Implementation of Sharia Governance for Sharia Economic Banks

COPY
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 25 OF 2024
CONCERNING
THE IMPLEMENTATION OF SHARIA GOVERNANCE
FOR SHARIA ECONOMIC BANKS
BY THE GRACE OF THE MOST HIGH GOD,

THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that with the increasing role of Islamic banking in supporting economic growth and national stability, it is necessary to strengthen Sharia governance at Sharia Economic Banks, including increasing the authority and role of the Sharia Supervisory Board; b. that the Financial Services Authority Regulation Number 24/POJK.03/2018 concerning the Implementation of Governance for Sharia Microfinance Banks is no longer in line with the needs and development of the Sharia Economic Bank industry, so it needs to be replaced;
c. that to implement the provisions of Article 34 of Law Number 21 of 2008 concerning Islamic Banking as amended several times, most recently with Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector;
d. that based on the considerations as referred to in letters a, b, and c, it is necessary to establish a Financial Services Authority Regulation concerning the Implementation of Sharia Governance for Sharia Economic Banks;

Recalling:

1. Law Number 21 of 2008 concerning Islamic Banking (State Gazette of the Republic of Indonesia Year 2008 Number 94, Additional State Gazette of the Republic of Indonesia Number 4867) as amended several times, most recently with Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (State Gazette of the Republic of Indonesia Year 2023 Number 4, Additional State Gazette of the Republic of Indonesia Number 6845);
2. Law Number 21 of 2011 concerning the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Additional State Gazette of the Republic of Indonesia Number 5253) as amended with Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (State Gazette of the Republic of Indonesia Year 2023 Number 4, Additional State Gazette of the Republic of Indonesia Number 6845);

DECIDING:

To Establish: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING THE IMPLEMENTATION OF SHARIA GOVERNANCE FOR SHARIA ECONOMIC BANKS.

CHAPTER I
GENERAL PROVISIONS

Article 1
In this Financial Services Authority Regulation, the following terms are meant:

1. Sharia Economic Banks, hereinafter abbreviated as BPR Syariah, are a type of Islamic bank that does not provide services in giro transactions directly in its activities.
2. Sharia Principles are Islamic legal principles based on fatwas and/or Sharia conformity statements issued by institutions having authority in determining fatwas in the Sharia field.
3. General Meeting of Shareholders, hereinafter abbreviated as GMS, is the general meeting of shareholders for BPR Syariah in the form of a limited liability company or the members' meeting for BPR Syariah in the form of a cooperative legal entity.
4. Board of Directors is the Board of Directors for BPR Syariah in the form of a limited liability company or the management for BPR Syariah in the form of a cooperative legal entity.
5. Board of Commissioners is the Board of Commissioners for BPR Syariah in the form of a limited liability company, and supervisors for BPR Syariah in the form of a cooperative legal entity.
6. Sharia Supervisory Board, hereinafter abbreviated as DPS, is a party that has the task and function of supervising the implementation of BPR Syariah activities to ensure compliance with Sharia Principles.
7. Sharia Governance at BPR Syariah is the structure, process, and mechanism for managing BPR Syariah to ensure that the implementation of BPR Syariah business activities complies with Sharia Principles.
8. Executive Officials are BPR Syariah officials who are directly responsible to members of the Board of Directors or have significant influence over the policies and/or operations of BPR Syariah.
9. Human Resources, hereinafter abbreviated as HR, are members of the Board of Directors, members of the Board of Commissioners, members of the DPS, permanent employees, and/or non-permanent employees at BPR Syariah.

CHAPTER II
IMPLEMENTATION OF SHARIA PRINCIPLES AND SHARIA GOVERNANCE AT BPR SYARIAH

Article 2
(1) BPR Syariah is required to implement Sharia Principles in the implementation of business activities at all levels or stages of the organization.
(2) The Sharia Principles as referred to in paragraph (1) are based on fatwas and/or Sharia conformity statements determined by institutions having authority in determining fatwas in the Sharia field.

Article 3
(1) To ensure compliance with Sharia Principles as referred to in Article 2, BPR Syariah is required to implement Sharia Governance at BPR Syariah.
(2) In implementing Sharia Governance as referred to in paragraph (1), BPR Syariah is required to have a Sharia Governance framework manifested at least through:
a. the implementation of the tasks, responsibilities, and authorities of the DPS; b. the implementation of Sharia risk management functions and Sharia compliance functions;
c. the implementation of Sharia internal audit functions; and
d. the implementation of external review of Sharia Governance.
(3) The Board of Directors overseeing the functions as referred to in paragraph (2) letters b and c is responsible for the effectiveness of the implementation of those functions in fulfilling Sharia Principles. (4) The functions as referred to in paragraph (2) letters b and c coordinate with the DPS in carrying out their tasks.

Article 4
(1) BPR Syariah is required to have internal procedures regarding the implementation of Sharia Governance at BPR Syariah in the implementation of business activities.
(2) BPR Syariah is required to evaluate and revise the internal procedures as referred to in paragraph (1) to ensure compliance with Sharia Principles and statutory regulations.

Article 5
The Financial Services Authority conducts an assessment of the implementation of Sharia Governance at BPR Syariah.

Article 6
(1) BPR Syariah violating the provisions as referred to in Article 2 paragraph (1), Article 3 paragraph (1), paragraph (2), and/or Article 4, shall be subject to administrative sanctions in the form of a written reprimand. (2) In the event that BPR Syariah has been subject to administrative sanctions as referred to in paragraph (1), and continues to violate the provisions as referred to in Article 2 paragraph (1), Article 3 paragraph (1), paragraph (2), and/or Article 4, BPR Syariah shall be subject to administrative sanctions in the form of:
a. downgrade of health level; b. temporary suspension of some operational activities of BPR Syariah; and/or
c. prohibition on expanding business activities.
(3) In the event that BPR Syariah has been subject to administrative sanctions as referred to in paragraph (1) and/or paragraph (2), the principal parties of BPR Syariah may be subject to administrative sanctions in the form of prohibition as principal parties in accordance with the Financial Services Authority Regulation concerning re-evaluation of principal parties of financial service institutions. (4) In addition to the administrative sanctions as referred to in paragraph (1), paragraph (2), and/or paragraph (3), BPR Syariah and/or controlling shareholders may be subject to administrative sanctions in the form of fines of at least IDR 10,000,000.00 (ten million rupiah) and at most IDR 100,000,000.00 (one hundred million rupiah) for each violation committed.

CHAPTER III
DPS

Section One
Position, Number, and Criteria of DPS

Article 7
(1) DPS members are established as principal parties of the bank in accordance with the Financial Services Authority Regulation concerning the assessment of competence and propriety for principal parties of financial service institutions and the Financial Services Authority Regulation concerning the re-evaluation of principal parties of financial service institutions. (2) Candidate DPS members must obtain approval from the Financial Services Authority through a competence and propriety assessment before carrying out actions, tasks, and functions as principal parties as referred to in paragraph (1). (3) In order to obtain approval from the Financial Services Authority as referred to in paragraph (2), candidate DPS members must obtain a recommendation from an institution having authority in determining fatwas in the Sharia field. (4) BPR Syariah manages and develops the quality of DPS continuously in accordance with the Financial Services Authority Regulation concerning the development of quality of human resources for economic banks and Sharia economic banks. (5) DPS members as principal parties as referred to in paragraph (1) shall take effect on January 1, 2026. (6) Further provisions concerning the assessment of competence and propriety for DPS members as referred to in paragraph (2) shall be determined by the Financial Services Authority.

