<article><a style="color: #000080;" href="http://www.ojk.go.id">The Indonesia Financial Services Authority</a> (FSA) has relaxed mark-to-market rules for debt securities held by insurance companies and pension funds in a move to help boost market confidence.</article>

<a style="color: #000080;" href="http://www.ojk.go.id">The Indonesia Financial Services Authority</a> (FSA) has relaxed mark-to-market rules for debt securities held by insurance companies and pension funds in a move to help boost market confidence.
However, the policy is temporary and will be revoked when the global financial condition recovers, the agency said.
FSA, also known as OJK (Otoritas Jasa Keuangan) which oversees banking and financial institutions, said in press statement on Saturday that the financial institutions can now amortize the purchase value of their debt securities until the debt matures.
They can also adjust the minimum amount of their risk-based capital to keep a certain level of solvency.
Previously, the firms had to record the market value, which may have fallen significantly amid a global rout, in their books.
Investors have pulled money out of Indonesian markets over the past few weeks due to concerns about the domestic economy and global economic turbulences. The agency recently launched a set of policies expected to salvage lending.
One part of the policy package includes leniency to banks to restructure the loans just by considering their consumer’s repayment ability, as opposed to the ability, business prospect and financial situation of the customer.
The package is composed of 12 policies for the banking sector, 15 for the capital market sector, four for the non-banking financial sector and four for the education and consumer protection sector.
The policies are expected to improve the overall financial industry. The policies aim to help banks restructure their customers’ loans and to attract more lenders to venture into micro, small and medium enterprises (SMEs), said OJK Chairman Muliaman D Hadad.
However, only banks with “strong” and “satisfactory” risk management ratings can benefit from the new leniency on lending.
The new policy will also allow banks to inject capital into a special purpose vehicle (SPV) that will take over and restructure their bad assets.
At the moment, only banks with a composite rating of 1 or 2 can inject capital into an SPV.
Banks with a composite 1 rating display the strongest performance and risk-management practices relative to their size, complexity and risk profile. However, following the implementation of the package, banks with composite rating 3 will be enabled to carry out the practice as well, so long they are limited to only having a 20 per cent stake in the SPV and they are not listed as controlling shareholders.
“This way banks can clean up their balance sheets. Some banks have even begun thinking to go down this road, involving their parent companies to solve the bad loan problem and establish the SPV,” Nelson Tampubolon, executive head for banking industry at OJK, said.
He added the rules were applicable for a temporary two-year period only.

The Indonesia Financial Services Authority (FSA) has relaxed mark-to-market rules for debt securities held by insurance companies and pension funds to help boost market confidence.

Indonesia relaxes mark-to-market rules for debt securities transaction

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