CHAPTER 12:

CASH AND CURRENT ACCOUNTS OF

INDONESIAN BANK

CASH

Cash is paper money and coin there are in rupiah and foreign exchange currencies that
are still valid as legal payment. Cash needs to be regulated so that there is no shortage in
fulfilling bank obligations, and not excessive. Excessive cash will cause opportunity
costs. Therefore, for banks to be able to control cash, there needs to be information about
the position or cash balance. Changes in the position of cash balances in banks are
generally caused by:

• Deposit and cash withdrawals by bank customers. For this transaction, customers can
make deposits, collect savings, pay checks, receive requests for transfers, receive
remittances, receive deposits, and so on.

• Deposit to or withdrawal from the relevant bank account at Bank Indonesia.

• Use for bank internal transactions, for example for small funds, payment of operational
costs, salary costs, and so on.

Cash accounting is related to the transaction, the registration is as much as received or

paid. The cash of a bank may not have a credit balance because it will disturb liquidity.
Allowable balance is a minimum of 0Rp.

Especially for cash accounts often accommodate remittances physically (remise) from a
bank to another bank or from a branch to another branch. Example: On 15 May 2015 the
Bank Mitra Niaga Semarang sent physical cash to the Mitra Branch Bank Solo for
Rp1.000.000.000, so the listing in the journal at the Semarang branch was:

Date Account Debit (Rp) Credit (Rp)

15/05/2015 Dr. RAK Solo branch 1.000.000.000
Cr. Cash 1.000.000.000

The journals in the Solo branch are as follows:

Date Account Debit (Rp) Credit (Rp)

 15/05/2015 Dr. Cash 1.000.000.000
Cr. RAK Solo branch 1.000.000.000

PETTY CASH

Petty cash is a special fund provided to pay for relatively small amounts of expenses. These
relatively small expenditures mostly occur within the bank and need to be recorded
separately. In a small cash fund account. There are two systems for petty cash registration,
namely:

• Imprest Fund System

Small cash fund transactions can include the formation of petty cash funds, the use of petty
cash funds, and the filling of small cash funds. In this system at the time of petty cash
formation, the bank will record the petty cash flow and then the use of petty cash is not
journalized, but only archived so that the balance of the petty cash fund will remain if the file
is taken into account. So what changes is only the composition of the cash, because the
composition of petty cash into cash and archives is worth to be exchanged when refilling.

• Fluctuating Fund System

In this system when charging a petty cash, the bank will debit the petty cash fund and credit
the cash account. At the time of use of petty cash, the related costs / debts will be debited and
credit the petty cash funds. Whereas when refilling it means that it will add to the cash petty
funds not yet used by debiting the small cash fund account and crediting the cash account.

Example

Transactions related to petty cash are:

Date Transactions
A small cash fund of Rp 200,000 was formed
01/12/2015
Paid local transport costs Rp. 25,000
05/12/2015
Paid snacks Rp. 30,000
10/12/2015
Paid magazine subscription fee of Rp. 10,000
15/12/2015
 Paid local transport costs Rp. 20,000
20/12/2015
Paid Rp60,000 newspaper subscription fee
30/12/2015
Paid employee lunch costs RP. 50,000
30/12/2015
Small cash is replenished Rp. 195,000
31/12/2015

The recording of these transactions in a journal when using the imprest fund syste:

Date Account Debit (Rp) Credit (Rp)

Dr. Petty cash fund
01/12/2015 200.000
Cr. Cash
200.000
Dr. Transport fee
05/12/2015 45.000
Dr. Meeting fee
10/12/2015 30.000
Dr. Magazine fees
15/12/2015 10.000
Dr. Newspaper fees
20/12/2015 60.000
Dr. Employee meal costs
30/12/2015 50.000
Cr. Cash
30/12/2015 195.000

Recording if the bank uses a fluctuating system.

Date Account Debit (Rp) Cedit (Rp)

Dr. Petty cash fund
01/12/2015 200.000
Cr. Cash
200.000

Dr. Transport fee

05/12/2015 25.000
Cr. Petty cash fund
25.000

Dr. Meeting fund costs

10/12/2015 30.000
Cr. Petty cash fund
30.000

Dr. Magazine fees

15/12/2015 10.000
Cr. Petty cash fund
10.000
 Dr. Transport fee
20/12/2015 20.000
Cr. Petty cash fund
20.000

Dr. Newspaper fees

30/12/2015 60.000
Dr. Employee meal costs
30/12/2015 50.000
Cr. Petty cash fund
110.000

Dr. Petty cash fund

30/12/2015 195.000
Cr. Cash
195.000

CURRENT ACCOUNTS OF INDONESIAN BANK

Current accounts of Indonesian Bank are current accounts owned by Commercial /

Commercial Banks in foreign currencies as well as rupiah currencies in Indonesia. With BI
Giro, banks can finance transactions between branches and between banks through clearing
and transfe settlement. In addition, it can be used to pay for relatively large deposits, credit
provision, and so on.

BI Current account transactions are more related to clearing transactions (debit notes / credit
notes), commercial transfers, withdrawals, and deposits of cash to BI. Bi-current accounts in
rupiah currency will be recorded at their nominal value. Whereas BI foreign currency current
accounts are recorded at the prevailing BI rate.

Exampe Cash Taking

December 1, 2015 ABC Bank Semarang took cash in BI in Semarang amounting to Rp.
500,000,000.

Date Account Debit (Rp) Credit (Rp)

01/12/2015 Dr. Cash 500.000.000
Cr. BI Giro 500.000.000

Example of Cash Deposit

On 3 December 2015 Bank ABC deposited cash for Giro at Bank Indonesia amounting to Rp.
300,000,000.

