Indonesia formalizes risk-sharing model for Shariah investment accounts

Indonesia is allowing banks to share investment risks with retail investors to obtain potentially higher returns in exchange for customers bearing investment risks, under the OJK Regulation Number 4 of 2026 issued by Otoritas Jasa Keuangan (OJK), or the Financial Services Authority, which establishes a distinct regulatory framework for Shariah banking investment products.

This emulates a similar leeway already allowed in other Islamic financial markets like Malaysia, the UAE and Saudi Arabia which offer profit-sharing investment accounts as alternatives to traditional deposits.

Previously, there was not a clear legal separation between third-party funding products - such as deposits, savings, and current accounts - and Shariah investment products.

Under the new ruling, effective the 29^th April 2026, Shariah banking investment products are defined as offerings which “consistently apply profit and risk sharing principles that reflect the characteristics of real investments by using contracts such as Mudarabah”. It means customers assume the investment risk in full.

The OJK mandates banks to educate and ensure the customer is aware of the associated investment risks – including prior evaluations, which could be some sort of low-, medium- or high-risk profile categories – before allowing the transactions to proceed.

Banks are given two years to align their existing products to the new rules.

An Indonesian Shariah banker told IFN Investor this OJK ruling has no immediate impact on retail clientele, who also said profit-sharing investment products are offered solely to corporate and institutional clients so far by the likes of CIMB Niaga Syariah, Maybank Syariah and Bank Muamalat Indonesia.