There are no direct market regulations covering issuance of securities under Sharia principles in Indonesia.

However, Bank Indonesia (BI), as bank regulatory authority, has formulated regulations governing financial institutions operating under Sharia principles. BI established a consultative forum in 2002 to create a comprehensive blueprint for banking under Sharia principles. The blueprint, to be implemented over the next ten years, recognizes a Sharia-specific supervisory role (currently filled by the National Sharia Board) to oversee relevant financial products, institutions and standards.

In response to the growing interest in Sharia banking operations, Bank Indonesia issued the following regulations to promote transparency and prudential banking:

• Guidelines for Sharia Bank Accounting in Indonesia (PAPSI)
• Sharia Commercial Bank Monthly Reports
• Earning Assets Quality
• Allowance for Earning Assets Losses for Sharia Banks
• Short-term Financing Facility for Sharia Banks

Commercial banks or rural banks operating based on Sharia principles are required to have a Sharia Supervisory Board residing at the bank's head office. The Board supervises the bank's operations to ensure that it complies with Sharia principles. Requirements for membership in the Sharia Supervisory Board are stipulated by the National Sharia Council of Indonesia Council of Ulama.

For a comprehensive list of approved Sharia principles, refer to Market Activities>
Instruments.