment system provider who is responsible for the submission of the report;
e.
the type of activity reports which have to be submitted to Bank Indonesia and the
report procedure;
f.
the type of payment instruments which may be used by the society including
electronic payment instrument such as ATM card, debit card, credit card,
prepayment card and electronic money;
g.
the security requirement of the payment instrument;
26
h.
the administrative sanction in the form of a fine for any violation of the provisions as
referred to in letter a, letter d and letter f.
Article 16
The meaning of interbank clearing is the interbank exchange of electronic financial papers or data
on behalf of a Bank and customers which will be settled within a certain period. The electronic
financial papers or data are non cash payment instruments stipulated by the prevailing regulations
or other provisions commonly used in a payment transaction.
An interbank clearing system covers domestic and cross border clearing system. The cross border
clearing system covers among other things :
a.
the prescription of requirements which have to be fulfilled by Bank Indonesia or a Bank

as a member of a regional or international clearing system;
b.
the regulation concerning the agreement between Bank Indonesia or other institutions as
the provider of payment system and Central Banks and or payment system provider of
other countries related to the clearing implementation and final settlement of interbank
payment transactions.
Article 17
Paragraph (1)
Self explanatory
Paragraph (2)
The main substances of the provisions which will be prescribed by Bank Indonesia
a. the type of clearing arrangement which may be conducted by other parties;
b. the requirements and legal form of other parties which may provide the clearing;
c. the procedure of granting the approval to other parties which may provide the clearing.
Article 18
Paragraph (1)
Self explanatory
Paragraph (2)
The approval of Bank Indonesia granted to other parties may be conducted based on a
request or an application of such parties or may take the form of an assignment given by
Bank Indonesia. Such approval is granted only in the event Bank Indonesia cannot
provide such activities in a certain region.
Paragraph (3)
a.
the requirement for other parties which may provide the final settlement of interbank
payment transactions;
b.
the procedure of granting an approval to other parties which will provide the final
settlement of interbank payment transactions;
c.
the mechanism to minimize the risk arising out of the failure of a Bank to meet its
liability in the final settlement of interbank payment transactions.
Article 19
27
The type of money is the kind of money issued by Bank Indonesia, namely paper money and coins. Paper
money is money in the form of sheets made of paper or other materials. Coin is money made of aluminium,
aluminum bronze, cupronickel, and other materials.
The price of money is a nominal value or a money fraction issued by Bank Indonesia. The characteristic of
money is a certain security features of money determined by Bank Indonesia, in order to secure the money
from any effort of counterfeiting. The security features may be in the form of colour, picture, size, weight
and other security features determined by Bank Indonesia.
Article 20
As the consequence of this article, Bank Indonesia provide an opportunity to the public to :
a.
exchange money of the same and different fraction;
b.
exchange deffective money or money which is deemed improper to be circulated;
c.
exchange money which is partly damaged because of fire or other causes with an amount
equal to or less than the nominal value depending on the degree of the damage.
Bank Indonesia also destroys money which is deemed no longer appropriate to be circulated.
Article 21
Self explanatory
Article 22
Lost or damaged money is money which is physically lost or damaged and or money which
genuineness feature is lost or damaged. Nevertheless, Bank Indonesia may provide a
compensation on money which, because of any reason, is partly damaged but the genuineness
feature of the money may still be known or recognized. The amount of the compensation on the
damaged money shall be determined by Bank Indonesia.
Article 23
Paragraph (1)
Self explanatory
Paragraph (2)
Self explanatory
Paragraph (3)
Self explanatory
Paragraph (4)
Self explanatory
Paragraph (5)
a. the publication of money which will be drawn from the circulation;
b. the procedure of the exchange of money;
c. the place and time of the exchange of money which is withdrawn from the circulation.
Article 24
The banking regulation and supervision shall refer to Act Number 7 of 1992 concerning Banking
as has been amended by Act Number 10 of 1998.
Article 25
28
Paragraph (1)
Banking regulations which stipulates prudential principle is intended to regulate banking
activities, in order to realize a sound banking system.
Considering the importance of a sound banking system, the banking regulation prescribed
by Bank Indonesia shall be supported by fair and just sanctions. The banking regulation
based on prudential principle shall be adjusted with an internationally prevailing
standard.
Paragraph (2)
The main substances of the provision which will be prescribed by Bank Indonesia covers
among other things :
a.
banking license;
b.
banking institution, including management and ownership;
c.
banking business activities in general;
d.
banking business activities based on Syariah Principle;
e.
merger, consolidation, and acquisition of a Bank;
f.
interbank information system;
g.
the procedure of banking supervision;
h.
the system of the submission of banking report to Bank Indonesia;
i.
banking restructuring;
j.
the revocation of a Banks business license, liquidation, and dissolution of the legal
form of a Bank;
k.
institutions which support the banking system.
Article 26
Letter a
The granting and revocation of a Banks business license shall be conducted based on the
Decree of the Governor of Bank Indonesia.
Letter b
The granting of license of the opening, closing and changing of address of a Banks
office shall be conducted based on a Decree of the Governor of Bank Indonesia.
The meaning of license to open a Banks office shall also include an approval on an
upgrading status of a Banks office.
Letter c
The granting of an approval of ownership and management of a Bank shall be conducted
based on a Decree of the Governor of Bank Indonesia.
Letter d
The meaning of license to conduct certain business activities shall include a license for
conducting business activities of a foreign exchange Bank, custody, conducting business
activities based on Syariah Principle, and other business activities in accordance with the
prevailing regulations.
Article 27
The meaning of direct supervision is a supervision conducted in the form of examination followed
by improvement measures.
29
The meaning of indirect supervision is a supervision conducted primarily in the form of off-sight
supervision through a thorough examination, analysis, and evaluation on Banks reports.
Article 28
Paragraph (1)
Self explanatory
Paragraph (2)
This provision is applied if a holding company, subsidiary company, related parties, and
affilliated parties obtain a certain facility from a Bank or, it may be presumed that those
parties have a role in the operational activities of such Bank.
Article 29
Paragraph (1)
The purpose of examination on a Bank is in order to obtain the correctness of an
information concerning the business activities of a Bank submitted to Bank Indonesia and
to insure the compliance of a Bank with the prevailing regulations.
The implementation of an examination on a Bank by Bank Indonesia covers among other
things books, bundles, papers, notes, documents and electronic data, including the copies.
Paragraph (2)
The examination on the holding company, subsidiary company, related parties, affiliated
parties, and debtor of a Bank shall be conducted selectively and is intended to enable
Bank Indonesia to conduct a comprehensive examination.
Paragraph (3)
Letter a
The term information and data covers electronic data and an explanation related to the
objective of the examination.
Letter b
Self explanatory
Letter c
Other things that shall be provided are, among others, an office space
and copies of documents needed in the examination.
Article 30
Paragraph (1)
The meaning of other parties in this paragraph are parties who, according to Bank
Indonesias evaluation, have the ability to implement the examination, for example a
Public Accountant. An examination by other parties may be conducted individually or
collectively with examiners of Bank Indonesia.
Paragraph (2)
Self explanatory
Paragraph (3)
a.
the criteria of the party assigned as an examiner;
b.
the code of ethics of a Banks examiner;
30
c.
the sanction to be imposed on the other parties who conduct a violation in