Date Account Debit (Rp) Credit (Rp)

01/12/2015 Dr. BI Giro 300.000.000
Cr. Cash 300.000.000

Examples of Clearing Withdrawals

On December 4, 2015 Bank ABC received a bill from Bank Mitra Niaga Semarang for Rp.
100,000,000 for the burden of Mr. Kabul

Date Account Debit (Rp) Credit (Rp)

01/12/2015 Dr. Mr Kabul’s Giro 100.000.000
Cr.BI Giro 100.000.000

Example of Clearing Deposit

On December 5, 2015 Bank ABC handed over clearing documents to BI and on the same day
the second clearing was declared to be Rp. 200,000,000 for the benefit of Mr Ali.

The journal on the second clearing.

Date Account Debit (Rp) credit (Rp)

01/12/2015 Dr. BI Giro 200.000.000
Cr. Ali’s Giro 200.000.000

LEGAL RESERVE REQUIREMENT (GWM) OF INDONESIAN BANK

Current account is a certain external party account at a Bank Indonesia which is a means of
administering transactions from deposits where withdrawals can be made at any time; Bank
Indonesia current accounts can also be defined as the balance of the current account owned
by the bank in Bank Indonesia. This account must not be reduced by a loan from Bank
Indonesia and supplemented with a loan facility from BI that has not been used but has been
approved (in commitment) for example Bank Indonesia Liquidity Credit. This account is in
rupiah or foreign currency. Checking account in rupiah, hereinafter referred to as a Rupiah
Current account Account, is a checking account in rupiah currency that can be withdrawn
using a Bank Indonesia check, Bank Indonesia checking account, or other means as referred
to in the applicable Indonesian Bank provisions concerning the current account Bank
Indonesia with external parties. While the current account account is in foreign currencies,
hereinafter referred to as a Foreign Currency Account, is a current account account in foreign
currency that can be withdrawn by book-entry or other means as referred to in the applicable
Bank Indonesia provisions concerning the relationship between current accounts between
Bank Indonesia and external parties.

Legal reserve requirement or often called (GWM), is a savings deposit that must be
maintained by a bank in the form of a balance in the current account at an Indonesian bank
whose amount is determined by Indonesia at a certain percentage of third party funds. Bank
third party funds, hereinafter referred to as TPF, are bank liabilities to residents and non-
residents in rupiah and foreign exchange.

FULFILLMENT CRITERIA OF LEGAL RESERVE REQUIREMENT

1. GWM in rupiah is set at 5% of TPF in rupiah. GMW in rupiah of 5% must be fulfilled

by all banks without regard to the amount of DPK in rupiah owned.
2. Besides fulfilling criteria 1, then for:
a. Banks that have Third Party Funds in rupiahs greater than Rp1,000,000,000,000
(one trillion rupiahs) up to 10,000,000,000,000 (ten trillion rupiahs) are required to
maintain additional GMW in rupiahs at 1% of Third Party Funds in rupiahs.
Example:
The Bank has Third Party Funds in rupiahs of Rp 5,000,000,000,000 (five trillion
rupiahs), the bank is required to maintain a Legal reserve requirements of 5% of
Rp.5.000.000.000.000; added to 1% from RP. 5,000,000,000,000.
b. Banks that have deposits in trillion more than Rp 10,000,000,000 (ten trillion
rupiahs) up to Rp 50,000,000,000,000 (fifty trillion rupiahs), are required to maintain
additional Legal reserve requirements in rupiahs of 2% of Deposits in rupiahs.
Example:
The Bank has Deposit Funds in rupiahs of Rp. 25,000,000,000,000 (Twenty-five
trillion rupiahs). Banks are required to maintain Legal reserve requirements in rupiahs
of 5% from Rp25.000.000.000.000.000; added by 2% from RP. 25,000,000,000,000.
c. Banks that have Third Party Funds in rupiahs greater than Rp 50,000,000,000,000
(fifty trillion rupiahs), are required to maintain additional Legal reserve requirements
of 3% of Deposits in rupiahs.
Example:
 The Bank has Deposit Funds in rupiahs Rp.55, (fifty-five trillion rupiahs). Banks are
required to maintain a legal reserve requirement requirement of 5% from
Rp.55.000.000.000.000; added to 3% from RP. 55.000.000.000.000.
d. Banks that have Third Party Funds in rupiahs up to Rp1.000.000.000.000 (one
trillion rupiahs) are not subject to mandatory additional Legal reserve requirements as
referred to in points a, b, and c.
3. Whereas the fulfillment of the statutory reserve requirement is 5% plus a certain
percentage (in points 2a, 2b, and 2c) there is still a need to add an additional
percentage of GMW regarding the position of the Loan to Deposit Ratio of a bank
with the following details:
 Bank’s loan to the deposit ratio above 90% will be charged an additional 0%.
 loan to the deposit ratio which reaches 75-90% will be subject to an additional
1%.
 loan to the deposit ratio reaching 60-75% will be charged an additional 2%.
 50-60% loan to the deposit ratio will be charged an additional 3%.
 40-50% loan to the deposit ratio is subject to an additional 4%; and.
 loan to the deposit ratio of less than 40% will be subject to an additional 5%

MAINTENANCE AND CALCULATION PROCESURES OF LEGAL RESERVE

REQUIREMENT

Banks are required to maintain LEGAL RESERVE REQUIREMENT (WGM) on a daily

basis. the obligation to maintain the legal reserve requirement and fulfill the legal percentage
reserve requirement is calculated by comparing the number of Bank Indonesia current
accounts every day in a reporting period against the daily average of the amount of third party
funds (DPK) in one reporting period in the previous two reporting periods. The GWM
percentage calculation formula is as follows:

The daily amount of the balance of the Bank's Current account Account recorded at Bank
Indonesia every day in one report period

x 100%

Daily average number of bank deposits in one reporting period at two

previous reporting period.

