Regulation of the Board of Governors of Bank Indonesia Number 12 of 2026 Aligns Sharia Foreign Exchange Transaction Provisions with National Foreign Exchange Regulations

Introduction 

On June 2, 2026, the Members of the Board of Governors of Bank Indonesia (“BI”) issued Regulation of the Board of Governors  of Bank Indonesia Number 12 of 2026 on the Amendment to Regulation of the Board of Governors  of Bank Indonesia Number 16 of 2024 on Foreign Exchange Market Transactions Based on Sharia Principles (“Regulation 12/2026”). Regulation 12/2026 amends the provisions regarding administrative procedures, underlying instruments, nominal limits (thresholds), and reporting mechanisms in foreign exchange market transactions based on Sharia principles, while aligning them with the general foreign exchange market provisions applicable in Indonesia.

Regulation 12/2026 is issued to align the provisions of foreign exchange market transactions based on Sharia principles with the developments in the foreign exchange market. In its considerations, Bank Indonesia explains that the amendments were made to support the stability of the Rupiah exchange rate, align Sharia foreign exchange provisions with other related provisions, strengthen risk management for transactions, and anticipate business activity developments of financial institutions.

Comparison 

Regulation 12/2026 amends several provisions previously stipulated in Regulation of the Board of Governors of Bank Indonesia Number 16 of 2024 on Foreign Exchange Market Transactions Based on Sharia Principles (“Regulation 16/2024”). The following is the comparison between Regulation 12/2026 and Regulation 16/2024:

Key Provisions

Adjustments to Publication and Transaction Execution Time 

Article 8 amends the provisions regarding the publication time of the reference rate, including the Jakarta Interbank Spot Dollar Rate (“JISDOR”), by referring to Bank Indonesia's provisions on foreign exchange market transactions. With this amendment, Regulation 12/2026 no longer sets forth the publication time of the reference rate in detail. Furthermore, Article 18 paragraph (1) stipulates that the execution time for interbank foreign exchange transactions against the Rupiah follows the execution hours of Bank Indonesia's foreign exchange monetary operations. Article 18 paragraph (2) also stipulates that the execution time for foreign currency transactions follows the transaction time based on global conventions. Banks must comply with the provisions regarding such transaction execution times. In the event of a violation, Article 18 paragraph (4) stipulates the imposition of administrative sanctions in the form of written reprimands.

Cover Hedging and Re-Hedge Provisions 

Article 15 paragraphs (1) and (2) amend the provisions regarding the execution of cover hedging and add provisions in paragraphs (3) and (4). Banks may conduct cover hedging with offshore banks not only for customer transactions but also for re-hedge transactions conducted by other banks. In its implementation, Article 15 paragraph (2) stipulates that cover hedging for customer transactions must use the customer's Underlying Transactions and be settled no later than 5 (five) working days after the customer transaction is conducted. Article 15 paragraph (3) stipulates that a bank facilitating a re-hedge must submit the customer's Underlying Transaction documents, and the cover hedging must be executed no later than 5 (five) working days after the re-hedge transaction is conducted by the other bank. If the underlying documents are not yet available, the bank may use a written statement in accordance with the format set forth in Annex VIII. Such written statement must include information that the transaction is conducted for re-hedge purposes and the bank's willingness to present the customer's Underlying Transaction documents to Bank Indonesia or other relevant authorities upon request.

Amendments to Foreign Exchange and Hedging Transaction Thresholds 

Regulation 12/2026 amends the provisions regarding transaction thresholds. For spot purchases of foreign exchange against the Rupiah, the threshold now follows Bank Indonesia's provisions on foreign exchange market transactions as stipulated in Article 22 paragraph (2). Furthermore, sell Simple Hedging Transactions have a maximum limit of USD10,000,000.00 (ten million United States Dollars) or its equivalent per transaction based on Article 22 paragraph (3) letter b. Meanwhile, buy Simple Hedging Transactions maintain a threshold of USD100,000.00 (one hundred thousand United States Dollars) or its equivalent per month for each actor of Foreign Exchange Market Transactions Based on Sharia Principles as stipulated in Article 22 paragraph (3) letter a. The maximum limit of USD10,000,000.00 per transaction also applies to Complex Hedging Transactions in accordance with Article 22 paragraph (4). As for Hedging Transactions Through Sharia Commodity Exchanges, the threshold is set at USD0.00 (zero United States Dollars) based on Article 22 paragraph (5).

Rupiah Transfer Provisions and Underlying Transaction Obligations 

The threshold for Rupiah Transfers now follows Bank Indonesia's provisions on foreign exchange market transactions as stipulated in Article 45 paragraph (2). The bank receiving the Rupiah Transfer must verify the availability of Underlying Transaction documents for transfers to accounts owned by Non-Residents or joint accounts above a certain amount (threshold), in accordance with Article 45 paragraph (1). However, this verification obligation does not apply if the transferred funds originate from the disbursement of Hedging Transactions Based on Sharia Principles for foreign exchange transactions against the Rupiah or constitute a movement of Rupiah Transfers between Rupiah accounts owned by the same Non-Resident as stipulated in Article 45 paragraph (3). Violations of the Rupiah Transfer provisions are subject to administrative sanctions in the form of a written reprimand and an obligation to pay 1% of the nominal transaction value in violation, with a minimum amount of Rp10,000,000.00 and a maximum of Rp1,000,000,000.00 in accordance with Article 45 paragraph (4).