implementing the examination.
Article 31
Paragraph (1)
The meaning of a certain transaction is among other things a transaction in a large
amount which is presumed as a result of an illegal activities.
Paragraph (2)
Self explanatory
Paragraph (3)
Self explanatory
Article 32
Paragraph (1)
The interbank information system is intended to smoothen and secure business activities
of a Bank. The interbank information are, among other things, in the form of :
a.
a Bank information, in order to understand the condition and status of the Bank;
b.
a credit information, in order to understand the status and condition of the Banks
debtor;
c.
a money market information, in order to understand the interest rate and the
condition of the market liquidity.
Paragraph (2)
The extension of the information system to other institutions in the financial field is
necessary, since there is a correlation between business activities of a Bank and such
institutions.
Paragraph (3)
Self explanatory
Article 33
Self explanatory
Article 34
Paragraph (1)
The supervisory board of financial services which will be established shall conduct a
supervision on Banks and other financial services companies which cover companies
involved in insurance, pension fund, securities, venture capital business, and finance, as
well as other entities which carry out the management of the public funds.
This supervisory board is independent in implementing its tasks, and it is outside the
Government and shall submit a report to the Supreme Audit Board and the House of
Representatives. In implementing its tasks, this supervisory board conducts a
coordination and cooperation with Bank Indonesia as a Central Bank that will be
regulated by the act of the establishment of such supervisory board.
This supervisory board may issue a regulation related to the implementation of the task of
banking supervision in a coordination with Bank Indonesia, and request an information
from Bank Indonesia concerning an information and macro data deemed necessary. The
regulating task will still be conducted by Bank Indonesia.
Paragraph (2)
31
Self explanatory
Article 35
Self explanatory
Article 36
Self explanatory
Article 37
Paragraph (1)
Self explanatory
Paragraph (2)
In the absence of the Governor, the task of the Governor shall be delegated to the Senior
Deputy Governor through the signing of an official report of delegation of authority.
Paragraph (3)
The meaning of absence is if the Governor:
a.
is on leave;
b.
is ill and must take a rest for a minimum of 6 (six) working days in consecutively;
c.
is on tour of duty to within the country or overseas for a minimum of 6 (six) working
days;
d.
is temporarily discharged because he/she has to undergo an investigation in a