Article 8
DPS members are established as related parties in accordance with the Financial Services Authority Regulation concerning the maximum limit for granting credit by rural credit banks and the maximum limit for the distribution of funds by Sharia microfinance banks.

Article 9
BPR Syariah is required to have at least 2 (two) and at most 3 (three) DPS members.

Article 10
(1) The DPS must be led by a chairman who is one of the DPS members.
(2) If necessary, other DPS members may be appointed as deputy chairman of the DPS.

Section Two
Independence of DPS

Article 11
(1) DPS members are prohibited from holding concurrent positions:
a. as DPS members in more than 1 (one) other BPR Syariah and 2 (two) Sharia financial service institutions; b. as members of the Board of Commissioners in other financial service institutions supervised by the Financial Services Authority, if the concurrent positions in letter a have been fulfilled;
c. as members of the Board of Directors or Executive Officials in other financial service institutions supervised by the Financial Services Authority; or
d. in other organizations, companies, or business entities in the event that concurrent positions cause conflicts of interest that affect the effectiveness of supervision based on the assessment of the Financial Services Authority. (2) For candidate DPS members who hold concurrent positions as referred to in paragraph (1), they are required to make a statement to:
a. maintain integrity; b. avoid all forms of conflict of interest; and
c. avoid actions that have the potential to harm BPR Syariah, reduce BPR Syariah profits, and/or cause BPR Syariah to violate prudential principles and/or Sharia Principles,
during their tenure as DPS members.

Article 12
The majority of DPS members are prohibited from having family relationships up to the second degree with other DPS members, members of the Board of Commissioners, and/or members of the Board of Directors.

Section Three
Term of Office, Appointment, and Dismissal of DPS

Article 13
(1) The term of office of DPS members must be determined for a maximum period equal to the term of office of members of the Board of Commissioners.
(2) BPR Syariah determines in the articles of association regarding:
a. the term of office period of DPS members starting from the effective date of appointment of DPS members by the GMS; and b. other conditions in fulfilling the position of DPS members. (3) DPS members serve for a specific period and may be reappointed after obtaining GMS approval. (4) Reappointment of DPS members by the GMS is carried out at most on the date the term of office of DPS members ends.

Article 14
(1) Every proposal for the appointment and/or replacement of DPS members to the GMS must take into account recommendations from the remuneration and nomination committee in accordance with the Financial Services Authority Regulation concerning the implementation of governance for economic banks and Sharia economic banks. (2) BPR Syariah that does not have a remuneration and nomination committee, proposals for appointment and/or replacement as referred to in paragraph (1) must take into account recommendations from members of the Board of Commissioners. (3) BPR Syariah determines in the articles of association regarding:
a. criteria; b. mechanisms; and
c. procedures,
for the appointment, replacement, dismissal, and/or resignation of DPS members, including the authorities attached to the DPS.

Article 15
(1) The dismissal or replacement of DPS members must prioritize the best interests of BPR Syariah.
(2) The dismissal or replacement of DPS members as referred to in paragraph (1) takes into account at least:
a. DPS members are assessed as unable to carry out their tasks and responsibilities; b. the dismissal or replacement of DPS members is not based on subjective assessments by shareholders, but based on objective assessments of the implementation of their tasks and responsibilities;
c. the dismissal or replacement of DPS members has gone through planning and mechanisms that are in effect, which at least take into account assessments from members of the Board of Commissioners or the remuneration and nomination committee and has been scheduled in the GMS;
d. the dismissal or replacement of DPS members does not result in organizational problems and/or problems that endanger the continuity of BPR Syariah business; and e. the implementation of the dismissal or replacement of DPS members prioritizes good communication patterns from all relevant parties. (3) The Financial Services Authority may conduct an evaluation and order BPR Syariah to take corrective action regarding the decision to dismiss or replace DPS members. (4) BPR Syariah is required to implement the orders of the Financial Services Authority as referred to in paragraph (3).

Article 16
(1) DPS members may resign from their position before the end of their term of office in accordance with the procedures in the articles of association of BPR Syariah.
(2) The Financial Services Authority may conduct an evaluation and order BPR Syariah to take corrective action regarding the resignation of DPS members.
(3) BPR Syariah is required to implement the orders of the Financial Services Authority as referred to in paragraph (2).

Article 17
The authority of the Financial Services Authority to conduct evaluations and order BPR Syariah to take corrective action regarding the actions of appointment, dismissal, replacement, and/or resignation of DPS members may be communicated by the Financial Services Authority through written instructions and/or written orders in accordance with the Financial Services Authority Regulation concerning written orders.

Article 18
(1) BPR Syariah is required to submit reports on the appointment, reappointment, resignation, and/or dismissal of DPS members online through the Financial Services Authority reporting system. (2) In addition to the reports as referred to in paragraph (1), BPR Syariah is required to submit reports on changes in DPS member positions and the death of DPS members online through the Financial Services Authority reporting system. (3) The submission of reports on appointment and reappointment as referred to in paragraph (1) is carried out in the reporting period of the date of appointment and/or reappointment of DPS members accompanied by the minutes of the GMS. (4) The submission of reports on resignation and/or dismissal as referred to in paragraph (1) is carried out in the reporting period:
a. the date of dismissal and/or resignation determined in the GMS; or b. the date the term regulated in the articles of association ends for GMS that cannot be held.
(5) The submission of reports on position changes as referred to in paragraph (2) is carried out in the reporting period of the date of position changes of DPS members accompanied by the reasons for position changes and documents explaining the decision on position changes as regulated in the articles of association of BPR Syariah. (6) The submission of reports on death as referred to in paragraph (2) is carried out in the reporting period of the date of death of DPS members accompanied by a death certificate from the competent authority.

Section Four
Tasks, Responsibilities, and Authorities of DPS

Article 19
The DPS is required to carry out tasks, responsibilities, and authorities in accordance with the Sharia Governance framework and good governance principles.

Article 20
(1) The DPS is tasked with supervising for the benefit of BPR Syariah over the policies and management conducted by the Board of Directors to ensure compliance with Sharia Principles and is responsible for that supervision, as well as providing advice to the Board of Directors, including providing Sharia opinions related to BPR Syariah activities. (2) The DPS is required to carry out tasks, responsibilities, and authorities for the benefit of BPR Syariah with good faith. (3) In carrying out supervision, the DPS is required to direct, monitor, and evaluate the implementation of Sharia Governance at BPR Syariah, including the implementation of Sharia risk management, Sharia compliance, and Sharia internal audit functions in an integrated manner, as well as the strategic policies of BPR Syariah related to the implementation of Sharia Principles, in accordance with statutory regulations, articles of association, and/or GMS decisions. (4) The DPS receives and implements authorities delegated and/or granted to the DPS in accordance with statutory regulations, articles of association, and/or GMS decisions. (5) Further provisions concerning the tasks, responsibilities, and authorities of the DPS shall be determined by the Financial Services Authority.

