New Capital Adequacy Regulation for Islamic Rural Banks Established by OJK

The initiative for this regulation stemmed from the need to update the capital requirements for BPR Syariah to better align with regulatory developments and asset management practices. Key changes include updated rules for holdings in securities from Bank Indonesia, the Government, and regional bodies, as well as capital implications for foreclosed collateral and abandoned properties. Furthermore, the regulation refines the accounting treatment for impairment losses based on the OJK's existing standards.

Regulation Number 12 of 2026 replaces Circular Letter Number 1/SEOJK.03/2017 and its amendments from Circular Letter Number 7/SEOJK.03/2020. Significant differences between the new and previous regulations include the treatment of asset allowances, current-year profit calculations, and capital deductions for foreclosed collateral and abandoned properties.

BPR Syariah is now required to maintain a KPMM ratio of at least 12% of Risk-Weighted Assets (ATMR) and a core capital minimum of 8% of ATMR. The Total Risk-Weighted Assets, which represent the total assets adjusted for risk, dictate the requisite capital reserves.

Additionally, BPR Syariah must self-monitor their capital adequacy monthly and adhere to specific guidelines outlined in the new regulation. A minimum core capital threshold is set at IDR 6 billion, with a stipulated grace period of six months to rectify any shortfall.

Approval from OJK is required for additional capital contributions, core and supplementary capital components, and donations. BPR Syariah must also submit online reports about the usage of assets obtained through capital contributions, confirming their operational use.

The regulation specifies core capital as including items such as paid-up capital, current-year profit (up to 50% recognized after tax deductions), and other reserves, while supplementary capital is limited to certain components, including a revaluation surplus.

Provisions in the regulation for deductions from core capital due to foreclosed collateral (AYDA) and abandoned properties vary based on the duration these assets have been held. This includes a structured approach to deductions, allowing for significant percentages of asset values to be considered as capital deductions based on the length of time an asset has been retained.

This comprehensive regulatory framework ensures adequate capital structures for BPR Syariah, detailing KPMM calculations, capital components, and compliance reporting to uphold financial stability.