30 Nov 2022
‘If you can’t beat them, join them’: Commercial banks now permitted to invest in fintech companies




Technological development has brought rapid, radical change to the financial-services industry around the world, and Indonesia is no exception. While the country’s financial-products market used to be dominated by the banking sector, the banks must now share it with financial technology (fintech) companies.


In response to the rapid rise of fintech, Indonesia’s Financial Services Authority (OJK) has concluded that collaboration between commercial banks and the fintech sector is desirable in order to create a more sustainable digital ecosystem. To further encourage such collaboration, the OJK recently issued Regulation No. 22 of 2022 on Equity Investments by Commercial Banks (Reg. 22).[1]  


Key features of Reg. 22 are:


1. Equity investments by commercial banks


Prior to the issuance of Reg. 22, commercial banks (“Banks”) were only permitted to invest in a limited range of financial institutions, including other Banks; leasing, venture capital or securities companies; and clearing, settlement and depository institutions.


With the issuance of Reg. 22, Banks are now allowed for the first time to invest in companies whose principal business involves the use IT to produce financial products (read: fintech companies), alongside other financial services institutions and credit information agencies. Investees may be based onshore or offshore.


Equity investments can be made either directly or through share purchases on the stock market. However, Reg. 22 specifically states that such investments must be long term  in nature (not purely for short term gain). Prior to making an equity investment,  a Bank must (i) submit an equity investment plan (as part of their wider business plan) to the OJK; and (ii) seek OJK approval for the investment.[2] Failure to obtain approval may result in the imposition of administrative sanctions and fines of up to IDR 100 million (USD 6,400) per non-compliant investment.


2. Restrictions on equity investments


A Bank’s  equity investments must not account for more than 35% of its capital.[3]  Should this figure be exceeded for 3 consecutive months, the Bank must submit an action plan to remedy the situation to the OJK by the end of the fourth month. Failure to submit a plan may result in an administrative sanction in the amount of IDR 1 million (USD 64) per business day of delay, capped at IDR 50 million (USD 3,200) in total.


3. Prohibitions on equity investments


Reg. 22 prohibits cross-holdings by Banks, meaning that it is not permitted for an investee of a Bank to be a shareholder of the Bank or for a Bank to be a shareholder of its own shareholder. In addition, it is prohibited for a Bank to conduct an equity investment that would “impose an unlimited obligation to the investee” (an example of this might be where the investor Bank gives an open-ended undertaking that it will always top up its investment should the investee require additional capital).  Failure to comply with these requirements may result in the Bank (i) being prohibited from conducting further equity investments, or (ii) having its financial health assessment downgraded.


4. Disposal of equity investments


Reg. 22 provides that a Bank may dispose of its shares in an investee either (i) voluntarily, or (ii) compulsorily at the request of the OJK in a situation where:


  • equity investments reduce, or may be expected to reduce, the capital of the Bank,
  • equity investments significantly increase, or may be expected to significantly increase, the risk profile of the Bank, or
  • (a) an equity investment has not received prior OJK approval; (b) an equity investment may be expected to harm the national economy or conflicts with the national interest, or (c) an equity investment may be expected to cause supervisory difficulties for the OJK.

A divesting Bank must submit a divestment plan to the OJK at least 7 business days before the date of the proposed share disposal.


5. Other key features


  1. Temporary equity investments

Reg. 22 provides that a Bank may make a temporary equity investment for the purpose of safeguarding a loan or providing financing. However, such investment must be disposed of within five years, or before five years if the investee has accumulated profits on its books.[4]


  1. Reporting requirements

A Bank must submit a realization report online to the OJK within 5 business days of the effective date of (i) an equity investment, or (ii) the disposal of an equity investment. Failure to submit such report may result in an administrative fine in the amount of IDR 1 million (USD 64) per business day of delay, capped at IDR 50 million (USD 3,200) per report.



ABNR Commentary


As highly regulated businesses, the Banks have found it difficult to keep pace with the rapid growth of the “lean and mean” fintech sector, which has left them facing essentially two options: (i) to either up their game and emulate their fintech rivals, or (ii) to join forces with them. The OJK previously set out its stance on option (i) in OJK Regulation No. 12/POJK.03/2021 on Commercial Banks,[5] which permits Banks to establish digital operations (referred to as ‘digital banks’) – these operations are allowed to operate wholly in cyberspace without the need for conventional bricks-and-mortar premises.


Reg. 22 now addresses option (ii) through its facilitation of mutually beneficial collaboration between Banks and fintech companies by allowing the former to invest in the latter (and earn dividends too).  Ultimately, a delicious cake tastes even better if shared by agreement rather than fought over.


By partner Mr. Freddy Karyadi ( and senior associate Ms. Anastasia Irawati (


This ABNR News and its contents are intended solely to provide a general overview, for informational purposes, of selected recent developments in Indonesian law. They do not constitute legal advice and should not be relied upon as such. Accordingly, ABNR accepts no liability of any kind in respect of any statement, opinion, view, error, or omission that may be contained in this legal update. In all circumstances, you are strongly advised to consult a licensed Indonesian legal practitioner before taking any action that could adversely affect your rights and obligations under Indonesian law. 


[1] POJK No. 22 Tahun 2022 tentang Kegiatan Penyertaan Modal oleh Bank Umum

[2] Dividends in the form of shares is excluded from the requirement to obtain approval from the OJK

[3] The percentage is calculated on the basis of a bank’s total equity investments in all of its investees, including increases in the value of investments due to such things as retained earnings, exchange rate fluctuations, increases/decreases in fair value, and dividends in the form of shares.

[4] The elucidation of Reg. 22 defines “accumulated profit” as the investee’s profit after deducting previous years’ losses

[5] Peraturan OJK No. 12/POJK.03/2021 tentang Bank Umum