Minimum capital requirement for commercial banks

To ensure that banks apply the same mechanism for the calculation of market risks, Indonesia’s central bank, Bank of Indonesia, on 1 November 2007 issued Regulation No. 9/13/PBI/2007 regarding Minimum Capital Requirement for Commercial Banks Taking Account of Market Risks (Regulation No. 9/13). The Regulation applies to banks that have satisfactorily met the certain criteria as stipulated in the regulation. These banks are obliged to fulfill the minimum capital requirement (kewajiban penyediaan modal minimum) by taking into account a 8% Market Risk whether individually or in consolidation with its subsidiary. This regulation also defines Market Risk and stipulates the method to be used for the calculation of the Market Risk in the calculation of the minimum capital. Banks which fulfill the criteria for Market Risk calculation must use the Standard Method. If a bank of these criteria wishes to use the Internal Method, it may do so upon.