Article 21
(1) The DPS is required to submit reports on the results of DPS supervision to the Financial Services Authority semi-annually.
(2) The report as referred to in paragraph (1) must be submitted to the Financial Services Authority at most 1 (one) month after the end of the relevant semi-annual period.
(3) The DPS may submit reports at any time to the Financial Services Authority if significant violations of Sharia Principles are found.
(4) The submission of reports on the results of DPS supervision to the Financial Services Authority as referred to in paragraph (1) is submitted online through the Financial Services Authority reporting system in accordance with the procedures in the Financial Services Authority Regulation concerning reporting through the Financial Services Authority reporting system and transparency of the financial conditions of economic banks and Sharia economic banks. (5) In the event that the online Financial Services Authority reporting system is not yet available, submission is carried out offline to the Financial Services Authority. (6) Further provisions concerning reports on the results of DPS supervision shall be determined by the Financial Services Authority.

Article 22
(1) The deadline for submitting reports on the results of DPS supervision as referred to in Article 21 paragraph (2) shall apply starting from the report period for the second semester of 2025. (2) Before the deadline as referred to in paragraph (1) takes effect, reports on the results of DPS supervision as referred to in Article 21 paragraph (1) must be submitted to the Financial Services Authority at most 2 (two) months after the end of the relevant semester.

Article 23
The DPS is required to supervise the Board of Directors' follow-up on audit findings or examinations and recommendations from work units or Executive Officials implementing the BPR Syariah internal audit function, external auditors, results of Financial Services Authority supervision, and/or results of supervision by other authorities and institutions, related to the implementation of Sharia Principles.

Article 24
(1) The DPS is required to have guidelines and work regulations that are binding for each DPS member.
(2) The guidelines and work regulations as referred to in paragraph (1) contain at least:
a. tasks, responsibilities, and authorities of the DPS; b. regulation of DPS meetings; and
c. work relationship patterns between the DPS and the Board of Directors and Board of Commissioners.

Article 25
The DPS is required to provide time to carry out tasks and responsibilities optimally in accordance with the guidelines and work regulations.

Article 26
The DPS is required to keep all data and information related to BPR Syariah in accordance with statutory regulations.

Article 27
(1) To support the implementation of Sharia Governance at BPR Syariah as referred to in Article 3 paragraph (1), the DPS may become members of every committee supporting the implementation of the Board of Commissioners' tasks. (2) In the event that there are committees supporting the implementation of the Board of Commissioners' tasks that do not include DPS members, those committees are required to request the opinion of the DPS in every discussion related to Sharia Principles. (3) In the event that the Board of Commissioners does not form committees supporting the implementation of the Board of Commissioners' tasks, the Board of Commissioners is required to request the opinion of the DPS in every discussion related to Sharia Principles.

Article 28
BPR Syariah is required to have adequate support functions for the DPS in the implementation of the DPS's tasks and responsibilities.

Section Five
Support from the Board of Directors and Board of Commissioners for the Implementation of DPS Tasks

Article 29
(1) The Board of Directors is required to support the implementation of DPS tasks as referred to in Article 20 paragraph (1) and Article 22, at least:
a. providing accurate, relevant, and timely data and information to the DPS in the context of DPS task implementation; b. ensuring the availability and adequacy of internal reporting supported by adequate management information systems to support the DPS task implementation process; and
c. providing adequate facilities and infrastructure to support the DPS task implementation process.
(2) The Board of Directors is required to follow up on recommendations from the results of DPS supervision as referred to in Article 20 paragraph (1).
(3) The Board of Commissioners is required to ensure that the Board of Directors has followed up on recommendations from the results of DPS supervision as referred to in paragraph (2).

Section Six
DPS Meetings

Article 30
(1) The DPS is required to hold DPS meetings at least 1 (one) time every 3 (three) months.
(2) The DPS meetings as referred to in paragraph (1) must be attended by all DPS members.
(3) The DPS meetings as referred to in paragraph (1) may be attended by relevant Sharia Governance functions.

Article 31
(1) BPR Syariah is required to hold joint DPS meetings with the Board of Directors at least 1 (one) time every 4 (four) months.
(2) The DPS meetings as referred to in paragraph (1) are held if attended by a majority of Board of Directors members.
(3) BPR Syariah is required to hold joint DPS meetings with the Board of Commissioners at least 1 (one) time every 4 (four) months.
(4) The DPS meetings as referred to in paragraph (3) are held if attended by a majority of Board of Commissioners members.

Article 32
(1) Decision-making in DPS meetings is first carried out through deliberation to achieve consensus.
(2) In the event that deliberation to achieve consensus as referred to in paragraph (1) is not reached, decision-making in DPS meetings is carried out based on the majority vote.
(3) All DPS decisions as referred to in paragraph (1) and paragraph (2) are binding on all DPS members.
(4) The DPS is required to document the results of DPS meetings as referred to in paragraph (1) in the meeting minutes and archive them in accordance with statutory regulations.
(5) Differences of opinion occurring in DPS meetings as referred to in paragraph (2) must be clearly stated in the DPS meeting minutes along with the reasons for the differences of opinion.

Part Seven
Transparency Aspects of the Sharia Supervisory Board (DPS)
Article 33
In the implementation of Sharia Governance for Sharia Economic Banks (BPR Syariah), members of the Sharia Supervisory Board (DPS) are required to disclose in the transparency report on the implementation of Sharia Governance at least:
a. their share ownership in the relevant Sharia Economic Bank (BPR Syariah) and other companies; b. financial and/or family relationships up to the second degree with members of the Board of Commissioners, members of the Board of Directors, other members of the DPS, and/or controlling shareholders of the Sharia Economic Bank (BPR Syariah);
c. concurrent positions of the DPS as referred to in Article 11 paragraph (1); and
d. remuneration and facilities determined based on a General Meeting of Shareholders (GMS) decision.

Article 34
(1) DPS members are prohibited from utilizing the Sharia Economic Bank (BPR Syariah) for the interests of themselves, their families, and/or other parties that can harm or reduce the profits of the Sharia Economic Bank (BPR Syariah). (2) DPS members are prohibited from taking and/or receiving personal profits from the Sharia Economic Bank (BPR Syariah), other than remuneration and facilities determined based on a GMS decision.

Part Eight
DPS Remuneration Policy
Article 35
(1) The DPS remuneration policy must be formulated by the Board of Commissioners in accordance with Financial Services Authority Regulations regarding the implementation of governance for rural economic banks and Sharia rural economic banks. (2) The DPS remuneration policy as referred to in paragraph (1) must take into account:
a. risks and complexity of DPS tasks according to the duties and responsibilities of DPS members; and b. proportionality to the remuneration of the Board of Commissioners.