Underlying Transaction Restrictions 

Foreign exchange-denominated securities based on Sharia Principles issued domestically by the Indonesian government cannot be used as Underlying Transactions for foreign exchange purchases against the Rupiah as stipulated in Article 24 paragraph (2) letter a1. This provision adds to the types of instruments exempted as Underlying Transactions, which previously covered foreign exchange-denominated sharia securities issued by Bank Indonesia. In addition, Article 24 paragraph (2) maintains exceptions for fund placements, reserves for financing facilities not yet withdrawn by debtors, and crypto assets. However, fund placement instruments may still be used as Underlying Transactions for sell Simple Hedging Transactions of foreign exchange against the Rupiah in accordance with Article 24 paragraph (3). Foreign exchange fund placements, both domestically and offshore, may also be used as the underlying for Rupiah Transfers to accounts owned by Non-Residents.

Amendments to Types of Financing for Non-Residents 

The provision of guarantees related to investment activities in Indonesia is no longer included as a type of financing to Non-Residents in line with the removal of Article 44 paragraph (1) letter a. Meanwhile, syndicated financing is maintained. On the other hand, Article 44 paragraph (1) inserts letter b1, which adds financing facilities guaranteed by fund placements. Such facilities may only be granted if they meet the following requirements:

1. The financing value does not exceed the value of the fund placement used as a guarantee;

2. The financing period does not exceed the remaining period of the fund placement;

3. The fund placement is at the bank providing the financing;

4. The financing funds are used for economic activities in Indonesia; and

5. Complies with other Bank Indonesia provisions.

Furthermore, Article 44 paragraph (1) continues to stipulate other types of financing that may be granted to Non-Residents, namely sharia financing cards, financing for consumer credit in Indonesia, and other banking activities.

Incidental Reporting Procedures and Enforcement of Administrative Sanctions 

Regulation 12/2026 amends the incidental reporting and administrative sanction provisions through amendments to Article 48 and the addition of Article 48A. Requests for the submission of incidental reports by Bank Indonesia to banks must now be submitted via letter as stipulated in Article 48 paragraph (1a). In addition, the sanction provision in Article 48 paragraph (3) is removed, and the subsequent imposition of sanctions is stipulated in Article 48A. Under Article 48A, violations of the obligation to submit periodic reports are subject to sanctions in accordance with Bank Indonesia's provisions on reporting, while violations of the obligation to submit incidental reports are subject to administrative sanctions in the form of written reprimands. The obligation to submit incidental reports upon Bank Indonesia's request remains stipulated in Article 48 paragraph (1). Furthermore, Bank Indonesia may request additional documents or information if the submitted reports are inadequate for supervisory purposes in accordance with Article 48 paragraph (2).

Transitional Provisions 

Article II stipulates that foreign exchange market transactions based on Sharia Principles conducted prior to June 2, 2026, remain subject to the provisions in Regulation 16/2024 until such transactions expire or mature. Furthermore, Bank Indonesia grants a time extension for spot purchases of foreign exchange against the Rupiah with a nominal amount above USD25,000.00 (twenty-five thousand United States Dollars) up to USD100,000.00 (one hundred thousand United States Dollars) per month per actor conducted during the period of June 2, 2026, to June 30, 2026. For such transactions, the submission of Underlying Transaction documents and data correction in periodic reports may be conducted no later than July 31, 2026.

Closing

Regulation 12/2026 amends various provisions in foreign exchange market transactions based on Sharia Principles, including adjustments to the publication time of reference rates and transaction execution times, provisions on cover hedging and re-hedges with offshore banks, changes to thresholds for spot purchases of foreign exchange, Rupiah Transfers, as well as sell Simple Hedging Transactions and Complex Hedging Transactions, which now have a maximum limit of USD10,000,000.00 per transaction. Furthermore, Regulation 12/2026 adds restrictions on the use of foreign exchange-denominated sharia securities issued domestically by the Indonesian government as Underlying Transactions for spot purchases of foreign exchange against the Rupiah, stipulates verification obligations for Underlying Transaction documents for Rupiah Transfers along with their exceptions, removes the provision of guarantees related to investment activities from the types of financing for Non-Residents, and adds financing facilities guaranteed by fund placements. Amendments are also made to the provisions on incidental reporting and administrative sanctions, including the obligation for Bank Indonesia to submit requests for incidental reports in writing, and the sanction provisions in Article 48A. In addition, transactions conducted prior to June 2, 2026, remain subject to Regulation 16/2024 until they expire or mature, while for spot purchases of foreign exchange against the Rupiah with a nominal amount above USD25,000.00 up to USD100,000.00 per month per actor conducted during the period of June 2, 2026, to June 30, 2026, the submission of Underlying Transaction documents and data correction in periodic reports may be conducted no later than July 31, 2026.