Islamic finance is expected to be a significant contributor to the Indonesian economy over the coming years and there is a need to put into place a comprehensive regulatory framework to govern how the Islamic finance system is to work. This process has started and this Bank Indonesia (BI) Regulation, No. 10/32/PBI/2008, is part of that framework.
The current laws and regulations provide for the Indonesian Ulama Council (Majelis Ulama Indonesia / MUI) to issue edicts (fatwas) that provide context for and a statement as to the validity of the provisions with respect to Islamic law. BI recognizes that there is a need to establish a committee that is tasked with drafting BI regulations that incorporate the MUI fatwas into the Syariah banking regulatory framework.
The Committee’s primary function is to assist BI in implementing the MUI fatwas and expanding the Syariah banking sector.
The duties of the Committee are to interpret the fatwas of the MUI as they relate to Syariah banking, provide inputs with respect to implementation, and to develop the Syariah banking sector.
Membership of the Committee is restricted to a maximum of 11 individuals and they are to be drawn from the ranks of BI, the Department of Religion, and relevant community elements. The composition of the Committee is to be balanced between the three. The Head of the Committee is to be chosen from among the members.
Members of the Committee must satisfy strict integrity and competency requirements, such as: good morals, a vision and mission for developing the Syariah banking sector, an understanding of Syariah finance and economy issues, and knowledge of prevailing laws and regulations in the sector. Membership of the Committee for non-BI members is two years and this term can be extended for a maximum of two further periods. An honorarium is payable and the amount of which is to be determined by prevailing internal BI remuneration mechanisms.
Decisions of the Committee will be legal provided a quorum of more than 50% of members is present.
The Regulation repeals and replaces Decision of the Governor of Bank Indonesia No. 10/26/KEP.GBI/2008.
The Regulation has been in force since 20 November 2008.
Islamic finance is expected to be a significant contributor to the Indonesian economy over the coming years and there is a need to put into place a comprehensive regulatory framework to govern how the Islamic finance system is to work. This process has started and this Bank Indonesia (BI) Regulation, No. 10/32/PBI/2008, is part of that framework.
The current laws and regulations provide for the Indonesian Ulama Council (Majelis Ulama Indonesia / MUI) to issue edicts (fatwas) that provide context for and a statement as to the validity of the provisions with respect to Islamic law. BI recognizes that there is a need to establish a committee that is tasked with drafting BI regulations that incorporate the MUI fatwas into the Syariah banking regulatory framework.
The Committee’s primary function is to assist BI in implementing the MUI fatwas and expanding the Syariah banking sector.
The duties of the Committee are to interpret the fatwas of the MUI as they relate to Syariah banking, provide inputs with respect to implementation, and to develop the Syariah banking sector.
Membership of the Committee is restricted to a maximum of 11 individuals and they are to be drawn from the ranks of BI, the Department of Religion, and relevant community elements. The composition of the Committee is to be balanced between the three. The Head of the Committee is to be chosen from among the members.
Members of the Committee must satisfy strict integrity and competency requirements, such as: good morals, a vision and mission for developing the Syariah banking sector, an understanding of Syariah finance and economy issues, and knowledge of prevailing laws and regulations in the sector. Membership of the Committee for non-BI members is two years and this term can be extended for a maximum of two further periods. An honorarium is payable and the amount of which is to be determined by prevailing internal BI remuneration mechanisms.
Decisions of the Committee will be legal provided a quorum of more than 50% of members is present.
The Regulation repeals and replaces Decision of the Governor of Bank Indonesia No. 10/26/KEP.GBI/2008.
The Regulation has been in force since 20 November 2008.
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