Part Nine
Administrative Sanctions
Article 36
(1) Sharia Economic Banks (BPR Syariah) that violate provisions as referred to in Article 7 paragraph (2), Article 9, Article 10 paragraph (1), Article 11, Article 12, Article 13 paragraph (1), Article 15 paragraph (1), paragraph (4), Article 16 paragraph (3), Article 18 paragraph (1), paragraph (2), Article 19, Article 20 paragraph (2), paragraph (3), Article 21 paragraph (1), paragraph (2), Article 23, Article 24 paragraph (1), Article 25, Article 26, Article 27 paragraph (2), paragraph (3), Article 28, Article 29, Article 30 paragraph (1), paragraph (2), Article 31 paragraph (1), paragraph (3), Article 32 paragraph (4), paragraph (5), Article 33, Article 34, and/or Article 35, shall be subject to administrative sanctions in the form of written reprimands. (2) In the event that a Sharia Economic Bank (BPR Syariah) has been subject to administrative sanctions as referred to in paragraph (1), and continues to violate provisions as referred to in Article 7 paragraph (2), Article 9, Article 10 paragraph (1), Article 11, Article 12, Article 13 paragraph (1), Article 15 paragraph (1), paragraph (4), Article 16 paragraph (3), Article 18 paragraph (1), paragraph (2), Article 19, Article 20 paragraph (2), paragraph (3), Article 21 paragraph (1), paragraph (2), Article 23, Article 24 paragraph (1), Article 25, Article 26, Article 27 paragraph (2), paragraph (3), Article 28, Article 29, Article 30 paragraph (1), paragraph (2), Article 31 paragraph (1), paragraph (3), Article 32 paragraph (4), paragraph (5), Article 33, Article 34, and/or Article 35, the Sharia Economic Bank (BPR Syariah) shall be subject to administrative sanctions in the form of:
a. reduction of health level; b. temporary suspension of part of the operational activities of the Sharia Economic Bank (BPR Syariah); and/or
c. prohibition on expanding business activities.
(3) In the event that a Sharia Economic Bank (BPR Syariah) has been subject to administrative sanctions as referred to in paragraph (1) and/or paragraph (2), the principal party of the Sharia Economic Bank (BPR Syariah) may be subject to administrative sanctions in the form of prohibition as a principal party in accordance with Financial Services Authority Regulations regarding the re-evaluation of principal parties of financial service institutions. (4) In addition to administrative sanctions as referred to in paragraph (1), paragraph (2), and/or paragraph (3), the Sharia Economic Bank (BPR Syariah) and/or controlling shareholders may be subject to administrative sanctions in the form of fines of at least Rp10,000,000.00 (ten million rupiah) and at most Rp100,000,000.00 (one hundred million rupiah) for each violation committed.

CHAPTER IV
SHARIA RISK MANAGEMENT FUNCTION, SHARIA COMPLIANCE FUNCTION, AND SHARIA INTERNAL AUDIT FUNCTION

Part One
Sharia Risk Management Function and Sharia Compliance Function
Article 37
(1) Sharia Economic Banks (BPR Syariah) with core capital of at least Rp50,000,000,000.00 (fifty billion rupiah) must have a work unit that performs the functions of Sharia risk management and Sharia compliance. (2) The work unit performing the functions of Sharia risk management and/or Sharia compliance as referred to in paragraph (1) may be combined with the work unit handling risk management and/or compliance. (3) Sharia Economic Banks (BPR Syariah) with core capital of less than Rp50,000,000,000.00 (fifty billion rupiah) must have an Executive Officer who performs the functions of Sharia risk management and Sharia compliance. (4) The Executive Officer performing the functions of Sharia risk management and/or Sharia compliance as referred to in paragraph (3) may concurrently serve as the Executive Officer performing the functions of risk management and/or compliance. (5) Human resources performing the functions of Sharia risk management and Sharia compliance must have knowledge and/or understanding regarding Sharia banking operations. (6) Sharia Economic Banks (BPR Syariah) manage and develop the quality of human resources performing the functions of Sharia risk management and Sharia compliance continuously in accordance with Financial Services Authority Regulations regarding the development of human resource quality for rural economic banks and Sharia rural economic banks. (7) Further provisions regarding the functions of Sharia risk management and Sharia compliance are determined by the Financial Services Authority.

Part Two
Sharia Internal Audit Function
Article 38
(1) Sharia Economic Banks (BPR Syariah) with core capital of at least Rp50,000,000,000.00 (fifty billion rupiah) must have a Sharia internal audit function attached to the internal audit work unit. (2) Sharia Economic Banks (BPR Syariah) with core capital of less than Rp50,000,000,000.00 (fifty billion rupiah) must have an Executive Officer who performs the Sharia internal audit function. (3) The Executive Officer performing the Sharia internal audit function as referred to in paragraph (2) may concurrently serve as the Executive Officer performing the internal audit function. (4) Human resources performing the Sharia internal audit function must have knowledge and/or understanding regarding Sharia banking operations. (5) Sharia Economic Banks (BPR Syariah) manage and develop the quality of human resources performing the Sharia internal audit function continuously in accordance with Financial Services Authority Regulations regarding the development of human resource quality for rural economic banks and Sharia rural economic banks. (6) Further provisions regarding the Sharia internal audit function are determined by the Financial Services Authority.

Article 39
The Sharia internal audit work unit and Executive Officers performing the Sharia internal audit function must submit audit results related to the implementation of Sharia Principles to the DPS.

Part Three
External Review of Sharia Governance
Article 40
(1) Sharia Economic Banks (BPR Syariah) conducting public offerings must conduct an external review of the implementation of Sharia Governance.
(2) The external review as referred to in paragraph (1) is conducted by public accountants and/or public accounting firms registered with the Financial Services Authority.
(3) The external review as referred to in paragraph (1) is conducted periodically at least 1 (one) time in 3 (three) years calculated from the time the first public offering was conducted. (4) The appointment of public accountants and/or public accounting firms in conducting the external review as referred to in paragraph (2) is done by the Board of Commissioners taking into account the recommendation of the audit committee. (5) Sharia Economic Banks (BPR Syariah) must submit the results report of the external review as referred to in paragraph (3) to the Financial Services Authority at the latest 2 (two) months after the external review period ends. (6) Sharia Economic Banks (BPR Syariah) must follow up on recommendations from the results of the external review as referred to in paragraph (5). (7) Further provisions regarding the external review of the implementation of Sharia Governance are determined by the Financial Services Authority.

Part Four
Administrative Sanctions
Article 41
(1) Sharia Economic Banks (BPR Syariah) that violate provisions as referred to in Article 37 paragraph (1), paragraph (3), paragraph (5), Article 38 paragraph (1), paragraph (2), paragraph (4), Article 39, Article 40 paragraph (1), paragraph (5), and/or paragraph (6), shall be subject to administrative sanctions in the form of written reprimands. (2) In the event that a Sharia Economic Bank (BPR Syariah) has been subject to administrative sanctions as referred to in paragraph (1), and continues to violate provisions as referred to in Article 37 paragraph (1), paragraph (3), paragraph (5), Article 38 paragraph (1), paragraph (2), paragraph (4), Article 39, Article 40 paragraph (1), paragraph (5), and/or paragraph (6), the Sharia Economic Bank (BPR Syariah) shall be subject to administrative sanctions in the form of:
a. reduction of health level; b. temporary suspension of part of the operational activities of the Sharia Economic Bank (BPR Syariah); and/or
c. prohibition on expanding business activities.
(3) In the event that a Sharia Economic Bank (BPR Syariah) has been subject to administrative sanctions as referred to in paragraph (1) and/or paragraph (2), the principal party of the Sharia Economic Bank (BPR Syariah) may be subject to administrative sanctions in the form of prohibition as a principal party in accordance with Financial Services Authority Regulations regarding the re-evaluation of principal parties of financial service institutions. (4) In addition to administrative sanctions as referred to in paragraph (1), paragraph (2), and/or paragraph (3), the Sharia Economic Bank (BPR Syariah) and/or controlling shareholders may be subject to administrative sanctions in the form of fines of at least Rp10,000,000.00 (ten million rupiah) and at most Rp100,000,000.00 (one hundred million rupiah) for each violation committed.