criminal case.
Paragraph (4)
The meaning of the Deputy Governor who has held the longest term of office is a Deputy
Governor who is at the first rank of all Deputy Governors of the Board of Governors
which rank is based on the letter of appointment of such Deputy Governor as a Deputy
Governor.
Article 38
Paragraph (1)
The Board of Governors may, in implementing its tasks, prescribe the organization of
Bank Indonesia along with its apparatus.
Paragraph (2)
The main substance of the provision which will be prescribed by the Board of Governors
a. the job description of the members of the Board of Governors;
b. the delegation of authority;
c. the code of ethics of the Board of Governors.
Article 39
Paragraph (1)
Self explanatory
Paragraph (2)
Self explanatory
Paragraph (3)
32
The meaning of other parties is an entity or a person outside Bank Indonesia which has a
certain capacity and provide its/his/her services to represent the Governor in, among
other things, a judicial proceeding before a court of justice.
Things that may be delegated are the tasks of Bank Indonesia which implementation is
the responsibility of the Board of Governors, but due to its nature such tasks may be
implemented by an official of Bank Indonesia or other bodies, for example, expert
witness, the provision or circulation of small denomination money in areas where an
office of Bank Indonesia does not exist.
A delegation of authority to a party who is competent to exercise the tasks that has been
authorized is generally done directly.
Paragraph (4)
The meaning of substitution right is a right of a person who receive an authority to
appoint a person or more to replace him/her in implementing the tasks of the person who
gives of such authority without losing his right as the receiver of such authority.
Article 40
Letter a
The meaning of Indonesian national is a person who, based on the prevailing regulation,
is declared as an Indonesian national.
Letter b
The meaning of having an excellent personal quality and moral is that a person should be
reliable on both his/her words and performances. Such person always obey the provision
of the prevailing laws and regulations in a just manner and does not conduct any
misbehaviour both in the implementation of his/her tasks and in his/her daily life.
Letter c
The meaning of having skill is that a person should master an expertise based on the
background of his/her education, knowledge, and experience necessary to support the
implementation of his/her tasks.
The meaning of having an experience is that a person should have a career background in
economic, financial, banking or legal field, especially which relates to Central Bank
tasks.
Article 41
Paragraph (1)
For every office of Governor and or of Senior Deputy Governor, the President shall
submit at a minimum 3 (three) or at a maximum 5 (five) nominees to the House of
Representatives at the latest 3 (three) months prior to the expiration of the office of
Governor and or of the Senior Deputy Governor. The proposal of the
President shall be made by taking into account the public aspiration. The House of
Representatives shall approve one of or refuse the whole nominees of Governor or of
Senior Deputy Governor at the latest 3 (three) weeks since such proposal has been
received.
In granting such approval, the House of Representatives may request the nominee of
Governor and of Senior Deputy Governor to make a presentation in a the session of the
House of Representatives concerning his/her vision, experience, expertise or ability, and
matters related to the moral and attitude of the nominee of Governor or of Senior Deputy
Governor.
33
The nominee who has obtained an approval of the House of Representatives shall be
prescribed and appointed as a Governor and/or Senior Deputy Governor by the President
as the head of state based on a Presidential decree.
Paragraph (2)
The Governor shall submit at a maximum 3 (three) nominees for every office of Deputy
Governors to the House of Representatives at the latest 3 (three) months prior to the
expiration of the office of Deputy Governors.
The nominee of the Deputy Governors proposed by the Governor are officials of Bank
Indonesia which meet the requirements stipulated by this Act.
The procedure of the granting of approval on and appointment of the candidate of
Governor and or of Senior Senior Deputy Governor as referred to in the elucidation of
paragraph (1) passage 2, passage 3, and passage 4 also prevails to the Deputy Governors.
Paragraph (3)
In the event that the House of Representatives refuses the proposed nominee of Governor
or of Senior Deputy Governor, the President shall propose at a minimum 3 (three) or at a
maximum 5 (five) new nominees of Governor or of Senior Deputy Governor at the lates
2 (two) weeks after the date of the receipt of the refusal letter of the House of
Representatives.
In the event that the House of Representatives refuses the proposed nominee of Deputy
Governors, the Governor shall propose at a maximum 3 (three) new nominee of Deputy
Governors at the lates 2 (two) weeks after the date of the receipt of the refusal letter of
the House of Representatives.
The House of Representatives shall prescribe one of such proposed nominees or refuse all
nominees at the latest 3 (three) weeks after the second proposal is received by the House
of Representatives.
Paragraph (4)
The meaning of to appoint to a higher office is that if the Senior Deputy Governor or a
Deputy Governor is appointed to be Governor, or the Deputy Governor is appointed to be
Senior Deputy Governor.
The terms of office of the Senior Deputy Governor or the Deputy Governor prior to the
appointment to a higher office shall not be considered in the period of the new term of
office.
The appointment of the nominee to be a member of the Board of Governor which has
been approved by the House of Representatives shall be conducted by the President at the
latest 2 (two) weeks prior to the expiration of the term of office of the would be replaced
member of the Board of Governors.
Paragraph (5)
Self explanatory
Paragraph (6)
The replacement of the member of the Board of Governors which shall be conducted
periodically is intended to secure the continuity of management and the implementation
of the management tasks of Bank Indonesia.
Article 42
Paragraph (1)
Self explanatory
34
Paragraph (2)
Self explanatory
Article 43
Paragraph (1) letter a and letter b
The meeting of the Board of Governors is the highest forum of the decision making in
prescribing Bank Indonesias principal and strategic policies, for example a general
monetary policy. The meaning of principal and strategic policies are Bank Indonesias
policies which bring a broad impact inside or outside Bank Indonesia. Another strategic
and principal policies are, among other things, policies on the regulation and maintenance
of the smoothness of the payment system, as well as on the regulation and supervision of
Banks. Other matters are not necessary to be discussed in the meeting of the Board of
Governors, rather they will be prescribed in a sectoral meeting presided by each Deputy
Governor in accordance with his/her authority, or in a limited intersectoral meeting
attended by the related member of the Board of Governors, with the requirement that the
decision made in such meeting will be reported at the weekly meeting of the Board of
Governors as an information.
Paragraph (2)
The meeting of the Board of Governors may be conducted by using the communication
technology, for example through a teleconference. This will enable the member of the
Board of Governors to attend the meeting of the Board of Governors without any
obligation of attending the meeting physically together at the same room.
Paragraph (3)
The meaning of Governor in this paragraph includes the Senior Deputy Governor or a
Deputy Governor who acts as a chairman of the meeting to replace the Governor who for
any reason is prevented from attending the meeting.
Paragraph (4)
The meaning of state of emergency is a critical situation and condition which has to be
overcome through certain measures or otherwise it will bring a negative impact on Bank
Indonesia or on the implementation of tasks assigned to Bank Indonesia by this Act.
Paragraph (5)
Self explanatory
Paragraph (6)
Self explanatory
Article 44
Paragraph (1)
The meaning of appointment includes any placement and mutation followed by or
without any promotion.
Paragraph (2)
In prescribing an employment regulation of Bank Indonesia, the Board of Governors
shall take into account any prevailing regulation related to such matter as long as it does
not reduce the independence of Bank Indonesia.
Paragraph (3)
The main substances of the provision which will be prescribed by the Board of Governors
35
a.
the appointment and the discharge of an employee;
b.
the employment regulation;
c.
the system of salary, reward, retirement and elderly allowance, as well as other
income.
Article 45
This provision is intended to provide a legal protection of personal responsibility of the member of
the Board of Governors and or of officials of Bank Indonesia who has, with good faith based on
his/her authority, made a decision which is difficult but has to be taken in the implementation of
his/her tasks and authority.
The decision making may be deemed as having been conducted based on good intention if it is:
a.
conducted without any intention of making any profit for himself/herself, his/her family,
group, and or conducted through any action which is not indicated as corruption, collusion
and nepotism;
b.
conducted based on a deep analysis and has a positive impact;
c.
conducted based on a preventive measures which will be taken should any decision made is
apparently inappropriate;
d.
completed by a monitoring system.
The meaning of an official of Bank Indonesia is an employee of Bank Indonesia who is, based on
a decree of the Board of Governors, appointed for a certain office and granted a right to make a
decision within the limit of his/her authority.
Article 46
Paragraph (1)
Self explanatory
Paragraph (2)
Self explanatory
Paragraph (3)
Self explanatory
Article 47
Paragraph (1)
Letter a
The meaning of having any direct interests on any companies is if such person is
a manager of a company or running a business on goods and services by
himself/herself. The meaning of having any indirect interests is if such person
has an interest in a company by possessing the shares of such company
amounting to more than 25% (twenty five percentage).
Letter b
Taking into account that the members of the Board of Governors have a very
strategic task in monetary, payment system, and banking regulation and
supervision, it is appropriate that the members of the Board of Governors should
be more professional and loyal to the implementation of their tasks.
However, based on their tasks and office, the members of the Board of
Governors are allowed to ex-officio hold any office concurrently at certain
36
institutions, among other things, at the International Monetary Fund (IMF),

