Sharia compliance framework for Islamic peer-to-peer financial technology companies in Indonesia

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The regulation of Islamic peer-to-peer fintech (IPF) in Indonesia is handled by OJK, which imposes regulation Number 10 in the Year 2022 (POJK 10/2022), covering both Islamic and conventional peer-to-peer (P2P) fintech companies. However, the monitoring of P2P compliance with the regulation is not explicitly addressed. The IPF companies are part of the Islamic fintech industry, which channels funds from crowds or peers (investors) to beneficiaries (enterprises) via online platforms. P2P fintech is comparable to Islamic banking regarding how monies are intermediated. A sharia compliance framework (SCF) is needed to minimise non-compliance risk. Without a standard SCF, the practices vary and cannot be generalised on the sectoral or industrial levels. As such, sharia-compliant businesses' misinterpretation probability or misconduct can be reduced. It is because the industry players and the public could always refer to the standard to assess the market. This study explores the implementation of SCF for IPF companies regarding the current interpretation of SCF, challenges in product management, and the possibility of establishing a standard of SCF. A qualitative approach with semi-structured interviews and collecting data from companies, the regulator, and the association of companies is the method to address the objective of this study. Similarities and differences or coding are applied to analyse the data. This study finds the proposed definition of SCF, which applies to the structure of the implementation of SCF. The standard of SCF is technical guidelines to conduct sharia compliance assurance in the IPF industry. SCF prescribes product management regarding fatwa selection, product disclosure sheet (PDS), and sharia report for every campaign. A principles-based approach will suit the proposed standard of SCF because it provides efficiency advantages. The implication of this study could become a recommendation for establishing a more robust shariah compliance regulatory framework for Islamic finance and P2P fintech in particular.
Sharia compliance framework (SCF) , Sharia governance , IPF companies , Standardised SCF , Implementation of SCF , Challenges in product management without standardised SCF , Project paper (MSc)
Perwiragama, S. A. (2022). Sharia compliance framework for Islamic peer-to-peer financial technology companies in Indonesia (Master dissertation). INCEIF, Kuala Lumpur. Retrieved from

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