ISLAMIC LAW ANALYSIS OF LPS RATE IN ANTICIPATING DISPLACED COMERCIAL RISK

Abstract

The determination of the deposit insurance interest rate or LPS Rate by the

Deposit Insurance Corporation (LPS) has been applied uniformly to all

participating banks, both conventional and Islamic, throughout this period.

However, the operational system and principles used by Islamic banks are

very different, especially because they adhere to the principle of profit-

sharing rather than interest. The purpose of this study is to analyze the

existence of a gap in legal research by examining the relationship between

the LPS's authority to set the LPS Rate and the principle of justice in the

Islamic banking system. Normative legal research using a normative

juridical approach, accompanied by an empirical approach thru case studies

and secondary data from academic literature. The research results indicate

that setting the LPS Rate without considering the characteristics of DCR in

Islamic banking has the potential to lead to legal injustice. Islamic legal

perspective explains that the establishment of the Deposit Insurance

Corporation needs to be reviewed from the principles of justice and the

prohibition of usury. Additionally, this policy also has negative

implications for the principles of justice, transparency, and sustainability

of the Islamic banking system in Indonesia. Therefore, a more inclusive,

proportional, and adaptive reformulation of deposit insurance policies is

needed for the dual banking system recognized in Indonesia. This effort is

expected to enhance the stability of the national financial system,

strengthen the competitiveness of Islamic banks, and ensure equal legal

protection for all customers of participating banks.