World Bank, and the Indonesian Bankers Institute.
Letter c
The restriction prescribed in this provision is not intended to nullify any political
right of such person to elect or to be elected in the general election.
Paragraph (2)
In the event that the Senior Deputy Governor and or a Deputy Governor who has been
known to violate the provision of paragraph (1) will not resign, the Governor shall submit
a proposal to the President to request the said person to resign. If such person who
commits a violation is the Governor, the President shall request him/her to resign.
Article 48
The resignation as referred to in this article shall be conducted wilfully by the said person or based
on the provision as referred to in Article 46 paragraph (2) or Article 47 paragraph (2).
The discharge caused by any criminal act as referred to in this article should be proved by a final
and binding court decision.
The meaning of permanently prevented from serving his/her office is if such person dies,
experiencing a physical defect and or a mental defect which makes it possible for such person to
perform his/her tasks properly, or has lost his/her nationality.
Article 49
Self explanatory
Article 50
Paragraph (1)
The Governor, Senior Deputy Governor, and or Deputy Governor who has been
appointed in order to occupy the vacant office may be reappointed for one subsequent
term of office at the maximum.
Paragraph (2)
Self explanatory
Paragraph (3)
The meaning of prevented from occupying such office is if the Governor and/or the
Senior Deputy Governor:
a.
is on leave;
b.
is ill and must take a rest for a minimum of 6 (six) working days consecutively;
c.
is on tour of duty to within the country or overseas for a minimum of 6 (six) working
days;
d.
is temporarily discharged because he/she has to undergo an investigation in a