CHAPTER V
TRANSPARENCY REPORT ON THE IMPLEMENTATION OF SHARIA GOVERNANCE, REPORT ON THE IMPLEMENTATION OF SHARIA GOVERNANCE, AND ASSESSMENT OF THE IMPLEMENTATION OF SHARIA GOVERNANCE

Part One
Transparency Report on the Implementation of Sharia Governance
Article 42
(1) Sharia Economic Banks (BPR Syariah) must prepare a transparency report on the implementation of Sharia Governance as referred to in Article 33, which is an integral part of the transparency report on the implementation of governance submitted at the end of each book year in accordance with Financial Services Authority Regulations regarding the implementation of governance for rural economic banks and Sharia rural economic banks. (2) Further provisions regarding the scope and procedures for preparing the transparency report on the implementation of Sharia Governance as referred to in paragraph (1) are determined by the Financial Services Authority.

Part Two
Report on the Implementation of Sharia Governance
Article 43
(1) Sharia Economic Banks (BPR Syariah) must prepare a report on the implementation of Sharia Governance for the Sharia Economic Bank (BPR Syariah), which is an integral part of the governance implementation report submitted semi-annually in accordance with Financial Services Authority Regulations regarding the implementation of governance for rural economic banks and Sharia rural economic banks. (2) Provisions regarding the scope and procedures for preparing the report on the implementation of Sharia Governance as referred to in paragraph (1) are determined by the Financial Services Authority.

Part Three
Assessment of the Implementation of Sharia Governance
Article 44
(1) The Financial Services Authority conducts assessments or evaluations of the results of self-assessments by Sharia Economic Banks (BPR Syariah) regarding the implementation of Sharia Governance, which is an integral part of the governance implementation report in accordance with Financial Services Authority Regulations regarding the implementation of governance for rural economic banks and Sharia rural economic banks. (2) Provisions regarding the scope and procedures for assessing the implementation of Sharia Governance as referred to in paragraph (1) are determined by the Financial Services Authority.

Part Three
Administrative Sanctions
Article 45
(1) Sharia Economic Banks (BPR Syariah) that violate provisions as referred to in Article 42 paragraph (1) and/or Article 43 paragraph (1) shall be subject to administrative sanctions in the form of written reprimands. (2) In the event that a Sharia Economic Bank (BPR Syariah) has been subject to administrative sanctions as referred to in paragraph (1), and continues to violate provisions as referred to in Article 42 paragraph (1) and/or Article 43 paragraph (1), the Sharia Economic Bank (BPR Syariah) shall be subject to administrative sanctions in the form of:
a. reduction of health level; b. temporary suspension of part of the operational activities of the Sharia Economic Bank (BPR Syariah); and/or
c. prohibition on expanding business activities.
(3) In the event that a Sharia Economic Bank (BPR Syariah) has been subject to administrative sanctions as referred to in paragraph (1) and/or paragraph (2), the principal party of the Sharia Economic Bank (BPR Syariah) may be subject to administrative sanctions in the form of prohibition as a principal party in accordance with Financial Services Authority Regulations regarding the re-evaluation of principal parties of financial service institutions. (4) In addition to administrative sanctions as referred to in paragraph (1), paragraph (2), and/or paragraph (3), the Sharia Economic Bank (BPR Syariah) and/or controlling shareholders may be subject to administrative sanctions in the form of fines of at least Rp10,000,000.00 (ten million rupiah) and at most Rp100,000,000.00 (one hundred million rupiah) for each violation committed.

CHAPTER VI
FOLLOW-UP OF NON-COMPLIANCE WITH SHARIA PRINCIPLES
Article 46
(1) Sharia Economic Banks (BPR Syariah) must follow up in the event that non-compliance with Sharia Principles is known and/or found in the business activities and/or operations of the Sharia Economic Bank (BPR Syariah). (2) Sharia Economic Banks (BPR Syariah) that violate provisions as referred to in paragraph (1) shall be subject to administrative sanctions in the form of written reprimands. (3) In the event that a Sharia Economic Bank (BPR Syariah) has been subject to administrative sanctions as referred to in paragraph (2), and continues to violate provisions as referred to in paragraph (1), the Sharia Economic Bank (BPR Syariah) shall be subject to administrative sanctions in the form of:
a. prohibition on issuing new Sharia Economic Bank (BPR Syariah) products; b. reduction of health level;
c. temporary suspension of part of the operational activities of the Sharia Economic Bank (BPR Syariah); and/or
d. prohibition on expanding business activities.
(4) In the event that a Sharia Economic Bank (BPR Syariah) has been subject to administrative sanctions as referred to in paragraph (2) and/or paragraph (3), the principal party of the Sharia Economic Bank (BPR Syariah) may be subject to administrative sanctions in the form of prohibition as a principal party in accordance with Financial Services Authority Regulations regarding the re-evaluation of principal parties of financial service institutions. (5) In addition to administrative sanctions as referred to in paragraph (2), paragraph (3), and/or paragraph (4), the Sharia Economic Bank (BPR Syariah) and/or controlling shareholders may be subject to administrative sanctions in the form of fines of at least Rp10,000,000.00 (ten million rupiah) and at most Rp100,000,000.00 (one hundred million rupiah) for each violation committed.

CHAPTER VII
OTHER PROVISIONS
Article 47
(1) A majority of the Board of Directors and members of the Board of Commissioners are prohibited from having family relationships up to the second degree with DPS members.
(2) In fulfilling governance implementation, members of the Board of Directors and members of the Board of Commissioners must disclose:
a. financial relationships with DPS members; and b. family relationships up to the second degree with DPS members, in the transparency report on the implementation of Sharia Governance as regulated in this Financial Services Authority Regulation. (3) Sharia Economic Banks (BPR Syariah) that violate provisions as referred to in paragraph (1) and/or paragraph (2) shall be subject to administrative sanctions in the form of written reprimands. (4) In the event that a Sharia Economic Bank (BPR Syariah) has been subject to administrative sanctions as referred to in paragraph (3), and continues to violate provisions as referred to in paragraph (1) and/or paragraph (2), the Sharia Economic Bank (BPR Syariah) shall be subject to administrative sanctions in the form of:
a. reduction of health level; b. temporary suspension of part of the operational activities of the Sharia Economic Bank (BPR Syariah); and/or
c. prohibition on expanding business activities.
(5) In the event that a Sharia Economic Bank (BPR Syariah) has been subject to administrative sanctions as referred to in paragraph (3) and/or paragraph (4), the principal party of the Sharia Economic Bank (BPR Syariah) may be subject to administrative sanctions in the form of prohibition as a principal party in accordance with Financial Services Authority Regulations regarding the re-evaluation of principal parties of financial service institutions. (6) In addition to administrative sanctions as referred to in paragraph (3), paragraph (4), and/or paragraph (5), the Sharia Economic Bank (BPR Syariah) and/or controlling shareholders may be subject to administrative sanctions in the form of fines of at least Rp10,000,000.00 (ten million rupiah) and at most Rp100,000,000.00 (one hundred million rupiah) for each violation committed.

