Bank Indonesia Regulation No. 10/11/PBI/2008 on Bank IndonesiaSyariah Certificates (“Regulation”) has recently been amended by Bank Indonesia Regulation No. 12/18/PBI/2010 (“Amendment”). The Amendment modifies the provision of the Regulation relating to sanctions.
Generally, a Bank Indonesia Syariah Certificate is syariah-based commercial paper issued by Bank Indonesia, which is valid for a short period of time and valued in Indonesian Rupiah; based on a ju’alah contract (an agreement to provide a compensation for the delivery of certain performances); issued in paperless form; and cannot be traded in the secondary market.
In addition, all Bank IndonesiaSyariah Certificates have to be traded through an auction process.
The parties who can purchase such syariah-based financial instrument include Commercial Syariah banks and Syariah Business Units (a unit in a commercial bank, focusing in providing syariah banking services). Such parties are also allowed to propose a Syariah Certificates Repurchase Agreement to Bank Indonesia.
According to the Regulation, any parties trading in Bank IndonesiaSyariah Certificates who fail to fulfill their obligations as set out in Article 11 of the Regulation will be subject to the cancellation of the transaction, and a fine of 1/1000th of the total value of the transaction up to a maximum fine of IDR 1 billion.
The Regulation also provides that in the event the parties commit three violations within a six month period, additional sanctions will be imposed, including the suspensions of the parties from participation in future auctions of the Certificates.
In the Amendment, however, the sanctions have been changed. The parties are now subject to a fine of 1/1000th of the total value of the transaction, or of at least IDR 10 million, and up to a maximum of IDR 100 million.
The additional sanctions are also amended, whereby under the Amendment, such sanction only includes the suspension of the parties from taking part in any syariah monetary operation activities for 5 consecutive working days.
The Amendment has been in force since 30 August 2010.
For a brief overview of the Regulation, see ILB No. 813 3/4/2008.
Bank Indonesia Regulation No. 10/11/PBI/2008 on Bank IndonesiaSyariah Certificates (“Regulation”) has recently been amended by Bank Indonesia Regulation No. 12/18/PBI/2010 (“Amendment”). The Amendment modifies the provision of the Regulation relating to sanctions.
Generally, a Bank Indonesia Syariah Certificate is syariah-based commercial paper issued by Bank Indonesia, which is valid for a short period of time and valued in Indonesian Rupiah; based on a ju’alah contract (an agreement to provide a compensation for the delivery of certain performances); issued in paperless form; and cannot be traded in the secondary market.
In addition, all Bank IndonesiaSyariah Certificates have to be traded through an auction process.
The parties who can purchase such syariah-based financial instrument include Commercial Syariah banks and Syariah Business Units (a unit in a commercial bank, focusing in providing syariah banking services). Such parties are also allowed to propose a Syariah Certificates Repurchase Agreement to Bank Indonesia.
According to the Regulation, any parties trading in Bank IndonesiaSyariah Certificates who fail to fulfill their obligations as set out in Article 11 of the Regulation will be subject to the cancellation of the transaction, and a fine of 1/1000th of the total value of the transaction up to a maximum fine of IDR 1 billion.
The Regulation also provides that in the event the parties commit three violations within a six month period, additional sanctions will be imposed, including the suspensions of the parties from participation in future auctions of the Certificates.
In the Amendment, however, the sanctions have been changed. The parties are now subject to a fine of 1/1000th of the total value of the transaction, or of at least IDR 10 million, and up to a maximum of IDR 100 million.
The additional sanctions are also amended, whereby under the Amendment, such sanction only includes the suspension of the parties from taking part in any syariah monetary operation activities for 5 consecutive working days.
The Amendment has been in force since 30 August 2010.
For a brief overview of the Regulation, see ILB No. 813 3/4/2008.
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