criminal case.
The meaning of the Deputy Governor who has held the longest term of office is a Deputy
Governor who is at the first rank of all Deputy Governors of the Board of Governors
which rank is based on the letter of appointment of such Deputy Governor as a Deputy
Governor.
Article 51
Paragraph (1)
Self explanatory
37
Paragraph (2)
Self explanatory
Paragraph (3)
Self explanatory
Article 52
As the holder of the Governments account, Bank Indonesia administers the Governments
account.
Article 53
The receiving of foreign borrowing for the interest of the Government shall be conducted by Bank
Indonesia only under the Governments request. Bank Indonesia may act for and on behalf of the
Government in accordance with this Act. The meaning of to settle the Governments liabilities
toward foreign parties is that Bank
Indonesia shall make a payment of the Governments liabilities which shall be burdened to the
Governments account with Bank Indonesia based on an agreement between the Government and
the lender.
Article 54
Paragraph (1)
Self explanatory
Paragraph (2)
Self explanatory
Article 55
Paragraph (1)
This consultation is needed in order that the state debt securities are issued in an
appropriate time and such issuance does not cause a negative impact on the monetary
policy, so that the debt securities may be sold with a requirement acceptable to the market
and profitable for the Government.
Paragraph (2)
The consultation with the House of Representatives will be held with a commission
which manages the State Budget.
Paragraph (3)
If the revenue of the state derived from tax, profit of state company, and other sources is
not sufficient to finance the whole state expenditure, the shortage will be covered by
funds derived from the public, either in the form of domestic loan or foreign borrowing
obtained through the issuance of state debt securities. Bank Indonesia may only purchase
the state debt securities indirectly or in the secondary market.
Paragraph (4)
The purchase of state debt securities in a secondary market by Bank Indonesia is merely
to achieve the purpose of the implementation of monetary policies.
Paragraph (5)
The nullification may be requested by the House of Representatives and or the public to
the Supreme Court.
Article 56
38
Paragraph (1)
Self explanatory
Paragraph (2)
The nulllification referred to in this paragraph may be requested by the House of
Representatives and or the public to the Supreme Court.
Article 57
Paragraph (1)
Cooperation between Bank Indonesia and international institutions including multilateral
institutions is conducted within the framework of the implementation of the tasks as
referred to in Article 8.
The cooperation is for example in the field of :
a.
collective intervention to stabilize the foreign exchange market;
b.
settlement of cross border transaction;
c.
correspondence;
d.
information exchange concerning matters related to Central Banks tasks, including

