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41 J.L. Pol'y & Globalization 97 (2015)
Supervision of Banking Institutions in Achieve Sound Banking in Indonesia

handle is hein.journals/jawpglob41 and id is 109 raw text is: ISSN 2224-3240 (Paper) ISSN 2224-3259 (Online) I Vol.41, 2015 iSh Supervision of Banking Institutions in Achieve Sound Banking in Indonesia Reka Dewantara* Moch. Munir2 Sihabudin3 Sukarmi3 I.Doctorate of Law Candidate at Law Faculty of Brawijaya University, Malang 2.Professor of Law, Faculty of Law, Brawijaya University, Malang 3.Lecturer at Faculty of Law, Brawijaya University, Malang Abstract The transfer of Bank Indonesia's authority of banking institutions supervision to the Financial Services Authority (FSA) carried out due to the financial reform during the crisis well in 1997/1998 and 2008 is limited to short- term desire to be able to survive so that some doubt to eliminate the impact of the crisis in all sectors Financial particularly banks at the time. Hybrid product development and the emergence of a business conglomerate banking and financial institutions in Indonesia into sociological factors needed an independent agency engaged in microprudensial and regardless of microprudential held by the Indonesian Central Bank. Legally emergence FSA Act number 21 Year 2011 is the mandate of article 34 Act no. 23 of 1999 concerning Bank Indonesia as amended by Act No. 3 of 2004, which indirectly weaken the independence of Bank Indonesia. This causes the need for an integrated regulation replaces regulation in the field of supervision of financial institutions, especially for banks. Construction of the development model regulation and supervision of banking institutions in Indonesia is formed through comparison with control models in other countries, analyzing the typology of banking institutions in Indonesia that are highly regulated, perform mapping regulatory rules regarding banking supervision by taking into account the implications of the theoretical and practical implications in accordance with the principles of good corporate governance. Keywords: Supervision, Bank, Microprudential 1. Introduction In the modem society, the role of a banking institutions very huge in encouraging economic growth and financial stability of a country. Almost all sectors of business and individuals today and the future will not be separated from the banking sector even become the need in carrying out financial activities in supporting efforts. Ismail said that financial institutions in particular play an important role in supporting a healthy financial system, on the grounds, among others: (1) the unique banking characteristics that are vulnerable to the invasion of the community of interest massive funds (bank runs) that could potentially harm the depositors and creditors of banks, (2) the spread losses among banks very quickly through contangion effect and thus potentially cause system problems, (3) the process of resolving troubled banks need funds in the amount of not less, (4) the loss of public trust as an intermediary institution would lead to pressures in the financial sector (financial distress), and (5) the instability of the financial sector will impact on macroeconomic conditions, particularly associated with the ineffectiveness of monetary policy transmission. The development of institutional structures in the field of supervision of banking institutions has become a necessity optimal primer. This was due to the increasing complexity of the development of the financial conglomerate in the field both in terms of product (hybrid products), information technology (IT) to services. Institutional structure will determine the performance in the field of supervision of banking institutions. Institutional structures in the field of supervision of banking institutions is important, because the structure will affect the effectiveness of the achievement of the objectives of monitoring activities itself, the structure will also describe the clarity of responsibility and monitoring purposes. Will reflect the structure of the different targets and different responsibilities and also describes the structure of costs arising from the surveillance activities (www.bi.go.id). Given the importance of the role of banks in Indonesia, then public confidence in the banking institutions must be maintained. Therefore, pursuant to Article 29 of Act No. 7 of 1992 concerning Banking as amended by Act No. 10 of 1998 (hereinafter referred to as the Banking Act), banks are required to maintain the soundness of the bank in accordance with the capital adequacy, asset quality, management quality, liquidity, profitability, solvency, and other aspects related to the business of the bank, and shall conduct business activities in accordance with the principle of prudence (Sulistyandari : 2012). The existence of banking institutions influenced and dependent on public trust. So that the community trust and a sense of security can be maintained, and the objective of economic development can proceed smoothly, required an agency / institution / body builder and supervise banking institutions, the Banking Supervisory Authority. In Indonesia before the formation of Act Number 21 Year 2011 on the Financial Services Authority (hereinafter referred to as OJK Act ), has two supervisory authorities in the financial sector, first, the supervision of banking institutions (LKB) is under the Central Bank, second, supervision for institutions non-bank financial (NBFIs) under the Ministry of Finance through the Capital Market Supervisory Agency and Financial Institution Journal of Law, Policy and Globalization www=ise-org

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