OJK Regulation No. 4 of 2026 on the Implementation of Islamic Banking Investment Products

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Sector: Banking

Sub-Sector: Islamic Banking

Type of Regulation: OJK Regulation

Regulation Number: 4 of 2026

Effective Date: 4/29/2026

Attachment 1 POJK 4 of 2026 Implementation of Islamic Banking Investment Products.pdf Abstract of POJK 4 of 2026 Implementation of Islamic Banking Investment Products.pdf FAQ of POJK 4 of 2026 Implementation of Islamic Banking Investment Products.pdf

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Financial Services Authority Regulation Number 4 of 2026 concerning the Implementation of Islamic Banking Investment Products

Abstract: This Financial Services Authority Regulation is established considering that the implementation of Islamic banking investment products must fulfill Sharia principles based on justice, balance, transparency, and the principles of profit-sharing and proportional risk distribution according to the characteristics of investments in Islamic banking; the regulation of Islamic banking investment products prior to the enactment of Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector still applied principles similar to those of deposit products; and in accordance with the policy direction for the development and strengthening of Islamic banking based on Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector, there has been a clear separation between deposit products and investment products in Islamic banking.

The legal basis for this POJK is: Law No. 21 of 2008 as amended several times, lastly with Law No. 4 of 2023; and Law No. 21 of 2011 as amended lastly with Law No. 4 of 2023.

This POJK regulates matters including product classification, main characteristics (basic features and additional features), principles of product implementation (minimum standards for governance and risk management implementation, policies and procedures, separation of management and recording, application of prudential principles, and application of consumer protection), as well as guidelines for determining the quality of Underlying Assets for financial service institutions as Investor Clients, with the following provisions: (a) Islamic Banking Investment Products are Investment products that are bound and must be recorded in the Bank's financial position reports; (b) Banks must implement governance and risk management in the implementation of Islamic Banking Investment Products, which is an inseparable part of the general implementation of governance and risk management; (c) Banks must manage Underlying Assets based on prudential principles and Sharia Principles for the benefit of Investor Clients in order to fulfill fiduciary duties; (d) Banks must have policies and procedures regarding: suitability assessment mechanisms between Investor Clients' needs and capabilities and Islamic Banking Investment Products, at least by conducting profiling that ensures the Investor Client's profile matches the investment objectives, risk tolerance, financial profile, and investment experience; disclosure standards for Islamic Banking Investment Products; mechanisms for determining Underlying Assets to be offered to Investor Clients; and the implementation of active and periodic engagement with Investor Clients; (e) Banks implementing Islamic Banking Investment Products must ensure the separation of the management and recording of Investment funds from third-party deposit funds and the separation of Underlying Assets from other productive assets managed by the Bank; (f) Separation includes the separation of the calculation of return rates for deposit funds from Investment funds based on the distribution of profit shares from Underlying Assets with other productive assets; (g) Banks implementing Islamic Banking Investment Products must have adequate internal control systems to ensure separation, including reliable information systems for the preparation of financial information for Islamic Banking Investment Products; (h) Banks implementing Islamic Banking Investment Products must apply consumer and community protection principles, ensure the suitability of Investor Clients with the Islamic Banking Investment Products offered by the Bank, and provide transparent information about Islamic Banking Investment Products to Investor Clients; (i) Sharia Banks that already have Islamic banking investment products prior to the enactment of this POJK must adjust such products to comply with the provisions in this POJK no later than 2 (two) years from the effective date of this POJK and/or until the end of the contract period; and applications for licenses to implement Islamic banking investment products submitted prior to the enactment of this POJK will be processed in accordance with the provisions in this POJK; (j) Sharia Banks that do not comply with the Islamic Banking Investment Product provisions will be subject to administrative sanctions, including written reprimands, suspension of business activities, downgrade of health status, payment obligations, up to sanctions against principal parties; (k) This POJK is an important part of realizing Investment products in Islamic banking that are in accordance with the mandate of the law but remain in line with the policy direction for the development and strengthening of Islamic banking to realize the implementation of trusted, responsible, sustainable, contributive, and inclusive Investment products.

Note: This Financial Services Authority Regulation takes effect on the date of promulgation. This Financial Services Authority Regulation was promulgated on April 29, 2026, and established on April 1, 2026. Upon the effective date of this Financial Services Authority Regulation: a. Banks that already have Islamic banking investment products prior to the effective date of this Financial Services Authority Regulation must adjust such products to comply with the provisions in this Financial Services Authority Regulation no later than 2 (two) years from the effective date of this Financial Services Authority Regulation and/or until the end of the contract period; and b. Applications for licenses to implement Islamic banking investment products submitted prior to the effective date of this Financial Services Authority Regulation will be processed in accordance with the provisions in this Financial Services Authority Regulation.