Sharia Supervisory Board: Effectiveness In The Supervisory Function Of Islamic Financial Institutions In Yogyakarta

Abstract

In order for people to feel safe and comfortablestoring their assets in Islamic financial institutions (LKS), it is necessary to implement the supervision of the Sharia Supervisory Board (DPS) to stand firm without any interest. The purpose of this study is to assess the effectiveness of supervision, the operation of the Sharia Supervisory Board (DPS) in supervising Islamic financial institutions in Indonesia, both in the banking and non-bank sectors. This research usesqualitative research, is descriptive and tends to use content analysis. The results of this study show that the implementation of DPS performance in LKS is still contextual in fulfilling the requirements for the establishment of Islamic financial institutions, which is still focused on understanding the actualization of financial products in order to be able to run in accordance with the rules of Article 27 of PBI No. 6/24/PBI/2004, DPS is leaning more towards Sharia contracts than Sharia Audits. So that the lack of effectiveness of DPS performance makes it less understanding of the Sharia contextual by workers in the Islamic finance sector has an impact on public loyalty and trust in making transactions on products issued by Islamic financial institutions.