The percentage of Legal reserve requirements in rupiahs or foreign currencies is based on

Bank Deposits in the following:

• The daily Legal reserve requirements for the reporting period from the 1st day through the
7th day is equal to the percentage of Legal reserve requirements determined from the average
Third Party Funds during the reporting period from the 16th to the 23rd of the previous
month.

• The daily Legal reserve requirements for the reporting period from the 8th to the 15th day is
the percentage of Legal reserve requirements determined from the average Third Party Funds
during the reporting period from the 24th to the end of the previous month.

• The daily Legal reserve requirements for the reporting period from the 16th to the 23rd day
are the percentage of Legal reserve requirements determined from the average Third Party
Funds during the reporting period from the first day to the same 7 months.

• Daily Legal reserve requirements for the reporting period of the 24th to the end of the
month are equal to the percentage of Legal reserve requirements determined from the average
Third Party Funds during the reporting period from the 8th to the 15th of the same month.

Information regarding TPF is obtained from DPK data submitted by banks to Bank Indonesia,
in accordance with Bank Indonesia provisions concerning Commercial Bank Periodic
Reports. Whereas information regarding the balance of the bank's Giro account in Indonesian
banks was obtained from the Indonesian bank accounting system. This applies to GWM in
rupiah and GWM in foreign currency.

The amount of TPF referred to in this calculation consists of the amount of TPF in rupiah at
all bank offices in Indonesia and the amount of TPF in foreign currencies at all Bank offices
in Indonesia. Particularly for Third Party Funds in rupiah includes obligations in rupiahs to
non-bank third parties, both to the population, which consists of:

 Current accounts for customers, which are deposits from the public that can be
withdrawn every day using checks, current accounts, or other book-entry orders.
 Time deposits; this can be in the form of time deposits and certificates of deposit. In
this post includes time deposits, insurance deposits, and deposits on call in rupiahs
whose withdrawals can be made within a certain period of time in accordance with
 agreements agreed between banks with third parties. Although it has matured but has
not been withdrawn by the depositor, it is still included in this component. Whereas
the deposit certificate, which is a time deposit that can be withdrawn within a certain
period of time according to what can be agreed but can be traded.
 Savings, that is, deposits of the public whose withdrawals can be made according to
certain conditions agreed upon but cannot be withdrawn using checks, current
accounts, or equivalent.
 Other obligations. The current short-term liabilities are all bank liabilities other than
those stated above which up to 24 months can be billed by the owner and immediately
paid. For example, PPh debt, other deposit accounts, obligation to purchase gas
stations sold under repurchase agreement (repo) terms.
While foreign currency deposits include liabilities in foreign currencies, to third
parties including banks in Indonesia, both for residents and non-residents, which
consist of.

Giro

Time deposits

Other obligation obligations

CURRENT ACCOUNT SERVICES OF BANK INDONESIA

Percentage of Demand Services
a) In accordance with Bank Indonesia regulations Number 6/15 / PBI / 2004 concerning
Legal reserve requirements for Commercial Banks at Bank Indonesia in Rupiah and
Foreign Currency as amended the latest by Bank Indonesia Regulation Number 7/49 /
PBI / 2005, Bank Indonesia provides services current accounts amounting to 6.5% per
annum against the balance of the Rupiah Current account Account that is intended to
fulfill the obligation to maintain GWM in rupiah.
b) The percentage of current account services in letter a is the annual effective interest
rate (effective annual rate) which is determined based on a daily compounding period
for 360 days, with the following formula:
Annual Interest Rate 36𝑜𝑑𝑎𝑦𝑠
Annual effective interest rate = (1 + ( ))) −1
360 𝑑𝑎𝑦𝑠
Current account service provided to the balance of the bank's rupiah current account account
designated for the fulfillment of the obligation to maintain additional rupiah is 0.0175% per
day.

Calculation of Giro Services

a. Current account services are calculated for each day based on the balance of
the bank's rupiah current account account recorded and obtained from the
Indonesian bank accounting system. Crediting of current accounts in rupiah
bank current account accounts by Bank Indonesia is carrie out as follows::
 On the 8th for the current account service from the 1th until 7th at the same
month periode.
 On the 16th for current accounts service from the 8th until 15th at the same
month periode
 On 24th for current account services from the 16th until the 23th at the same
month periode.
 On the 1th in the next month for the current account service from 24th until the
end of the previous month periode.
b. In the event that the dates for crediting current accounts by Bank Indonesia
fall on holidays, then crediting the balance of the Current account account of
the bank is conducted by Bank Indonesia on the next working day.
c. In the event of a lack or excess in the credit associated with the provision of
current accounts by Bank Indonesia, Bank Indonesia can directly credit or
debit the current account of who is involved.

The term Indonesian bank credit is the same as debiting by commercial banks. Conversely,
the debiting by Bank Indonesia is crediting by the public hank..

Example calculation of current account service:

Bank A has daily average Third Party Funds in rupiahs in the reporting period of the 8th day
through the 15th day of January of Rp.55.000.000.000.000. loan to the deposit ratio is above
90%. Daily Legal reserve requirements that must be maintained for the reporting period from
the 24th to the end of January, which is Rp. 7.750.000.000.000 as referred to in the criteria
for fulfillment of Legal reserve requirements plus
 a) 5% of RP. 55,000,000,000.00 is Rp. 2.75.000.000.000, thai is mean in fulfillment
criteria of legal reserve requirement (giro wajib minimum)
b) 3% from RP. 55.000.000.000 which is RP. 1.650.000.000.000 as referred to in
the reserve requirement (giro wajib minimum) fulfillment criteria.

