Updated Legal Framework on Conventional Commercial Bank UUS: Licensing, Minimum Capital and Spin-off Requirements Revised

In an effort to support the development of, as well as procedural and business process adjustments for sharia business units (Unit Usaha Syariah– “ UUS ”) that are operating within the sharia banking sector, the Financial Services Authority (Otoritas Jasa Keuangan– “ OJK ”) has issued Regulation No. 12 of 2023 on Sharia Business Units (“ Regulation 12/2023 ”), which has been in force since 12 July 2023. [1] At its core, the introduction of Regulation 12/2023 aims to consolidate and integrate various frameworks that address the UUS of conventional commercial banks (Bank Umum Konvensional– “ BUK ”), as well as to encourage spin-offs of UUS into sharia commercial banks (Bank Umum Syariah– “ BUS ”) in the wake of the issuance of Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector (“ Law 4/2023 ”). [2]