The Regulation of the Members of the Board of Commissioners of the Financial Services Authority No. 48/PADK.06/2025 on the Implementation of Risk Management for Financing Institutions, Venture Capital Companies, Microfinance Institutions, and Other Financial Services Institutions, was enacted and became effective on 30 December 2025 (“PADK No. 48/2025”).
Pursuant to this regulation, business activities that are subject to PADK No. 48/2025 align and enhance their risk management strategies, policies, procedures, and/or internal risk management guidelines within six months from the date the PADK was enacted.
This regulation applies to the following finance institutions:
- Finance companies;
- Venture capital companies;
- Microfinance institutions;
- Pawnshops;
- Information technology-based joint funding service providers;
- Indonesian export financing institutions;
- Secondary housing financing companies;
- PT Permodalan Nasional Madani;
- Public Housing Savings Management Agency;
- PT Sarana Multi Infrastruktur (Persero); and
- Other financial services institutions.
hereinafter referred to as (“PVML“).
The regulation addresses various main issues as follows:
- Implementation of risk management;
- risk management principles;
- the organizational structure of the Risk Management work unit or Risk Management function;
- Procedures for submitting Risk Profile Reports for PVML; and
- self-assessment of risk profiles form.
PADK No. 48/2025 reiterates important points in previous SEOJK No. 7/2021which includes (a) supervision of the board of directors, board of commissioners, and sharia supervisory board; (b) risk management policies and procedures and risk limit determination; (c) risk identification, measurement, control, and monitoring processes; and a risk management information system; and (d) a comprehensive internal control system.
The PVML already having strategy, policy and procedures or internal policy of risk management but not entirely in line with this regulation shall adjust it within 6 months as of the date of the regulation.
Health Level Assessment
The regulation also governs the assessment of risk profile factors for PMVL. The risk profile assessment for PMVL continues to encompass the same inherent risk factors as under the previous regulation, namely strategic risk, operational risk, credit risk, market risk, liquidity risk, legal risk, compliance risk, and reputation risk. However, the regulations introduces an additional factor: inherent insurance risk.
In assessing insurance risk, the parameters to be considered including, at a minimum, underwriting practices, determination of premiums or contributions, reinsurance structure, claims management, product risks, liability risks, the nature of the insurance business, the composition and diversification of the business portfolio, and the geographical area of operations.
Conclusion
PADK No. 48/2025 broadens the scope of risk management implementation by extending its obligations to microfinance institutions, pawnshops, and information technology-based peer-to-peer lending service providers.
For further information, please contact:
MetaLAW, Legal Consultant, Jakarta, Indonesia
general@metalaw.id