The balance of rupiah Giro accounts with Bank A in Indonesia on January 24 was
Rp.4.400.000.000.000 or 8% of Third Party Funds in rupiahs. For Bank A, the current
account service on January 24 was only granted to the balance of the rupiah current account
account placed for the fulfillment of the provisions for additional Legal reserve requirements,
amounting to Rp1.650.000.000.000 in the following manner:

0.0175% x Rp1.650.000.000.000 = Rp.288.750.000.000

Journal required in bank A

Rekening Debit (Rp) Credit (Rp)

Dr. Bank Indonesia Giro 288.750.000.000
Cr. Interest Income on Current
accounts 288.750.000.000

The portion of the balance of the rupiah current account account placed for fulfillment of the
5% reserve requirement is Rp. 7,750,000,000,000.

The provision of current accounts does not apply to:

a) Part of the balance of the bank's rupiah current account account for the fulfillment of
certain conditions as referred to in the criteria for fulfilling the Legal reserve requirements
point 1.

b) The portion of the balance of the bank's Rupish current account account which exceeds the
Legal reserve requirements obligation, for the bank as referred to in the criteria for fulfilling
the RR 2d.

c) The portion of the balance of the rupiah current account account that exceeds the
additional reserve requirement as determined in the criteria for meeting the legal reserve
requirement requirement of letters a, b, or c.

d) Part of the balance of the bank's rupiah current account account which is an additional
reserve requirement for GWM in rupiahs that do not meet the conditions referred to in the
criteria for fulfilling the GMW point 2 letter a, b, or c.
SANCTIONS OF MINIMUM MANDATORY GIRO BREACH

• Debiting the bank checking account, as a result of the loading of witnesses for legal reserve
requirement requirements, is carried out on the next working day after the occurrence of a
legal reserve requirement requirement.

• In the event that the dates for debiting the bank checking account fall on a holiday, then
debiting the balance of the bank checking account is conducted by Bank Indonesia on the
following working day.

• In the event of a shortfall or excess in debiting related to the imposition of a legal reserve
requirement requirement sanction by Bank Indonesia, Bank Indonesia can directly debit or
credit the bank's current account.

Violation of legal reserve requirement (GWM) can happen in positif BI’s current account
(positif balance) or negative balancefor general bank. Bank is stated violate legal reserve
requirement (GWM) if account of daily current account in bank is cheaper than account of
daily current account bank that must maintained to fulfillment reserve requirement (GWM).
In the even of a violation of legal reserve requirement (GWM) in rupiah and the mean
of current account is in positif balance, so bank sanctioned obligation to pay 125% of
average interest rate for 1 day overnight period from Jakarta Interbank Offered Rate (JIBOR)
when the violation happen, to against deficiencies of legal reserve requirement (GWM) in
rupiah, to every violation.

Example calculation of sanctions

Bank A has daily average Third Party Funds in rupiahs during the reporting period of the 8th
day through the 15th day of January amounting to Rp20.000.000.000.000. LOAN TO THE
DEPOSIT RATIO is above 90%. Daily RR for a reporting period from the 24th day through
the end of January is:

a) 5% of Rp. 20,000,000,000,000, namely Rp1,000,000,000,000, as referred to in Article 3

paragraph (1) plus.

b) 2% of Rp. 20,000,000,000,000, which is Rp.400.000.000.000, as referred to in the criteria

for fulfilling GWM point2.

The balance of rupiah Giro accounts with Bank A at Bank Indonesia on 24 Jnuari amounted
to Rp1.200.000.000.000 or 6% of Deposits in rupiahs, resulting in a shortage of GWM
fulfillment of Rp.200.000.000.000. The JIBOR interest rate on January 24 was 6%.
Calculation of sanctions for payment of violations of rupiah Legal reserve requirements for
Bank A on January 24 is as follows

𝐺𝑊𝑀 𝑆ℎ𝑜𝑟𝑡𝑎𝑔𝑒 𝑥 125% 𝑥 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑟𝑎𝑡𝑒 𝑓𝑜𝑟 𝐽𝐼𝐵𝑂𝑅 𝑥 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑑𝑎𝑦𝑠)

= 360 𝑥 100

Namely:

𝑅𝑝200.000.000.000 𝑥 1.25𝑥 6 𝑥 1
360 𝑥 100

= 41.666.667

Journals at Bank A are:

Dr. Other penalty fees Rp41.666.667

Cr. Bank Indonesia Giro Rp41.666.667

Examples Case Of Accounting Treatment And Calculation Of Auction Result Settlement

Price Of Conventional Based Government Securities

Sample case:

Bank ABC has a daily average of third party funds (TPF) in rupiahs during the reporting
period from the 8th day through the 15th day of January of Rp.55,000,000,000,000 and
the calculation of the amount of the LDR at the end of the second week's reporting period
is 80%.

The balance of the rupiah bank checking account at Bank Indonesia at:

• January 24 is Rp.4.950.000.000.000 or 9% of Third Party Funds in rupiahs.

• January 25 of Rp.4.950.000.000.000 or 9% of Third Party Funds in rupiahs

• On January 26, Rp.4.565.000.000.000 or 8.3% of Third Party Funds in rupiahs.

• January 27 amounted to Rp.5.555.000.000.000 or 10.1% of Third Party Funds in

rupiahs.