CHAPTER VIII
TRANSITIONAL PROVISIONS
Article 48
(1) Applications for prospective DPS members submitted before January 1, 2026, shall be processed in accordance with Financial Services Authority Regulation Number 26 of 2022 concerning Sharia Rural Economic Banks. (2) DPS members who have obtained approval from the Financial Services Authority before January 1, 2026, do not follow the competency and propriety assessment process as referred to in Financial Services Authority Regulations regarding the competency and propriety assessment for principal parties of financial service institutions until the end of their term of office.

Article 49
At the time this Financial Services Authority Regulation takes effect, DPS members holding concurrent positions prohibited as referred to in Article 11 paragraph (1) may continue to hold concurrent positions until the end of their term of office.

CHAPTER IX
CLOSING PROVISIONS
Article 50
At the time this Financial Services Authority Regulation takes effect, the implementation provisions of Financial Services Authority Regulation Number 24/POJK.03/2018 concerning the Implementation of Governance for Sharia Rural Economic Banks (State Gazette of the Republic of Indonesia Year 2018 Number 228, Supplement to the State Gazette of the Republic of Indonesia Number 6266) remain in force insofar as they do not conflict with the provisions in this Financial Services Authority Regulation.

Article 51
At the time this Financial Services Authority Regulation takes effect:
a. Financial Services Authority Regulation Number 24/POJK.03/2018 concerning the Implementation of Governance for Sharia Rural Economic Banks (State Gazette of the Republic of Indonesia Year 2018 Number 228, Supplement to the State Gazette of the Republic of Indonesia Number 6266); and b. Financial Services Authority Regulation Number 26 of 2022 concerning Sharia Rural Economic Banks (State Gazette of the Republic of Indonesia Year 2022 Number 32/OJK, Supplement to the State Gazette of the Republic of Indonesia Number 23/OJK), are repealed and declared invalid.

Article 52
This Financial Services Authority Regulation takes effect on the date of enactment.

This copy is consistent with the original
Director of Legal Development
Legal Department
Aat Windradi

To ensure that everyone knows it, ordering the enactment of this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Established in Jakarta on November 29, 2024
CHAIRMAN OF THE COMMISSIONERS
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA,
MAHENDRA SIREGAR

Enacted in Jakarta on November 29, 2024
MINISTER OF LAW OF THE REPUBLIC OF INDONESIA,
SUPRATMAN ANDI AGTAS
STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2024 NUMBER 35/OJK singed

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 25 OF 2024
CONCERNING
THE IMPLEMENTATION OF SHARIA GOVERNANCE
FOR SHARIA RURAL ECONOMIC BANKS

I. GENERAL
As an intermediary institution, banks play a role in contributing to the economy through support for economic growth and national stability. In achieving these goals, banks must operate by applying good corporate governance in all their business activities. In Sharia banks, the application of good corporate governance is not limited to general governance principles, but also in the application of Sharia Principles. The main objective of Sharia Governance is to maintain compliance with Sharia Principles, which is the raison d’etre for Sharia financial institutions. The presence of a reliable Sharia Governance system is very important to ensure that bank activities do not conflict with Sharia Principles in order to maintain public confidence in Sharia banking, which ultimately can impact the performance of Sharia banking. The implementation of Sharia Governance is also in line with provisions regarding good governance principles as referred to in Law Number 21 of 2008 concerning Sharia Banking as amended several times, most recently by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector, which has increased the role of the Sharia Supervisory Board (DPS) as a party within Sharia Economic Banks (BPR Syariah) tasked with supervising the implementation of Sharia Principles. Furthermore, considering the obligation to implement Sharia Principles for Sharia banks in the Otoritas Jasa Keuangan regulatory framework has been regulated in various regulations concerning Sharia banking, this Financial Services Authority Regulation also serves as the umbrella for regulations related to the implementation of Sharia Governance for Sharia Economic Banks (BPR Syariah). Thus, the implementation of Sharia Governance can be carried out in all business activities and lines of defense of Sharia Economic Banks (BPR Syariah), so it is hoped to provide a positive contribution in supporting the strengthening of the identity and competitiveness of Sharia Economic Banks (BPR Syariah), as well as supporting inclusive and sustainable national economic growth, thereby realizing a prosperous, advanced, and dignified society. In relation to this matter, to support the strengthening of rules regarding Sharia Governance for Sharia Economic Banks (BPR Syariah), it is necessary to update regulations regarding the Implementation of Sharia Governance for Sharia Economic Banks (BPR Syariah).

II. ARTICLE BY ARTICLE
Article 1
Sufficiently clear.

Article 2
Paragraph (1)
The obligation to implement Sharia Principles in the conduct of business activities of Sharia Economic Banks (BPR Syariah) is part of the responsibility of the Board of Directors for the implementation of the management of Sharia Economic Banks (BPR Syariah) and the responsibility of the Board of Commissioners for supervising the implementation of the Board of Directors' duties as a whole, as well as the responsibility of the DPS for supervising the implementation of Sharia Principles. Paragraph (2) What is meant by “institutions with authority to determine fatwas in the field of Sharia” is the National Sharia Council of the Indonesian Ulema Council.

Article 3
Paragraph (1)
Sufficiently clear.
Paragraph (2)
Sufficiently clear.
Paragraph (3)
Sufficiently clear.
Paragraph (4)
Coordination between functions related to Sharia Governance and DPS is carried out, among others, through consultation or requests for opinions.

Article 4
Paragraph (1)
Internal procedures regarding the implementation of Sharia Governance for Sharia Economic Banks (BPR Syariah) can be part of internal procedures regarding the implementation of good corporate governance in accordance with Financial Services Authority Regulations regarding the implementation of governance for rural economic banks and Sharia rural economic banks. Internal procedures of Sharia Economic Banks (BPR Syariah) include, among others, decrees, manuals, policies or guidelines for Sharia Economic Banks (BPR Syariah) (standard operating procedure), company charters, other operational documents of Sharia Economic Banks (BPR Syariah), which are prepared in accordance with the provisions of legislation and in accordance with the business processes and approval mechanisms at Sharia Economic Banks (BPR Syariah). Paragraph (2) Sufficiently clear.

Article 5
Sufficiently clear.

Article 6
Sufficiently clear.

Article 7
Paragraph (1)
Members of the DPS are the main parties of the bank as the main managing party, similar to members of the Board of Directors and members of the Board of Commissioners.
Paragraph (2)
It is sufficiently clear.
Paragraph (3)
See the explanation of Article 2 paragraph (2).
Paragraph (4)
It is sufficiently clear.
Paragraph (5)
It is sufficiently clear.
Paragraph (6)
It is sufficiently clear.

