Fit and Proper Tests in the Syariah Banking Sector

The Syariah banking sector is recognized as holding considerable potential to contribute to the growth and development of the national economy. However, if this potential is to be exploited then the government and Bank Indonesia (BI) must ensure that there are safeguards in place to protect consumers and to regulate the management of both Syariah Banks and Syariah Business Units. The best way to ensure the reduction of risk is to endeavor to place only qualified individuals into positions that are responsible for the overall direction of Syariah Banks and Business Units and their management.

To this end, BI has issued Regulation No. 11/31/PBI/2009 setting out provisions with respect to fit and proper tests for these individuals who are prospective candidates for executive and management positions at the relevant Syariah Banks and Business Units. The individuals concerned include controlling shareholders (Pemegang Saham Pengendali / PSP), prospective candidates for the Board of Commissioners, the Board of Directors of the Syariah banks, and the USS Directors.

In addition, the regulation also includes a mandate that incumbent PSP, members of the Board of Commissioners, the Board of Directors of the Syariah banks, and the USS Directors are to participate in the fit and proper tests.

BI is responsible for the conduct of the fit and proper tests. The individuals tested will be tested against the following criteria:

The regulation provides both administrative and criminal sanctions. The administrative sanctions may take the form of a written warning and / or dismissal from office. Meanwhile, the criminal sanctions stipulate terms of imprisonment of between 3 and 8 years and fines of between IDR 5 and IDR 100 billion.

The regulation repeals and replaces Regulations No. 5/25/PBI/2003 on Fit and Proper Tests, and No. 6/23/PBI/2004 on Fit and Proper Test for Community Credit Bank.