banking supervision;
e.
training/research on monetary and payment system matters.
Paragraph (2)
The membership of Bank Indonesia in a multilateral institution is based on the authority
granted by the President as the head of state.
Article 58
Paragraph (1)
The submission of information to the public is to enable the public to participate in
monitoring/overseeing Bank Indonesia in prescribing and implementing its policies, since
the public has the right to monitor Bank Indonesia, so that it will become a reliable and
authoritative institution.
Letter a
Self explanatory
Letter b
Self explanatory
Paragraph (2)
The submission of information to the President is conducted on informative purpose,
while submission of information to the House of Representatives is to enable the House
of Representatives to oversee Bank Indonesia in prescribing and implementing its tasks.
Paragraph (3)
In the implementation of the function of the House of Representatives to oversee Bank
Indonesia, Bank Indonesia shall submit a report of the development of the tasks and
authority implementation in writing.
Paragraph (4)
Self explanatory
Article 59
39
The special examination conducted upon the request of the House of Representatives on Bank
Indonesia is to enable the House of Representatives to further understand a certain matter or
activity related to a financial management and a budget implementation by Bank Indonesia.
Article 60
Paragraph (1)
Self explanatory
Paragraph (2)
The submission of annual budget of Bank Indonesia which has been prescribed by the
Board of Governors and the evaluation of the implementation of the previous years
budget to the House of Representatives is to enable the House of Representatives to
monitor the management authority of Bank Indonesia on its budget, while the submission
of such report to the Government is for information purpose related to any surplus or
deficit experienced by Bank Indonesia.
Paragraph (3)
Self explanatory
Article 61
Paragraph (1)
The meaning of the annual financial report of Bank Indonesia is the balance sheet and
report of Bank Indonesias revenues and expenditures along with its attachments.
Excess of revenue over expenditure during one budget year is a surplus which may be
allocated to the General Reserves and Special Purposed Reserves. In the event the
revenue is less than the expenditure Bank Indonesia experiences a deficit which may be
covered by funds from the General Reserves and the capital.
Paragraph (2)
The Supreme Audit Board may, in conducting its task to examine the financial report of
Bank Indonesia, use a service of a public accountant office which has an international
reputation.
Paragraph (3)
Self explanatory
Paragraph (4)
The annual financial report of Bank Indonesia which is publisized to the public is a
condensed financial report which comprises a condensed balance sheet and a report of
principal revenue and expenditure which has been audited by the Supreme Audit Board.
Article 62
Paragraph (1)
The General Reserves is used to increase the capital or cover the deficit experienced by
Bank Indonesia, while the Special Purposed Reserves is used, among other things, to
finance the replacement and or the renewal of the fix asset, the provisioning of the
required equipment, and the development of the organization and the human resources in
implementing the tasks and authority of Bank Indonesia, as well as the investment needed
in implementing the tasks of Bank Indonesia as referred to in Article 64.
In Act Number 13 of 1968 concerning Central Bank, the surplus of Bank Indonesia
allocated to the Special Purposed Reserves is as much as 20% (twenty percentage) which
will be used to finance the replacement/renewal of the fix asset and equipment needed for
the implementation of the tasks and business of Bank Indonesia.
40
In this Act, the Special Purposed Reserves is used to finance the replacement and or the
renewal of the fix asset, the provisioning of the required equipment, the development of
the human resources and the organization in the implementation of the tasks and
authority of Bank Indonesia as well as the investment referred to in
Article 64.
The allocation of the surplus of Bank Indonesia for the Special Purposed Reserves as stipulated in
this Act is increased to 30% (thirty percentage), considering that the challenges faced by Bank
Indonesia require among other things, the continuous increase of the human resources quality as
well as the increase of the information technology quality.
Paragraph (2)
In the event that the capital and the General Reserves has reached 10% (ten
percentage) of the monetary liabilities, the rest of the surplus which constitutes
the share of the Government shall previously be used for the payment of the
Governments liabilities to Bank Indonesia.
Paragraph (3)
The obligation of the Government to cover the shortage of the minimum capital
of Bank Indonesia may be conducted through the issuance of state debt
securities which may be traded at the latest 1 (one) month since the publication
of the financial report of Bank Indonesia.
The maximum amount which should be paid by the Government is the shortage
of the required capital of Rp2.000.000.000.000,00 (two trillion rupiah).
Paragraph (4)
The provision of this paragraph is intended to enable the fulfilment of the capital of Bank
Indonesia which should be amounted to 10% (ten percentage) of the monetary liabilities
in a short period. In the event that the capital of Bank Indonesia has reached 10% (ten
percentage) of the monetary liabilities, the major part of the surplus obtained by Bank
Indonesia shall be submitted to the state through the Government.
Article 63
The publication of the weekly condensed balance sheet in the State Bulletin of the Republic of
Indonesia is an official publication in order to publish the condensed balance sheet to the public.
Article 64
Paragraph (1)
The provision of this paragraph is to limit the equity participation of Bank Indonesia in
any legal entity or other certain entities. The meaning of any legal entity or other entities
which are necessary in the implementation of the tasks of Bank Indonesia are among
other things a clearing house, a rating agency, and a deposit guaranty institution. The
equity participation in an entity other than the entity or other entities as referred above
may only be conducted upon the approval of the House of Representatives.
Paragraph (2)
Self explanatory
Article 65
Self explanatory
Article 66
Self explanatory
Article 67
41
Self explanatory
Article 68
Self explanatory
Article 69
The meaning of any entity in this provision covers all entities, for example a legal entity, a
partnership, a foundation, an association, or other entities which are determined as a respondent in
a survey.
Article 70
Paragraph (1)
Self explanatory
Paragraph (2)
Self explanatory
Article 71
Paragraph (1)
T
he term confidential in this paragraph means official secret.

