OJK Updates Provisions on Maximum Limits for Fund Distributions and Large Exposures for Sharia Banks

In order to prevent any Sharia Commercial Banks (Bank Umum Syariah – “BUS”) from failing as a result of any concentration of fund transfers, the Financial Services Authority (Otoritas Jasa Keuangan – “OJK”) has issued Regulation No. 26/POJK.03/2021 on the Maximum Limits for Fund Distribution and Large Exposures for Sharia Commercial Banks (“Regulation 26/2021”), which represents an implementation of international standards for calculations of fund transfers and determinations of fund transfer limits. As a consequence of the promulgation of Regulation 26/2021, the previous legal frameworks that addressed determinations of loans and fund distributions have now been repealed and replaced, specifically:[1]