• January 28 of Rp.7.051.000.000.000 or 12.82% of Third Party Funds in rupiahs.

• January 29 amounting to Rp6.050.000.000.000 or 11% of Third Party Funds in rupiahs.

• January 30 amounted to Rp4.950.000.000.000 or 9% of Third Party Funds in rupiahs

• January 31 of Rp4.950.000.000.000 or 9% of ThirdParty Funds in rupiahs

1. GWM Calculation
• 5% of Rp.55.000.000.000.000, namely Rp.2.750.000.000.000 as referred to in the
criteria for fulfilling GWM point 1.
• 3% of Rp.55,000,000,000,000 which is Rp1,650,000,000,000, which is an additional
Statutory Reserves based on Third Party Funds as referred to in the criteria for
fulfilment of Statutory Reserves in point 2c, plus.
• 1% of Rp.55,000,000,000,000 which is Rp.550,000,000,000, which is an additional
Statutory Reserves based on LDR as referred to in the criteria for fulfilment of
Statutory Reserves in point 3.

2. Calculation of Current Accounts and Journal Notes

a. The calculation of demand deposits for 27.28.29 and 30 January dates is as
follows:
= 0.0175% x part of the balance of the bank's rupiah demand deposit account which is
an obligation for additional GWM maintenance
= 0.0175% x Rp.2,200,000,000,000
= IDR 385,000,000
The balance of the rupiah giro account on the 24th, 25th, and 31st January is not
provided with demand deposits, because these dates do not fall on business days
b. Crediting of Current Account by BI
Crediting of demand deposits by BI for January 27, 28, 29 and 30 respectively was
carried out by BI on the rupiah demand deposit account on February 2, because on
February 1, it fell on a holiday. Current account services credited to the Bank's rupiah
Giro account on February 2 are:
= 4 x Rp385.000.000
= Rp1.540.000.000
The journal at ABC Bank is:

Account Debit (Rp) Credit (Rp)

 Dr. Bank Indonesia current account 1.540.000.000
Cr. account-interest interest income 1.540.000.000

Calculation of Statutory Reserves and Journal Notes

• Sanctions for lack of fulfilment of Statutory Reserves on January 26 are calculated
as follows:
Rp385.000.000.000 x 1.25 x 8 x 1 hari
= 360 𝑥 100

= Rp106.944.444
Description:
Whereas the balance of the BI Demand Deposit on January 26 amounted to
Rp.4,565,000,000,000 which is equivalent to 8.3% of Third Party Funds in rupiah
currency. Thus the calculation is:

5% x Rp55,000,000,000,000 Rp2.750.000.000.000
3% x Rp.55,000,000,000,000 1.650.000.000.000
1% x Rp55,000,000,000,000 550.000.000.000
The amount of Statutory Reserves should be Rp4.950.000.000.000
BI Current Account Balance as of January 26 4.565.000.000.000
Information Rp385.000.000.000

Debiting of the Real Demand Deposit Account by BI for sanctions for shortages of
Statutory Reserves on January 26 amounting to 106,944,444 carried out on the
following working day, namely on January 27. Thus Bank ABC credit the following
dates:

Account Debit (Rp) Credit (Rp)

Dr. Other fees for statutory reserve requirements 106.944.444
Cr. Bank Indonesia current account 106.944.444
 CHAPTER 13:

SHORT-TERM INVESTMENT

SHORT-TERM INVESTMENT: BONDS & STOCK

Short-term investments are intended to be resold, not to control the issuer's company. Short-
term securities purchases are usually recorded at historical cost accounting. This listing
applies both to bonds and stocks.

Especially for the purchase of bond securities transactions that occur between the date of
interest payment, the current interest is not part of the historical cost accounting, but is the
interest receivable and recorded in the interest account.

Example:

In early 2015 Bank Indonesia decided to invest its excess liquidity in short-term bonds and
shares. Transactions related to the price of securities are as follows:

January 10, 2015

10,000 shares of PT Tritiih Jaya were purchased with a nominal value of Rp5,000 per share,
an exchange rate of 110% and a purchase fee of Rp75 per share. Purchases are made through
BI current accounts.

January 20, 2015

10,000 shares of PT Indorent were purchased with a nominal value of Rp.2,000 per
November, an exchange rate of 97% and a purchase fee of Rp20 per share. Purchases are
made in cash.

April 1, 2015

2.500 PT Baruna's 18% bonds were purchased, Rp. 5,000 per share at 108% exchange rate,
Rp. 10 per purchase fee, purchase of current accounts at other banks (ABC Bank). Interest is
paid every June 1 and December 1.

May 31, 2015

Purchased Rp7.500 per bond 18% PT Adi Karya Wisesa nominal Rp2.000 with an exchange
rate of 94% and a purchase fee of Rp30 per share. Bond interest is paid every March 1 and
September 1.

