Dion Bisara – After a long delay, the House of Representatives passed a bill on Thursday that will create a new superbody to supervise the country's financial sector, including banking and capital markets, by early 2013.

To consolidate policies amid global financial turbulence, the Financial Services Supervisory Authority (OJK) will assume the central bank's current supervisory role over the nation's lenders, which are valued at Rp 3,300 trillion ($370 billion).

It will also oversee capital markets and non-banking institutions, presently monitored by the Capital Market and Financial Institution Supervisory Board (Bapepam LK), which is attached to the Finance Ministry.

"This bill, in its history of discussions at the House, was one that saw many deadlocks, but today... thank God, it has finally been approved by all factions to become law," said Priyo Budi Santoso, a deputy House speaker from the Golkar Party, who chaired the plenary session on Thursday.

The OJK was modeled on Britain's Financial Services Authority. The superbody has as one of its key functions avoiding a banking meltdown like that seen in the 1997-98 Asian financial crisis.

In addition, lawmakers in 2004 saw flaws in the ability of Bank Indonesia to monitor the country's hundreds of commercial banks.

A 2004 central bank law called for the establishment of the OJK by the end of 2010, but drafting the bill has been a slow process, with Bank Indonesia, keen to retain its oversight powers, arguing that the change could put financial stability at risk.

With the new superbody, Bank Indonesia must give up its power to grant bank licenses, to supervise and assess lenders' health and to release policies for banking sector stability.

The bill will allow a new inter-agency forum to make critical decisions about the financial sector. The key members, the finance minister, the central bank governor and the OJK's head of commissioners, can then respond quickly to any potential financial shock that could hurt the nation's economy or its financial system.

"To achieve these objectives, the OJK must be an independent agency," Finance Minister Agus Martowardojo was quoted by Antara news agency as saying.

He said that OJK members also holding roles at the central bank and the Finance Ministry were expected to better synchronize fiscal and monetary policies.