The Role of OJK and the Sharia Supervisory Board in Sharia Financing

Compliance in sharia financing with religious principles doesn't stop at regulation on paper. Two parties play a direct role in making sure that compliance is actually applied: the Financial Services Authority (OJK) as the national-level regulator, and the Sharia Supervisory Board (DPS) as the supervisor at each individual financial institution.

Understanding both roles helps business owners see that the sharia financing products they use are supervised in layers, rather than resting solely on a compliance claim from the fund provider.

OJK's Role: Regulator and Supervisor at the National Level

As an independent authority over the financial sector, OJK is responsible for regulating and supervising all financial institutions, including sharia financial institutions, under Law No. 21 of 2011 on the Financial Services Authority. In the context of sharia financing, OJK's role covers several areas.

First, issuing technical regulations (POJK) that serve as the reference for implementing sharia financing products and activities, such as POJK No. 24/POJK.03/2015 on Sharia Bank and Sharia Business Unit Products and Activities. Second, granting a business license to a sharia financial institution before its products can be offered to the public. Third, conducting prudential supervision, ensuring an institution's financial health and governance remain sound, including monitoring capital adequacy ratios and the quality of financing disbursed. Fourth, affirming that every sharia financing product may only be marketed after obtaining a sharia compliance fatwa from DSN-MUI.

In other words, OJK supervises from the regulatory and overall institutional health side, rather than monitoring the day-to-day transactions of each institution. Supervision at this level ensures sharia financial institutions operate with sound governance while complying with the legal framework that applies nationally.

The Role of the Sharia Supervisory Board: Supervision at the Operational Level

Unlike OJK, which operates at the national regulatory level, the Sharia Supervisory Board (DPS) is a body that must be established at every sharia financial institution, including sharia banks, sharia business units, and sharia rural banks, as required under Law No. 21 of 2008 on Sharia Banking. DPS members are generally appointed through a shareholders' meeting on the recommendation of the Indonesian Ulema Council.

DPS carries two main functions. The first is sharia supervision, ensuring all of the institution's products and operational activities comply with fatwas issued by DSN-MUI. The second is an advisory function, where DPS provides input to the board of directors whenever the institution faces a question about the sharia compliance of an activity, including during the development of new products that will be submitted to DSN-MUI for a fatwa.

In practice, DPS conducts periodic reviews of transaction documents, carries out sample checks on customers for each product, provides a sharia opinion within the institution's public reports, and reports its supervisory findings to the board of directors, the board of commissioners, DSN-MUI, and OJK, generally every six months. This regular reporting mechanism ensures sharia supervision isn't merely a formality but remains traceable and accountable.

How the Two Roles Complement Each Other

OJK and DPS operate at different levels, but they complement one another within a single supervisory ecosystem. OJK ensures the regulatory framework and institutional health are maintained nationally, while DPS ensures sharia compliance is applied consistently in the day-to-day operations of each institution. Both refer to DSN-MUI fatwas as the basis for assessing sharia compliance, leaving no gap between the rules that apply nationally and the practices carried out at the operational level.

This layered supervisory structure offers a direct benefit to business owners using sharia financing: assurance that the product they're using has gone through an evaluation process covering both legality and sharia compliance, rather than resting on a marketing claim alone. Business owners can also more easily verify an institution's legality through OJK's official registry, and check for the presence of a DPS in that institution's public reports.

Ultimately, trust in sharia financing isn't built only on the principles it upholds, but also on a supervisory system that ensures those principles are genuinely and consistently applied by every provider.