Article 8
It is sufficiently clear.

Article 9
It is sufficiently clear.

Article 10
Paragraph (1)
It is sufficiently clear.
Paragraph (2)
What is meant by "other DPS" is DPS other than the chairman who concurrently serves as a member in one Sharia Economic Bank.

Article 11
Paragraph (1)
Letter a
It is sufficiently clear.
Letter b
What is meant by "other financial service institutions" is financial service institutions other than Sharia Economic Banks.
Example 1:
A DPS member at Sharia Economic Bank A serves as a DPS member at Sharia Economic Bank B and as a DPS member at Sharia Insurance Company C. Thus, that DPS member can still serve as a DPS member at 1 (one) other Sharia financial service institution or as a member of the Board of Commissioners at another financial service institution. Example 2:
A DPS member at Sharia Economic Bank A serves as a DPS member at Sharia Economic Bank B, a DPS member at Sharia Insurance Company C, and a DPS member at Sharia Insurance Company D. Thus, that DPS member can no longer serve as a DPS member or a member of the Board of Commissioners at other Sharia Economic Banks and at other financial service institutions. Letter c What is meant by "other financial service institutions" see the explanation of letter b. https://jdih.ojk.go.id/

Letter d
What is meant by "conflict of interest" is the difference between the economic interests of the Sharia Economic Bank and the personal economic interests of the DPS member.
Tasks in other positions that do not cause conflict of interest can be carried out as long as they do not neglect the execution of tasks and responsibilities as a DPS member.
Paragraph (2)
It is sufficiently clear.

Article 12
What is meant by "majority" is more than 50% (fifty percent).
What is meant by "family relationship up to the second degree" is both vertical and horizontal relationships, covering:
a. biological/step/adopted parents; b. biological/step/adopted siblings together with their husbands or wives;
c. biological/step/adopted children;
d. biological/step/adopted grandparents; e. biological/step/adopted grandchildren; f. biological/step/adopted siblings of parents together with their husbands or wives; g. husband/wife; h. parents-in-law;
i. brothers/sisters-in-law;
j. husband/wife of biological/step/adopted children; k. grandparents of husband/wife;
l. husband/wife of biological/step/adopted grandchildren; or
m. biological/step/adopted siblings of husband/wife together with their husbands or wives.

Article 13
Paragraph (1)
It is sufficiently clear.
Paragraph (2)
Letter a
It is sufficiently clear.
Letter b
Other conditions include when a DPS member whose term has expired has not had a replacement appointed by the General Meeting of Shareholders (GMS), the relevant person can still execute the same authorities until a replacement is appointed by the GMS. Paragraph (3) It is sufficiently clear. Paragraph (4) Reappointment includes, among others, reappointment of DPS members experiencing term extension.

Article 14
It is sufficiently clear. https://jdih.ojk.go.id/

Article 15
Paragraph (1)
Dismissal of DPS members includes temporary dismissal of DPS members.
Paragraph (2)
Letter a
It is sufficiently clear.
Letter b
Objective assessments related to the management of Sharia Economic Banks include, among others, aspects of performance, integrity, financial reputation, and/or competence.
Letter c
It is sufficiently clear.
Letter d
It is sufficiently clear.
Letter e
Good communication from various related parties includes, among others, communication between the Sharia Economic Bank and the National Sharia Council of the Indonesian Ulema Council. Paragraph (3) The authority of the Financial Services Authority to conduct evaluation and corrective actions, among others, in conditions:

1. DPS members are dismissed before the end of their term objectively; and
2. the dismissal of DPS members causes the number of DPS members to be inconsistent with the minimum number regulated in this Financial Services Authority Regulation.
   Paragraph (4)
   It is sufficiently clear.

Article 16
Paragraph (1)
It is sufficiently clear.
Paragraph (2)
Evaluation is conducted to assess whether the resignation was voluntary, contains elements of coercion, or is intended to release responsibility as a DPS member in handling problems at the Sharia Economic Bank. Paragraph (3) It is sufficiently clear.

Article 17
It is sufficiently clear.

Article 18
Paragraph (1)
It is sufficiently clear.
Paragraph (2)
Change of position includes, among others, change of position of a DPS member to Chairman of the DPS.
Paragraph (3)
It is sufficiently clear.
Paragraph (4)
It is sufficiently clear.
Paragraph (5)
It is sufficiently clear. https://jdih.ojk.go.id/

Paragraph (6)
It is sufficiently clear.

Article 19
Principles of good governance refer to Financial Services Authority Regulations regarding the application of governance for people's economy banks and Sharia people's economy banks.

Article 20
It is sufficiently clear.

Article 21
Paragraph (1)
What is meant by "semi-annual" is a 6 (six) month period ending in June and December.
Paragraph (2)
What is meant by "at most 1 (one) month after the semi-annual period ends" is the submission of the June position report at the latest by July 31 of the current year and for the December position report at the latest by January 31 of the following year. Paragraph (3) Significant violation of Sharia Principles includes, among others, violations of Sharia Principles that have the potential to influence the financial condition and/or reputation of the Sharia Economic Bank. Paragraph (4) It is sufficiently clear. Paragraph (5) It is sufficiently clear. Paragraph (6) It is sufficiently clear.

Article 22
It is sufficiently clear.

Article 23
Authorities and other institutions include payment system supervisory authorities, deposit insurance and resolution authorities, and other authorities and institutions authorized to conduct audits against Sharia Economic Banks.

Article 24
Paragraph (1)
Guidelines and rules of work for the DPS are also known as the DPS Charter.
Paragraph (2)
It is sufficiently clear.

Article 25
It is sufficiently clear.

Article 26
This obligation is intended to maintain information confidentiality and avoid potential insider information. https://jdih.ojk.go.id/

Article 27
Paragraph (1)
Committees supporting the implementation of the Board of Commissioners' tasks according to Financial Services Authority Regulations regarding the application of governance for people's economy banks and Sharia people's economy banks. Paragraph (2) Example:
The risk monitoring committee at Sharia Economic Bank A does not have DPS members, so in evaluating the consistency between Sharia risk management policies and their implementation, among others, calculation of return policies, the risk monitoring committee of Sharia Economic Bank A requests opinions from the DPS. Paragraph (3) It is sufficiently clear.

Article 28
What is meant by "adequate DPS support functions" is having sufficient human resources with appropriate competencies to support the execution of tasks and responsibilities of the DPS. DPS support functions can be held concurrently with other functions as long as they continue to meet applicable regulations, including principles of good governance. DPS support functions include, among others, secretarial functions and product development functions.

Article 29
Paragraph (1)
Letter a
Accurate, relevant, and timely data and information are required in relation to the tasks and responsibilities of the DPS to supervise the execution of tasks and responsibilities of the Board of Directors and control the implementation of Sharia Economic Bank policies. Letter b It is sufficiently clear. Letter c It is sufficiently clear. Paragraph (2) It is sufficiently clear. Paragraph (3) It is sufficiently clear.

