The authority is preparing a five-year plan aimed at addressing issues, including a lack of scale in the industry, sector consolidation and the role of foreign ownership, OJK told Reuters.
The document would be available for public consulation by year-end.
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To help Islamic banks navigate a range of local and federal regulations, OJK has set up a committee tasked to encourage coordination in Islamic finance among government bodies and the private sector.
According to the regulator, Indonesian Islamic lenders hold about 4.8% share of total banking assets in the country as of May, down from 24.2% year-on-year growth rate in 2013 and a peak of 49.2% in 2011.
With a new blueprint, the sector will implement rules mandating Islamic window operations to be spun off from their parent banks and floated on the local exchange by 2022.
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