The material judicial review hearing of Law No. 21 of 2008 on Sharia Banking, Monday (4/11/2022). Photo by Humas MK/Bayu.
Tuesday, April 12, 2022 | 05:07 WIB
JAKARTA, Public Relations—The Bank of Indonesia (BI) as the regulatory and supervisory authority of sharia banking does not have the legitimacy to formulate sharia principles directly in the formation of institutional regulations. Thus, fatwas (edicts) by the National Sharia Board of the Indonesian Ulema Council (DSN-MUI) are one of the determining prerequisites for the implementation of Islamic banking products as mandated by law, so the fatwas are binding for the development of the sharia banking operational system.
Such was the testimony of Rosalia Suci Handayani of BI (Relevant Party) at the material judicial review hearing of Law No. 21 of 2008 on Sharia Banking on Monday, April 11, 2022 in the plenary courtroom. The case No. 65/PUU-XIX/2021 was filed by Rega Felix, who challenges Article 1 point 12 and Article 26 paragraphs (1), (2), and (3) of the Sharia Banking Law.
Rosalia said that based Law No. 12 of 2011 on Lawmaking, all regulations that BI issues are recognized and binding, including those on sharia banking activities. All sharia business activities must comply with sharia principles, which are stipulated by the MUI in fatwas, which are then incorporated into BI regulations.
After the Sharia Banking Law was promulgated, BI has issued several regulations on sharia banking involving the Sharia Banking Committee and the DSN MUI to decide the materials to cover in the regulations.
“Therefore, the possibility of discrepancy between the will of the fatwa maker, in this case the DSN MUI, and the interpretation of the Sharia Banking Committee is very small. Even when the regulatory and supervisory authority in sharia banking remains with Bank Indonesia, Bank Indonesia will also involve the DSN MUI in the formulation of provisions on sharia banking products and services to be included in regulations. Thus, this collaboration can be ensured if Bank Indonesia regulations governing sharia banking products and services are always in line with the DSN MUI’s fatwas and the needs of banking practices,” Rosalia explained before the bench chaired by Chief Justice Anwar Usman.
Also read: Stipulation of Sharia Banking Principles Challenged
Increasingly Resilient Sharia Banking
The OJK’s Deputy Commissioner for Law and Investigation Rizal Ramadhani testified that the Petitioner does not have legal standing in the case because when he applied for financing facilities to Islamic banks based on a murabahah contract, he must also comply with the provisions of sharia banking, which are also in accordance with sharia principles, which are the embodiment of the principle of prudence in sharia banking.
The OJK was of the opinion that the Petitioners’ argument that sharia banking services not have fair legal certainty was not based on facts. Rizal said the Sharia Banking Law had been formed to accommodate the community interests and needs in transactions that follow sharia principles. In addition, it allowed for transactions and funding in accordance with sharia principles and the DSN MUI’s fatwas.
Based on a report on the development of Islamic finance in Indonesia in 2020, the Islamic banking’s resilience is increasing as evidenced by its liquidity as indicated by the Financing to Deposit Ratio (FDR), which is maintained at the range of 80-90%. Moreover, the number of Islamic banking accounts at sharia commercial banks, sharia business units, and sharia financing banks continues to increase since the end of 2020. “Therefore, sharia banks in Indonesia are able to meet the needs of the people who want banking services that are in accordance with the sharia principles of Islamic that they adhere to,” he explained.
Also read: Petitioner Revises Material Judicial Review Petition of Sharia Banking Law
Sharia Principles Not Under OJK’s Jurisdiction
The incorporation of the MUI fatwas into OJK regulations (POJKs), Rizal added, is done without reducing any stipulation in those fatwas. The formation of OJK’s provisions on sharia principles is based on fatwas, so that they do not go against those fatwas. He also said that the stipulation of sharia principles is not under the OJK’s jurisdiction, but is based on arrangements determined in the DSN MUI fatwas. Therefore, according to Articles 6-9 of the OJK Law, he added, the OJK’s jurisdiction is only limited to the regulation and supervision of the financial service sector, including banking.
“Therefore, it would not be appropriate that the OJK be authorized to determine sharia principles, including in sharia banking services, as it is not under its jurisdiction,” he explained.
Also read: House Explains MUI’s Authority Over Fatwa on Sharia Banking
The material judicial review case No. 65/PUU-XIX/2021 on Sharia Banking Law was filed by Rega Felix. At the preliminary hearing on Thursday, January 6, the Petitioner asserted his constitutional loss due to the ambiguous sharia banking provision. He claimed that Article 1 point 12 and Article 26 paragraphs (1), (2), and (3) of the Sharia Banking Law allows the Indonesian Ulema Council (MUI) and the Bank of Indonesia (BI) or the OJK (Financial Services Authority) to delegate unspecified authority to a lower-level provision or what is known as delegasi blangko, which has led to disharmony of the regulations on sharia banking as well as legal uncertainty.
He believes that the a quo law in general only regulates sharia banking, but not the principles of transactions in sharia banking (especially ownership right). As such, sharia principles that must be regulated in a law is not regulated in the a quo law. Instead, through Article 26 paragraphs (1), (2), and (3), it delegates the authority to form regulations to the MUI to issue a fatwa (edict), which is then further regulated in a BI or OJK regulation after the enactment of Law No. 21 of 2011 on the OJK.
Due to the ambiguous interpretation of the regulation, he added, it seems as if the OJK could forsake regulating those principles in a POJK (OJK regulation). This delegasi blangko and dualism of authority have led to public perception of dichotomy between the state and religious law, compelling them to believe “it is better to follow religious law than state law.” On the other hand, he said, the practices of sharia banking constitute undisguised riba (usury) that is common among conventional banks. This, he asserted, is because there are many conflicting notions in the state law.
The Petitioner stressed that this must be addressed, or it would lead to the ruin of sharia banking due to weak foundation. He believes this has harmed his constitutional rights as a sharia banking customer.
He also argued that Article 26 of the a quo law “has forced” MUI, BI, or the OJK to regulate something that is supposed to be regulated in a law.
Therefore, in his petitum, the Petitioner requested that the Court order lawmakers to form a law that regulates material rights in sharia banking transactions or to amend the Sharia Banking Law in relation to that matter.
Writer : Sri Pujianti
Editor : Nur Rosihin Ana
PR : Tiara Agustina
Translator : Yuniar Widiastuti (NL)
Translation uploaded on 4/12/2022 12:29 WIB
Disclaimer: The original version of the news is in Indonesian. In case of any differences between the English and the Indonesian versions, the Indonesian version will prevail.
Tuesday, April 12, 2022 | 05:07 WIB 366