Article 30
Paragraph (1)
It is sufficiently clear.
Paragraph (2)
It is sufficiently clear.
Paragraph (3)
Functions related to Sharia Governance include, among others, Sharia risk management functions, Sharia compliance functions, and Sharia internal audit functions.
The presence of functions related to Sharia Governance in DPS Meetings is conducted with the approval of the DPS. https://jdih.ojk.go.id/

Article 31
Paragraph (1)
Joint meetings of the DPS and Board of Directors are joint meetings of the DPS with the Board of Directors, among others, for the purpose of the DPS conducting supervision or providing instructions and/or guidance to the Board of Directors regarding the implementation of Sharia Principles. Paragraph (2) What is meant by "majority" see the explanation of Article 12. Paragraph (3) Joint meetings of the DPS and Board of Commissioners are joint meetings of the DPS with the Board of Commissioners, among others, for the purpose of coordination of supervision regarding the implementation of Sharia Principles, including if violations of Sharia Principles are found that cause or have the potential to cause conditions that could endanger the continuity of the business of the Sharia Economic Bank. Paragraph (4) What is meant by "majority" see the explanation of Article 12.

Article 32
It is sufficiently clear.

Article 33
Letter a
What is meant by "other companies" is financial service institutions or non-financial service institutions inside or outside the country, including controlling shareholders and/or ultimate controlling shareholders of the Sharia Economic Bank. Letter b What is meant by "financial relationship" is a person who receives income, financial assistance, or loans from:

1. members of the Board of Directors, members of the Board of Commissioners, and/or members of the DPS;
2. companies whose controlling shareholders are members of the Board of Directors, members of the Board of Commissioners, and/or members of the DPS; and/or
3. controlling shareholders and/or ultimate controlling shareholders of the Sharia Economic Bank.
   What is meant by "family relationship up to the second degree" see the explanation of Article 12.
   Letter c
   It is sufficiently clear.
   Letter d
   It is sufficiently clear.

Article 34
Paragraph (1)
It is sufficiently clear.
Paragraph (2)
Personal profit includes, among others, unreasonable asset rental income and commissions or remuneration in the context of gathering and/or distributing funds.
Not included as personal profit includes, among others, if a DPS member as a customer of the Sharia Economic Bank receives reasonable returns. https://jdih.ojk.go.id/

Article 35
Paragraph (1)
It is sufficiently clear.
Paragraph (2)
Letter a
It is sufficiently clear.
Letter b
Proportionality against the remuneration of the Board of Commissioners considers the comparison of risks and complexity of tasks between the DPS and the Board of Commissioners.

Article 36
It is sufficiently clear.

Article 37
Paragraph (1)
The objective of the Sharia risk management function is to ensure the fulfillment of Sharia Principles in the application of risk management at the Sharia Economic Bank in operations, business, and all activities of the Sharia Economic Bank. The objective of the Sharia compliance function is to ensure that policies, regulations, systems and procedures, and business activities conducted by the Sharia Economic Bank are in accordance with Sharia Principles. Paragraph (2) What is meant by "work units handling risk management and/or compliance" is work units for risk management and work units for compliance according to Financial Services Authority Regulations regarding the application of governance for people's economy banks and Sharia people's economy banks. Paragraph (3) It is sufficiently clear. Paragraph (4) What is meant by "Executive Officials executing risk management and/or compliance functions" is Executive Officials executing risk management functions and Executive Officials executing compliance functions according to Financial Services Authority Regulations regarding the application of governance for people's economy banks and Sharia people's economy banks. Paragraph (5) Having knowledge and/or understanding of Sharia banking operations includes, among others, having previously obtained education and/or training, holding certification of graduation, and/or having experience related to Sharia banking operations. Paragraph (6) It is sufficiently clear. Paragraph (7) It is sufficiently clear.

Article 38
Paragraph (1)
What is meant by "internal audit work unit" is the internal audit work unit according to Financial Services Authority Regulations regarding the application of governance for people's economy banks and Sharia people's economy banks. The objective of the Sharia internal audit function is to provide independent and objective assurance and consultation regarding the application of Sharia Principles in the implementation of management of the Sharia Economic Bank, by evaluating and improving the effectiveness of risk management, controls, and corporate governance processes of the Sharia Economic Bank. Paragraph (2) It is sufficiently clear. Paragraph (3) What is meant by "Executive Official executing internal audit functions" is the Executive Official executing internal audit functions according to Financial Services Authority Regulations regarding the application of governance for people's economy banks and Sharia people's economy banks. Paragraph (4) See the explanation of Article 37 paragraph (5). Paragraph (5) It is sufficiently clear. Paragraph (6) It is sufficiently clear.

Article 39
Results of internal audit related to the implementation of fulfillment of Sharia Principles are an inseparable part of the report of the internal audit work unit or the Internal Audit Executive Official.

Article 40
Paragraph (1)
External review of the application of Sharia Governance is conducted on the effectiveness of the DPS function and DPS support functions, Sharia compliance functions, Sharia risk management functions, and Sharia internal audit functions. Paragraph (2) Public accountants or public accounting firms conducting external reviews of the application of Sharia Governance may be public accountants or public accounting firms conducting audits of the financial statements of the Sharia Economic Bank. Paragraph (3) What is meant by "initial public offering" is the initial public offering as referred to in capital market legislation regulations. The external review period consists of:
a. the period from July to June of the third subsequent year; or b. the period from January to December of the third subsequent year.
Example:
A Sharia Economic Bank that conducts its first initial public offering in February 2025, the first external review is conducted for the period July 2025 to June 2028. https://jdih.ojk.go.id/

A Sharia Economic Bank that conducts its first initial public offering in August 2025, the first external review is conducted for the period January 2026 to December 2028.
Paragraph (4)
It is sufficiently clear.
Paragraph (5)
It is sufficiently clear.
Paragraph (6)
It is sufficiently clear.
Paragraph (7)
It is sufficiently clear.

Article 41
It is sufficiently clear.

Article 42
It is sufficiently clear.

Article 43
Paragraph (1)
It is sufficiently clear.
Paragraph (2)
The scope of the Sharia Governance implementation report to be regulated includes, among others, self-assessment of the implementation of Sharia Governance.

Article 44
It is sufficiently clear.

Article 45
It is sufficiently clear.

Article 46
Paragraph (1)
Follow-up on non-compliance with Sharia Principles in business activities and/or operations of the Sharia Economic Bank is conducted according to the policy of the Sharia Economic Bank. Example:

1. improvement of financing contracts; or
2. transfer of income obtained from business activities that are not in accordance with Sharia Principles to non-halal receipts.
   Paragraph (2)
   It is sufficiently clear.
   Paragraph (3)
   It is sufficiently clear.
   Paragraph (4)
   It is sufficiently clear.
   Paragraph (5)
   It is sufficiently clear.

Article 47
Paragraph (1)
See the explanation of Article 12.
Paragraph (2)
See the explanation of Article 33 letter b. https://jdih.ojk.go.id/

Paragraph (3)
It is sufficiently clear.
Paragraph (4)
It is sufficiently clear.
Paragraph (5)
It is sufficiently clear.
Paragraph (6)
It is sufficiently clear.

Article 48
It is sufficiently clear.

Article 49
It is sufficiently clear.

Article 50
It is sufficiently clear.

Article 51
It is sufficiently clear.

Article 52
It is sufficiently clear.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 103/OJK https://jdih.ojk.go.id/