Indonesia tells banks to report risk-sharing with foreign parties

JAKARTA (Reuters) - Indonesia's central bank said on Thursday that it will require all banks in the country to report when they transfer or split any of their risk portfolio with banks or parties overseas.

Bank Indonesia (BI) said the new rule, to take effect on March 1, is aimed at improving management of foreign liabilities of banks operating in Indonesia.

Banks must report to BI and the Financial Services Authority their portfolio's "risk participation transactions" which involve banks or parties outside Indonesia, said Yanti Setiawan, director of the central bank's financial system surveillance department.

Such transactions often occur on large-scale corporate loans and "usually it takes place between a bank here and their sister company abroad," she told reporters.

Banks will be required to report such transactions within seven days. Those failing to do will be fined, she said.

The revision announced on Thursday also stipulates stricter sanctions for banks that fail to get BI's approval before raising funds overseas.

(Reporting by Maikel Jefriando;Writing by Fransiska Nangoy; Editing by Richard Borsuk)