Recording of these transactions at Indoball Bank is:

Date Account Debit (Rp) Credit (Rp)

10/01/2015 Dr. Investment Jk. Short Shares of PT Tritih Jaya 55.750.000
Cr. Giro Bank Indonesia 55.750.000

Calculations

Description Amount
The purchase price of 10.000 x 5.000x 110% 55.000.000
Purchase Fee of 10.000 x 75 750.000
Acquisition cost 55.750.000

Date Account Debit (Rp) Credit (Rp)

20/01/2015 Dr. Investment Jk. Short Shares of PT 19.600.000
Cr. Cash 19.600.000

Calculations:

Description Amount
The purchase price of 10,000 x 2000 x 97%
19.400.000
Purchase Fee of 10,000 x 20
200.000
Acquisition cost
19.600.000

Listing for PT Baruna bond purchase transactions

Date Account Debit (Rp) Credit (Rp)

01/04/2015 Dr. Investment Shorterm. PT Dari Bonds 13.550.000
Dr. Interest Income 750.000
 Cr. Current Bank Current accounts 14.300.000

Calculations

Description Amount
The purchase price of 2500 sheets x Rp. 5,000 x 108%
13.500.000
The purchase fee is 2500 pieces x 20
50.000
Acquisition cost
13.550.000
Interest runs 1/12 2014 to 1/4 2015

(4/12) x 18% x Rp. 12,500,000

750.000
Total payment
14.300.000

Journals for amortization and interest adjustment are:

Date Account Debit (Rp) Credit (Rp)

01/06/2015 Dr. Cash 1.125.000
(Interest receipt) Cr. Interest Income 1.125.000

01/12/2015 Dr. Cash 1.125.000

(Acceptance of
interest) Cr. Interest Income 1.125.000

31/12/2015 Dr. Interest receivable 187.500

(Interest
adjustment) Cr. Interest Income 187.500

Bond investment of PT Adi Karya Wisesa

Account Debit (Rp) Credit (Rp)

Dr. Investment Jk. Short Bond PT 14.325.000
Dr. Interest income 450.000
Cr. Cash 14.775.000

Calculations

Description Amount
Purchase price of 7500 sheets x Rp.2,000 x 94%
14.100.000
Cost of purchasing 750 sheets x 30
225.000
Acquisition cost
14.325.000
Interest runs 1/4 to 31/5/2015

(2/12) x 18% x Rp. 15,000,000

450.000
Total payment
14.775.000

Recording for interest receipts is:

Date Account Debit (Rp) Credit (Rp)

01/06/2015 Dr. Cash 1.350.000
(Acceptance of
interest) Cr. Interest Income 1.350.000

01/12/2015 Dr. Interest Receivable 900.000

(Interest
Adjustment) Cr. Cash 9.00.000

ASSESSMENT OF SHORT-TERM INVESTMENTS FOR RISK SECURITIES

Investment valuation based on short-term according to the usual there are three bases,
namely the cost price (cost base), market price, and the lowest price between the
market price and the acquisition price.
• Evaluation based on the acquisition price
If a temporary investment is paid at the acquisition price, it is not necessary to make
an adjustment journal, but it must be disclosed in the financial statements. By
referring to the previous example, the acquisition price can be known:

Acquisition cost
Short-term securities (Rp)
PT Tritih Jaya shares
55.750.000.
PT Indotext's shares
19.600.000
PT Baruna shares
13.550.000
PT Adi Karya Wisesa shares
14.325.000

• Assessment based on market prices

 An assessment at market prices can be done if the market price of the
securities is less than the cost. This is consistent with conservative principles
in financial reporting.
• Evaluation based on the lowest price between the market price and the
acquisition price.
This method is the best method and is indeed used in assessing short-term
investments. Assessment with this method depends on the relationship
between the acquisition price and the market price.
a) acquisition priceis greater than market price, then presented at market price.
b) The value of the acquisition is smaller than the market price, then it is
presented at the acquisition price.
c) Acquisition price equals market price, it is presented at the market price or
acquisition price.

Assessment of short-term investments using this method uses the following steps:

• Determine the acquisition price.

• Record the prices of short-term investment markets

• Compare to choose the lowest between the acquisition price or market price.

BANK INDONESIA CERTIFICATE

Introduction: SBI and auction mechanism

SBIs are securities of rupiah denominations issued by BI as recognition of short-term debt

with a discount system. SBIs are issued and sold by BI to reduce the excess of base money
(currency+ current accounts).

In line with the basic idea of issuing SBI as one of the tools for open market operations, SBI
sales are prioritized to banking institutions. Even so, it is not possible for individuals, both
companies and companies to be able to own SBIs.

Characteristics of Bank Indonesia Certificates

 SBI has Rp1.000.000.unit

 SBIs are issued scriptless.
 SBIs are traded on the secondary market.
  The period of SBI is at least 1 month and is a maximum of 12 months which is stated
in the number of days and is calculated from the date of settlement of the transaction
until the due date.
 SBI is issued and traded with a discount system.
The transaction cash value is calculated based on the true discount as follows:

Cash value = (Nominal Value x 360) / (360 + {(Discount Rate) x (Term)})

 Discounted value is held as follows:

Discount Value = Nominal value - Cash value

Recording of SBI Purchase Transactions

Recording of SBI transactions here is for participants who won the SBI auction. SBI winners
act as SBI buyers for short-term investments. SBI enumeration is certainly at the cost. the
difference between the nominal value and the cash value is recorded as interest income

The recording of SBI transactions in this area is for participants who won the SBI auction.
SBI winners act as SBI buyers for short-term investments. Registration of SBIs is at cost. The
difference between the nominal value and the cash value has stabilized the SBI auction of
5,000,000,000 with a discount rate of 12% pa, the SBI auction period is 3 months (90 days)
so to record it at Bank Mandiri is preceded by determining the cash value, discount value and
mandatory tax borne by Bank Mandiri.

