Updated Legal Framework on Conventional Commercial Bank UUS: Licensing, Minimum Capital and Spin-off Requirements Revised

In an effort to support the development of, as well as procedural and business process adjustments for sharia business units (Unit Usaha Syariah – “UUS”) that are operating within the sharia banking sector, the Financial Services Authority (Otoritas Jasa Keuangan – “OJK”) has issued Regulation No. 12 of 2023 on Sharia Business Units (“Regulation 12/2023”), which has been in force since 12 July 2023.[1] At its core, the introduction of Regulation 12/2023 aims to consolidate and integrate various frameworks that address the UUS of conventional commercial banks (Bank Umum Konvensional – “BUK”), as well as to encourage spin-offs of UUS into sharia commercial banks (Bank Umum Syariah – “BUS”) in the wake of the issuance of Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector (“Law 4/2023”).[2]