PADG Number 9 of 2026 Introduces New Flexibility in Liquidity Rescue for Sharia Commercial Banks

Introduction

On 31 March 2026, Bank Indonesia issued Member of the Board of Governors Regulation Number 9 of 2026 on Amendments to Member of the Board of Governors Regulation Number 1 of 2024 on Implementing Regulations for Short-Term Liquidity Financing Based on Sharia Principles for Sharia Commercial Banks (“PADG 9/2026”), which took effect as of that date. This regulation expands the scope of high-rated sharia securities instruments that may be submitted by Sharia Commercial Banks (“BUS”) as collateral when accessing short-term liquidity financing facilities.

This regulation was established as a follow-up to the issuance of Bank Indonesia Regulation Number 8 of 2025 on Amendments to Bank Indonesia Regulation Number 5 of 2023 on Short-Term Liquidity Financing Based on Sharia Principles for Sharia Commercial Banks. Previously, BUS faced a limited scope of collateral when addressing liquidity difficulties arising from mismatches between cash inflows and outflows. Through PADG 9/2026, Bank Indonesia aims to strengthen the stability of the Islamic banking system by providing additional flexibility for BUS to optimize other high-quality sharia securities assets in maintaining their liquidity resilience.

 

Comparison

PADG 9/2026 updates several provisions under Member of the Board of Governors Regulation Number 1 of 2024 on Implementing Regulations for Short-Term Liquidity Financing Based on Sharia Principles for Sharia Commercial Banks (“PADG 1/2024”). The following table presents a comparison between PADG 9/2026 and PADG 1/2024:

 

Key Provisions

Expansion of PLJPS Collateral Objects

Pursuant to Article 4 paragraph (1) letter d1 and paragraph (1a), Bank Indonesia expands the classification of assets that may be submitted by BUS as risk mitigants for liquidity financing. Bank Indonesia now recognizes and accepts other types of Sharia-compliant securities beyond the instruments previously regulated, as long as those securities are classified as having a high rating. Bank Indonesia will disseminate information regarding the list of such newly designated sharia securities to the banking sector through official correspondence, publication on the Bank Indonesia website, or other communication channels.

Adjustment of Collateral Submission Order

Article 4 paragraphs (2), (3), and (4) stipulate changes to the order of collateral submission by BUS. These high-rated sharia securities instruments are treated equally with Corporate Sukuk in the collateral submission hierarchy. BUS is only permitted to submit collateral in the form of Financing Assets or fixed assets if the bank demonstrably does not possess a portfolio of high-rated sharia securities, or if the total value of such sharia securities instruments is insufficient to cover the requested liquidity financing ceiling.

Valuation Authority and Special Treatment by Bank Indonesia

Article 11 letter d1 and Article 79A stipulate that Bank Indonesia has the authority to determine the valuation mechanism and technical treatment of such new collateral. Bank Indonesia assesses the collateral value of these high-rated sharia securities objectively based on fair market value. Furthermore, Article 79A paragraph (3) provides that Bank Indonesia is authorized to regulate a series of collateral treatments, including:

1. The use of other high-rated sharia securities as collateral; 
2. Collateral binding arrangements; 
3. Collateral requirements; 
4. Calculation of collateral value; 
5. Maintenance and administration of collateral registers; 
6. Obligations for collateral verification by Public Accounting Firms (KAP) and appraisal by Public Appraisal Offices (KJPP); 
7. Examination of completeness of collateral documentation; 
8. Collateralization mechanisms; 
9. Mechanisms for the return of collateral upon repayment; 
10. Execution of collateral; and/or 
11. Other related matters. 

Closing

PADG 9/2026 aims to strengthen the stability of Islamic banking by providing flexibility for BUS in managing their liquidity resilience, particularly through the expansion of short-term financing collateral objects, which now include “other high-rated sharia securities.” This expansion modifies the collateral submission order, whereby BUS must prioritize all such securities instruments before being permitted to pledge Financing Assets or fixed assets. To ensure effective implementation, Bank Indonesia is authorized to determine the valuation of such new collateral objectively based on fair market value, as well as to regulate the technical provisions governing collateral binding, independent verification, and execution mechanisms.