Legal Risk Mitigation in the Implementation of Sharia Financing Contracts: Gap Analysis Between Sharia Principles and Practice in the Field

Abstract

The Islamic finance industry has experienced significant global growth, including in Indonesia, marked by the expansion of banking and non-bank institutions offering sharia-compliant financial products. Unlike conventional systems based on interest, Islamicf inancing utilizes contracts aligned with Islamic law, aiming to eliminate usury and promotes ocial and economic justice. Sharia principles serve not only as ideological foundations buta lso as operational guidelines, emphasizing transparency, ethics, and community welfare. However, the practical implementation of sharia contracts often encounters legal challenges, such as vague clauses, differing fatwa interpretations, and procedural inconsistencies. Thesel egal risks may undermine public trust and threaten the sustainability of Islamic financial institutions. Therefore, legal risk analysis is essential to ensure compliance and strengthen the credibility of the industry. Optimizing the role of the Sharia Supervisory Board (DPS) and enhancing legal risk management are crucial steps in maintaining sharia adherence and preventing contractual disputes in Islamic financing.