The meaning of other parties who perform a certain task are parties who have been
assigned or approved by Bank Indonesia to perform the tasks as referred to, among other
things, in Article 14 paragraph (2), Article 17 paragraph (1), Article 18 paragraph (2),
Article 30 paragraph (1), Article 32 paragraph (3), and Article 39 paragraph (3).
The term illegally means that if a person or an entity wilfully commit an action which is
contrary to the prevailing regulations.
Paragraph (2)
Self explanatory
Paragraph (3)
The main substances of the provision which will be prescribed in the Board of Governor
a.
the type of information and other data catagorized as confidential, among other
things individual information and data obtained through a survey and an individual
data of a Bank which is a clearing member;
b.
the treatment on information and other data catagorized as confidential;
c.
the procedure of the disclosure of information and other data catagorized as

confidential;
d.
the official authorized to disclose the information and other data catagorized as
confidential.
Article 72
Paragraph (1)
The authority of the Board of Governor to prescribe the administrative sanction as
regulated in this article shall prevail on any violation of the provisions stipulated in this
Act and the implementation regulation of this act namely Bank Indonesia Regulation and
the Board of Governor Regulation.
The meaning of other parties is a person or an entity as stipulated in this Act among other
things as referred to in Article 2 paragraph (4), Article 9 paragraph (1), Article 14
42
paragraph (3), Article 17 paragraph (1), Article 18 paragraph (2), Article 28 paragraph (1)
and paragraph (2), and Article 29 paragraph (3), Article 30 paragraph (1), Article 32
paragraph (3), Article 39 paragraph (3) and parties who has been assigned in the
implementation regulation of this Act.
Paragraph (2)
Letter a
The meaning of fine is an obligation to pay a certain amount of money as a
result of a failure to meet the provision of this Act.
Letter b
Self explanatory
Letter c
The revocation or annulment of a business license of a business entity shall be
conducted by a competent agency upon the request of Bank Indonesia.
The meaning of a business entity is a business entity assigned or approved by
Bank Indonesia to implement the tasks of Bank Indonesia as referred to in
Article 14 paragraph (2), Article 17 paragraph (1), Article 18 paragraph (2),
Article 30 paragraph (1), Article 32 paragraph (3), Article 39 paragraph (3) and
other business entities assigned by this Act.
Letter d
The disciplinary sanction may only be imposed on Bank Indonesias employees
based on the employment disciplinary regulation prescribed by the Board of
Governors Regulation.
Paragraph (3)
Further regulation on administrative sanction prevails on other parties other than the
employee of Bank Indonesia shall be prescribed by Bank Indonesia Regulation, while
administrative sanction which will be imposed on the employee of Bank Indonesia shall
be prescribed by the Board of Governors Regulation.
a.
the type of violation which may be subject to an administrative sanction;
b.
the amount of administration sanction in the form of a fine;
c.
the procedure of the imposition of administrative sanction.
The main substance which will be prescribed by the Board of Governor Regulation
covers among other things :
a.
the type of violation which may be subject to an administrative sanction;
b.
the type of the employees disciplinary sanction;
c.
the procedure of the imposition of the employment disciplinary sanction.
Article 73
The transfer of the assets and liabilities of Bank Indonesia as referred to in this article shall be
implemented since the coming into effect of this Act.
Article 74
Paragraph (1)
43
With the coming into force of this Act, Bank Indonesia shall no longer extend any
liquidity credit within the framework of program credit.
The State Owned Company assigned by the Government is a State Owned Company with
a sound financial condition.
The transfer of credit as referred to in this paragraph also includes the transfer of
channelling loan which funds derived from foreign parties and technical assistance given
in the extension of program credit.
Considering that the channelling loan and the technical assistance involves other
institutions/parties outside Bank Indonesia, the time limit of the transfer of the channeling
loan and the technical assistance to the State Owned Company shall be determined upon
an agreement of the parties concerned.
The tasks and authority of the State Owned Company assigned by the Government are
among other things :
a.
to conduct the payment of any liabilities payable to Bank Indonesia;
b.
to channel and administer the program credit;
c.
to seek funding sources for the continuity of the implementation of the program
credit.
Paragraph (2)
The Credit Liquidity of Bank Indonesia (KLBI) within the framework of program credit
covers various scheme which respectively has its own requirements either on its term or
interest rate. In this regard, a period of KLBI means a period of each scheme of the said
KLBI.
As long as such KLBI has not been repaid to Bank Indonesia, the Bank shall pay the
principal amount and the interest in accordance with the agreement with the State Owned
Company.
The State Owned Company shall pay the principal amount and the interest of KLBI owed
to Bank Indonesia at the maturity date of each scheme of such KLBI.
Paragraph (3)
The meaning of interest subsidy is a subsidy with the amount equal to the difference
between the market interest rate and the interest rate of the Liquidity Credit of Bank
Indonesia.
Article 75
Paragraph (1)
Self explanatory
Paragraph (2)
Self explanatory
Paragraph (3)
Self explanatory
Article 76
Paragraph (1)
The exemption for the financing of banking restructuring is intended to ease the burden
of the State Budget which basically intended to ease the burden of the people.
Paragraph (2)
44
The extension of the period of the state debt securities is needed should the state financial
condition is insufficient to settle the liabilities to Bank Indonesia.
The claims on the state debt securities which has been directly purchased by Bank
Indonesia are conducted within the framework of :
a.
the implementation of program credit;
b.
the payment of various liabilities incurred within the framework of the State Budget;
c.
the Government guaranty program on liabilities of Commercial Banks and Rural

