- The Chief Executive of Banking Supervision at the Financial Services Authority (Otoritas Jasa Keuangan – “OJK”), Dian Ediana Rae (“Chief Executive”), has issued a statement affirming that the OJK has officially issued three new sets of guidelines that specifically address sharia banking products in an effort to strengthen sharia characteristics and sharia-based products with unique value propositions that are not offered by conventional banks.
- In this regard, the Chief Executive has revealed that the three sets of guidelines break down as follows: 1) Guidelines on Mudarabah Financing Products (“Mudarabah Product Guidelines”); 2) Guidelines on the Implementation of Shariah Restricted Investment Accounts (“SRIA”) through Mudharabah Muqayyadah Akad (“SRIA Guidelines”); and 3) Guidelines on Cash Waqf Linked Deposit (“CWLD”) Implementation (“CWLD Guidelines”).
- In terms of the Mudarabah Product Guidelines, the Chief Executive has affirmed that these guidelines are the third in an issued series that deal with financing products offered by the sharia banking industry. In this regard, the Mudarabah Product Guidelines have been introduced as an alternative set of guidelines that address the diversification of sharia financing products that can be implemented in addition to the existing Musyarakah financing scheme.
- The Mudarabah Product Guidelines cover a wide range of aspects that broadly break down as follows: 1) Scope of businesses and required capital available for Mudarabah financing; 2) Mechanism for the restructuring of Mudarabah financing; and 3) Schemes that are eligible for Mudarabah financing.
- Meanwhile, the Chief Executive has stated that the new SRIA Guidelines have also been introduced for use by the sharia banking industry in order to diversify its sharia-based products through a focus on investment-based transactions. In this regard, a mandate that addresses SRIA through Mudharabah Muqayyadah Akad is set out under Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector. The SRIA Guidelines broadly address the following aspects: 1) Structure of SRIA products; 2) Market conduct during SRIA transactions; and 3) Prudential and investment aspects of SRIA via foreign currencies.
- The Chief Executive has stated that the third set of guidelines, specifically the CWLD Guidelines, was originally introduced under the Roadmap for the Development and Strengthening of Sharia Banking. In this regard, CWLD is a kind of waqf-based contemporary cash product. The CWLD Guidelines are intended for use as a reference during the implementation of CWLD by sharia banks and specifically address the following aspects: 1) Regulatory aspects, general concepts and applicable schemes for CWLD; 2) Relevant documents required for CWLD implementation; and 3) Reports on CWLD programs. (ANT)
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