Regulation of Branchless Banking in Indonesia
This update of CGAP’s 2009 Diagnostic Report on the Legal and Regulatory Environment for Branchless Banking in Indonesia incorporates research conducted by CGAP in January 2010 regarding relevant legal and policy changes through the end of 2009. It is one of 11 country updates produced by CGAP as a part of the G20 Access through Innovation (ATI) Sub-Group’s work plan.
The paper states that mobile network operators and banks have not developed branchless banking business models that meet the needs of poor and unbanked clients, despite Bank Indonesia’s (BI) relatively advanced approach toward e-money. BI has recently issued regulations permitting nonbanks to issue e-money for making retail payments. However, the ability of these regulations to change the landscape of e-money providers is questionable. BI has expressed its commitment to moving Indonesia toward a society that relies less on cash. It has stated that e-money regulation in Indonesia will be based on four principles:
- Safety, which includes safety of the electronic instrument and the information technology-based processing system, as well as prudent behavior of issuers;
- Efficiency at the national level;
- Equitable access to all users;
- Consumer protection.
