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Bank Indonesia to tightly control issuance of credit cards.

Bank Indonesia has issued a regulation on credit cards, confirming its authority to control credit cards. A presidential decree is yet to be issued on shopping cards of non bank financial agencies.

A Bank Indonesia executive Diah Nastiti Makhijani said tile National Payment System Development Bureau of the central bank has issued a regulation, PBI No. 6/30/2004 on the payment instrument with card from banks.

A presidential decree on shopping card from non bank financial agencies has yet to be determined by a presidential decree based on an agreement with the finance ministry.

Diah said an issue agreed with the finance ministry concerns the plan to transfer the function of supervision from the Financial Agencies Directorate General of the Finance Ministry to the central bank. Under chapters 28 and 29 of PBI No. 6/30/2004 the authority of supervision both directly and indirectly is held by Bank Indonesia, but the central bank could ask assistance from other agencies.

Bank Indonesia said it is waiting for the issuance of a new presidential decree on the operation of non bank financial services concerning the licensing authority for issuing credit cards. The presidential decrees concerns non bank financial institution operation in credit card business such as multifinance companies and issuance of cards like GE Card, MFB or Diners Club.

PBI No. 6/30/2004 regulates card payment instruments are credit cards, ATM cards, debit cards and pre-paid cards and the like. The regulation also says that both banks, principals, and acquirers (technical and financial acquirer) are required to have an approval from Bank Indonesia before issuing payment cards.

The central bank said it will revoke the license for credit card if the issuing banks are considered not financially healthy. It will also cancel license for credit card issued to principals and acquirers, if recommended by non bank institution authority.

Article 1 of chapter 16 says that issuers are required to adopt risk management base don a regulation of the central bank when issuing credit cards.

It is also required when issuing ATM card, debit cards and pre-paid cards. The issuers are also required to adopt credit risk management covering a number of aspects concerning the minimum age and minimum income of the card holders.

Credit card issuers are required to determine a credit maximum limit for prospective card holders. Minimum payment by the card holder is 10% of the total amount of bill.

Bank Indonesia, however, could determine the minimum age and income of the card holders and the maximum credits they could receive. The central bank also requires issuers to regularly inform in writing the card holders about their bills.

The regulation also requires the credit card issuers to exchange information about them about negative and positive lists involving card holders.
Table - 1
Market shares of credit cards, 2003

Bank Shares

Citibank 28.9
Bank BNI 14.9
Bank BCA 13.2
Bank BII 10.7
Bank Mandiri 7.6
Bank HSBC 6.8
GE Capital 3.4
Bank Danamon 3.1
Bank Li: co 2.8
Bank Permata 2.4
Others 6.3

Sources: various sources
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Comment:Bank Indonesia to tightly control issuance of credit cards.(FINANCE AND BANKING)
Publication:Indonesian Commercial Newsletter
Geographic Code:9INDO
Date:Jan 11, 2005
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