Banks;
d.
banking recapitalization.
In regard with the above items, letter c and letter d are banking restructuring program,
and the major part of the claims are liabilities of the Government Banks.
The settlement of the claims on the state debt securities directly purchased by Bank
Indonesia should have been accomplished prior to the maturity date of such debt
securities. This settlement may only be achieved if :
a.
the related agency such as Indonesian Bank Restructuring Agency, Ministry of

Finance, and so forth may conduct an optimal protection of the money of the people
(the State Budget) and minimize the burden of the people;
b.
the success of the recovery of the national economic condition.
In the event that the condition in letter a and letter b has been achieved, it is not necessary
to make an extension of the credit maturity date. However, to anticipate any unexpected
condition, it is necessary to have a legal basis for the extension of the maturity date.
Paragraph (3)
The term day in this paragraph means a calendar day.
Article 77
Self explanatory
Article 78
Paragraph (1)
Self explanatory
Paragraph (2)
Self explanatory
Article 79
Self explanatory
SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER
3843
45

Indonesia Law No. 23 Concerning Bank Indonesia 1999

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Indonesia Law No. 23 Concerning Bank Indonesia 1999

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ANNEX I.

ACT OF THE REPUBLIC OF INDONESIA

LAW OF THE REPUBLIC OF INDONESIA

With the approval of

Board of Governors is the management of Bank Indonesia;

Governor is the chairman of and concurrently a member of the Board of Governors;

Deputy Governor is a member of the Board of Governors;

The currency unit of the Republic of Indonesia is rupiah abbreviated as Rp.

Rupiah currency is a legal tender in the territory of the Republic of Indonesia.

Bank Indonesia is a Central Bank of the Republic of Indonesia.

Bank Indonesia is a legal entity based on this Act.

Bank Indonesia shall reside in the Capital of the Republic of Indonesia.

to prescribe and to implement the monetary policy;

to regulate and to safeguard the smoothness of the payment system;

to regulate and to supervise Banks.

Bank Indonesia shall manage the foreign exchange reserves.

to determine the use of payment instruments.

grant and revoke a business license of a Bank;

provide an approval on ownership and management of a Bank;

grant a license to a Bank to conduct certain business activities.

the required information and data;

other necessary things.

Bank Indonesia shall regulate and develop interbank information system.

having an excellent personal quality and morality;

The oath or vow as referred to in paragraph (1) shall be read as follows.

The meeting of the Board of Governors shall be held :

A consanguinity relationship up to the third degree and a relationship between parents-in-law

having any direct or indirect interests on any enterprises;

holding a position in the management of and or being a member of a political party.

Bank Indonesia shall not provide any credit to the Government.

an evaluation on the implementation of the monetary policies of the previous year;

The fiscal year of Bank Indonesia is a calendar year.

30% (thirty percentage) for the Special Purpose Reserves;

a fine for a minimum of Rp1.000.000.000,00 (one billion rupiah) and a maximum of

The administrative sanction as referred to in paragraph (1) may be in the form of :

a revocation or an annulment of a business license by a competent institution if the violation

an imposition of a disciplinary sanction if such violation is conducted by a business entity.

a quotation of prices of goods and services in foreign currencies in a certain

a utilization of ASEAN currencies for export and or import conducted in the

an anticipation of the possibility of economic integration.

a determination of a certain territory and or region;

a certain business place or business activity;

an agreement on trade of goods and services.

a prescription of the amount of rupiah currency which may be brought outside

a procedure of obtaining an approval to bring rupiah currency outside and inside

administrative sanctions on any violation of the provision concerning a transfer

accounting treatment of Bank Indonesias capital;

requirement and procedure of asset revaluation;

requirement to increase the capital which derives from other sources.

the procedure of open market operation in rupiah money market;

the procedure of foreign exchange intervention in stabilizing rupiah;

instruments used in the open market operation;

the procedure of the stipulation of discount rate;

the stipulation of administrative sanction against the violation of the minimum

the requirement and procedure of extending credit or financing based on Syariah

the procedure to secure the collateral.

in a floating exchange rate system, in the form of market intervention;

the procedure of collecting and submitting of data;

the requirements for other parties who conduct a survey.

the security requirement of the payment instrument;

the prescription of requirements which have to be fulfilled by Bank Indonesia or a Bank

exchange money of the same and different fraction;

exchange deffective money or money which is deemed improper to be circulated;