Dian Ediana Rae, Chief Executive of Banking Supervision at OJK, said that the mandate from the Financial Sector Development and Strengthening (P2SK) Law emphasizes enhancing the strategic role of rural banks.

"The large number of BPRs makes them a priority. We continuously strengthen BPRs, including their capital," Dian said at a press conference following the OJK Board of Commissioners' Monthly Meeting on Monday, August 5, 2024.

However, not all rural banks meet the required capital standards. OJK has proposed several solutions to address this issue, such as requesting shareholders to increase capital and encouraging mergers or consolidations.

Additionally, OJK plans to open funding access for rural banks through the capital market. However, not all of them will be allowed to enter the capital market or payment systems, as they must meet certain criteria.

"This strategy aims to ensure that BPRs can align with the banking development direction set out in P2SK Law, allowing them to play an optimal role in lending to MSMEs," Dian said.

She emphasized that improving all aspects of BPR, including human resources, governance, capital, and information technology, is crucial to ensuring the sustainability and effectiveness of rural banks.

Previously, Dian mentioned that OJK plans to close 20 rural banks this year to strengthen the national banking system.

"Therefore, it should not be surprising if the banking supervision executive has recently had to close some BPRs. There may be around 20 BPRs we close, all in the context of strengthening our banking sector," Dian said during the Bisnis Indonesia Midyear Challenges 2024 event in Jakarta on July 29, 2024.

Overall, Dian noted that the condition of rural banks in Indonesia is quite good. However, some of them have to be closed due to non-compliance with regulations or involvement in fraud cases.