Bank Indonesia says foreign nationals will only be allowed to work as top-level executives at foreign-owned banks in the country.
The central bank's deputy governor for banking affairs, Muliaman D Hadad, also said they hoped to accelerate the "transfer of knowledge" at these banks.
Bank Indonesia is currently working to finalize a draft regulation on these issues.
"Bank Indonesia will issue a regulation that limits the number of foreign bankers who can work in middle-management positions at the country's banks that are owned by foreign-based investors. The regulation will also require banks to implement a 'transfer of knowledge,'" he said Sunday.
Under the regulation, foreign nationals will not be allowed to fill middle-management positions at the banks, except for those positions for which there are no qualified Indonesians.
In these cases, the foreign-owned banks will have three years in which to complete the transfer of knowledge process and train Indonesians to fill the positions.
"There's nothing we can do if there are no qualified Indonesians to fill those positions. But if they are, they must be employed," Muliaman said as reported by Antara.
He said foreign-owned banks must train at least two local employees eventually to fill middle-management positions held by foreign nationals. "I hope three years is enough time for the training process."
Muliaman said that in implementing the regulation, Bank Indonesia would abide by all relevant rulings, including the 2003 Labor Law and the 1998 Banking Law, as well as other central bank regulations and ratified agreements.
Indonesia's privatization program since the economic crisis has seen a flurry of takeovers of national banks by overseas-based investors.
Aside from Bank Mandiri, Bank Negara Indonesia and Bank Rakyat Indonesia, all of which are state owned, Indonesia's top 10 banks in terms of assets are majority owned by overseas investors.
According to the central bank, foreign-owned banks currently control about 48 percent of total assets in the country's banking industry, while state-owned banks hold about 37 percent.
Bank Indonesia also is encouraging mergers among smaller banks to stabilize the industry.