Calculation:

Nominal SBI won in auction 5.000.000.000

Cash value (Rp5.000.000.000.000 x 360) / ( 360 + (0.12 x
90) 4.854.368.932
Discount 145.631.068
Discounted PPh fee = Rp 145.631.068 x 15% 21.844.660
Current Account expense = Rp21.844.660 +
Rp4.854.368.932 4.876.214.592

SBI purchase journals at Bank Mandiri are:

Date Account Debit (Rp) Credit (Rp)

Dr. Bank Indonesia Certificate
01/05/2015 5.000.000.000
Dr. PPh paid in advance
21.844.660
 Cr. Interest opinion received
145.631.068
Cr. BI Giro
4.876.213.592

Interest income received in advance must be amortized every month as follows:

Date Account Debit (Rp) Credit (Rp)

31/05/2015 Dr. Interest income is received in advance 48.543.689,33
Cr. Interest Income 48.543.689,33

Dr. Interest income tax 7.281.553,33

Cr. Prepaid PPh 7.281.553,33

30/06/2015 Dr. Interest income is received in advance 48.543.689,33

Cr. Interest Income 48.543.689,33

Dr. Interest income tax 7.281.553,33

Cr. Prepaid PPh 7.281.553,33

31/07/2015 Dr. Interest income is received in advance 48.543.689,33

Cr. Interst Income 48.543.689,33

Dr. Interest income tax 7.281.553,33

Cr. Prepaid PPh 7.281.553,33

Dr. BI Giro 5.000.000.000

Cr. Bank Indonesia Certificate 5.000.000.000.

SBI Trading Principles and Requirements

1. SBI is issued through an auction mechanism.

2. SBI auctions are conducted based on quantity targets by taking into account the level of
interest rates / discounts that occur.

3. In this case the one-month SBI issuance is carried out using the fixed rate method as
referred to in point 1.a, the discount rate applied shall be based on BI-RATE.

4. BI announces the SBI auction plan at the latest on the working day before the day of the
SBI auction day is held through the money market information center (PIPU) or other means
set by BI.
5. The SBI auction is held on Wednesday, or on the following working day or other working
days if Wednesday is a holiday that can be held every week and or every two weeks and / or
every month.

6. The SBI maturity date is set on Thursday or the next working day if Thursday is a holiday.

7. SBI auction participants are divided into:

a) Direct participants, namely banks and brokers that conduct SBI auction transactions
directly by BI.

b) Indirect particpant, a bank that submits an SBI auction through a broker.

8. Banks can only submit SBI auction offers only for self-interest.

9. Brokers are prohibited from submitting SBI auctions for their own benefit.

10. The SBI auction participant is responsible or the truth of the proposed SBI auction bid
data.

Determination of the Winner of the SBI Auction

1. In the event that an SBI auction is conducted using a fixed rate rate, the incoming quality
offerings from each auction participant are declared to be accepted as the winning bidder.

2. BI can only adjust the quantity of laelalng winners as referred to in number 1

3. In the event that an SBI auction is conducted using a variable rate method, the winner of
the SBI auction is determined in a way;

a) BI determines the SOR for SBI auction offers received.

b) The quantity of SBI auctions won by each bidder is calculated as follows:

1) In the event that the tender participant submits a bid rate for the discount rate lower than
the SOR that is stipulated, the auction participant concerned obtains all SBI offers submitted;

2) In the event that the auction participant submits a discount rate equal to the stipulated
SOR, the auction participant concerned can obtain all or part of it which is calculated
proportionally.

SBI Repo with Bank Indonesia

Example of calculating the value of a SBI Repo transaction

Participant 4 (Bank XYZ) submits Repo SBI transactions with a concept of SBI IDBI
10100428S with a nominal value of 500,000,000,000 and the applicable repo SBI discount
rate of 13,093% (see weighted average. Cash value of SBI Repo transactions submitted by
Bank XYZ as follows:

SBI Repo Nomina; 500.000.000.000.,00

Cash Value (Rp500.000.000.000 x 360)/ (360 +(0.13903 x 1) 499.806.977.322,06
Discount 193.022.677,94
PPh costs 15% x Rp193.022.667,94 28.953.401,69
For current account / bank profits 499.835.930.723,75

The formula for calculating the value of a SBI Repo is:

(𝐶𝑎𝑠ℎ 𝑉𝑎𝑙𝑢𝑒)𝑥 360

Cash Value = 360+{𝑆𝐵𝐼 𝑅𝑒𝑝𝑜 𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑅𝑎𝑡𝑒) 𝑥 (𝑆𝐵𝐼 𝑅𝑒𝑝𝑜 𝑃𝑒𝑟𝑖𝑜𝑑)}

The Journal is:

Date Account Debit (Rp) KCredit (Rp)

02/05/2015 Dr. BI Giro 499.835.930,723,75
Dr. Interest income is received upfront 193.022.677,94
Cr. Bank Indonesia Certificate 500.000.000.000
Cr. PPh is paid in advance 28.953.401,69

Calculation of bank profits in SBI investments repurchased (Rp. 500,000,000,000) can be

determined. When the auction winner we have determined the default value and disk discount
as follows:

Nominal SBI won in auction 500.000.000.000

Cash Value (Rp500.000.000.000 x 360) / ( 360 + (0.14 x
28) 494.614.200.923
Discount 5.385.799.077
Discounted PPh fee = 15% x Rp 5.385.799.076,72 Rp807.869.862
Current Accounts / bank fees (is cash + tax) 495.422.070.785

Thus the benefits of SBI Investment (specifically those in repos)

Description Amount (Rp) Total (Rp)

Interest income at auction
5.385.799.076,72
Cost of interest when repo
193.022.677,94
Net interest income before tax
5.192.776.398,78
Interest tax at auction
807.869.861,51
Tax safekeeping when repo
28.953.401,69
Tax is borne by the bank
778.916.459,82
Net interest income after tax
4.413.859.938,96
 CHAPTER 14:
INVESTMENT ON CONVENTIONAL BASED
GOVERNMENT SECURITIES (SUN)

TYPES OF STATE DEBT LETTERS (SUN)

Government Bonds (SUN) issued and sold by auction in the primary market consist of:

o State Treasury Bill, hereinafter referred to as SPN, namely SUN in rupiah currency
with a maturity of up to 12 months with discounted interest payments.

o Government Bonds (ON), namely SUN in rupiah currency with a maturity of more
than 12 months with coupons and or with discounted interest payments.

