Indonesia's Financial Services Authority (OJK) has introduced strict regulations for financial institutions looking to engage in bullion-related activities. Under the new rules outlined in POJK No. 17 of 2024, companies must have a minimum core capital of Rp 14 trillion to qualify for participation.

Ahmad Nasrullah, Head of Regulation and Development for Financing Institutions at OJK, emphasized that the requirements aim to ensure stability and reduce risks in this high-stakes industry. “We see the need for stringent criteria, particularly given the exposure bullion activities present,” he explained during a press conference.

The regulations apply to non-conventional financial institutions, including Islamic banks and financial service providers. Existing regulatory frameworks will guide the licensing process, and new institution types will not be introduced.

“Initially, our approach is cautious as bullion involves significant risks, especially in physical gold storage,” Ahmad added. To mitigate these risks, OJK is implementing internationally recognized standards, particularly for infrastructure like vaults. Certified storage facilities will be mandatory to ensure security and transparency.

Bullion activities, as defined by OJK, encompass gold-related services such as deposits, financing, trading, and custodial services. These initiatives are part of Indonesia's efforts to strengthen its financial sector under the 2023 Financial Sector Development and Strengthening Law (UU P2SK).

While the market offers promising opportunities, Ahmad acknowledged that entry barriers remain high. “We hope more players will participate in the future, but only those meeting rigorous requirements can enter at this stage,” he said.

OJK is also preparing additional technical guidelines, including reporting formats for bullion operations. These are expected to be finalized by 2025. The comprehensive framework aims to enhance risk mitigation and promote transparency in bullion banking operations.

This move aligns with Indonesia's broader financial strategies, including plans to establish gold banks by mid-2025. However, challenges such as high entry costs and operational risks underscore the importance of cautious implementation.

As the landscape evolves, industry players must adapt quickly to align with these stringent regulations. For decision-makers, understanding these requirements will be essential for navigating this emerging sector.

KONTAN