Those who can buy SUN in the primary market are individuals, companies, joint ventures,
associations, or organized groups. Whereas parties who can participate in the SUN auction
called auction participants consist of banks, money market brokerage companies and
securities companies that have been appointed by the Minister of Finance of the Republic of
Indonesia.

HOW TO PURCHASE STATE DEBT LETTERS

How to purchase state bonds:

o Competitive purchases are submission of purchase bids by including the volume and
yield rate desired by the bidder.

o Non-Competitive Offer is the submission of a purchase offer by listing the volume

without the yield level desired by the bidder.

Settlement of SUN auction results in the primary market is carried out with the
following conditions:

o SPN is conducted on the next working day after the SPN auction day (T + 1).
o ON at the latest - at the latest 5 working days after receipt of the announcement of
the winner of the winning winner ON (T + 5).SUN Auction Terms and Conditions

1. SUN Auction is carried out based on the target quantity by taking into account the
discount rate or yield of the payment received.

2. Banks and securities companies may submit SUN auction bidding and on behalf of
themselves and other parties, namely individuals, companies, joint ventures,
associations, or organized groups.

3. Money market brokerage companies can only tax SUN auction offers for other
parties, namely individuals, companies, joint ventures, associations, or organized
groups.

4. In the event that an auction participant submits a SUN purchase offer for and on his
own behalf, the purchase bid can only be made by means of a competitive purchase.

5. In the event that the auction participant submits SUN purchase arrestors for and on
behalf of other parties, namely individuals, companies, joint ventures, associations, or
organized groups, the submission of bids can be carried out by means of competitive
purchase and non-competitive purchase.

6. BI announces the auction quantity target plan in the form of an indicative target no
later than one business day prior to the SUN auction day through the center of the
Money Market Information Centre (PIPU) or other means established by Indonesia
Bank procedures for implementing SUN auctions

1. BI announces indicative targets and the date of SUN auction through PIPU or other
facilities stipulated by BI.

2. Announcement of SUN auction plans including but not limited to:

3. On the day of SUN execution, bidders submit a quantity bid and discount rate
according to the time period for competitive bidding or non-competitive bidding.

o The time of the auction

o Indicative targets offered

 o SUN period

o Issuance date and due date

o Currency

o The time of opening and closing the purchase offer (bid)

o Time for announcement of auction results

o Settlement date

o Allocation for non-competitive buying offers in the case of competitive and non-
competitive auction combinations

o Means for submitting auction bids.

4. The SUN auction is conducted by the head office of a bank or the bank office
designated by the head office of a bank.

5. Submission of bids is made by the head office of money market brokers and
securities companies.

6. SUN auction offer covering quantity supply and discount rate or yield according to
the time period regulated by the following conditions:

o The submission of a quantity payment from each auction participant must be at least
1000 units or Rp1,000,000,000 and the remainder with a multiple of 100 units or Rp
100,000,000.

o Offer submitted by a money brokerage company or securities company, must be

accompanied by direct confirmation from the designated bank as the paying bank to
conduct fund settlement.

o The offer of discount or yield is submitted with a multiple of 0.01%.

DETERMINATION OF SUN AUCTION WINNERS

The method of determining the SUN auction winner is done by the Stop-Out Rate (SOR)
system, namely SUN sales based on indicative SUNs that will be sold by the government.
SOR is determined by the Minister of Finance of the Republic of Indonesia.

Price and quality determination for each auction winner is as follows:

1. Competitive purchase offer

o In the event that the discount rate or yield is lower than SOR, the auction participant
obtains all of the SUN quantity offers submitted with the proposed discount rate or
yield.

o In the event that the discount rate offer is the same as SOR, the auction participant
can obtain all or part of the SUN quantity offer submitted based on proportional
calculation, with the proposed discount rate.

2. Non-competitive purchase offer

o Determination of SUN prices for winners of SUN auctions is based on the weighted
average price of the auction results of competitive bidding.

o The determination of the quantity of SUN for auction winners is as follows:

1) In the event that the number of bids is smaller than the maximum allocation for
non-competitive auctions, participants obtain all the quantities submitted.

2) In the event that the number of bids is greater than the maximum non-compliant
allocation, the auction participant obtains a portion of the quantity bid submitted
based on proportional calculation.

ACCOUNTING TREATMENT AND CALCULATION PRICE CALCULATION OF

SUN AUCTION RESULTS

Calculation of SUN Auction Result Settlement Prices

1) The period of SUN is stated in the number of days and is calculated as the settlement
date up to the maturity date.
 2) Number of day counts for the calculation of Actual per Actual (A / A) accrued interest
base.

3) Calculation of fund settlement prices is carried out as follows:

o For SPN

Settlement price = (net price per rounded SPN unit) x (number of SPN units won).

o To ON with a coupon system

Settlement price = (Net price per unit of ON which is rounded) x (Number of units of ON
won).

o For ON with a discount system

Settlement price = (net price per unit of ON that has been rounded) x Number of units On
won).

How to calculate the price of the unit per State Treasury Letter (SPN are as follows:PSPN =
𝑁
𝐷
1+(𝑖 𝑥( ))
365

Description:

PSPN= Settlement price per SPN unit

N = the nominal value of SPN per unit

i = Yield in percentage, up to four decimal places

D = Number of actual days counted from one day after the date of the settlement until the due
date