: The Ratification of the Islamic Banking Act in Political Perspective. This article discusses the history of the formation of Islamic banking in Indonesia. At first, in the New Order era, the relationship between Muslims and the government was filled with suspicion and prejudice that every activities related to Islam was considered as an attempt to actualize the Jakarta Charter or to establish an Islamic state. However, when Indonesia experienced economic hardship followed by changes in the structure of politics/government, the idea of Indonesian Muslims to establish shariah bank can ultimately be realized. The success of the establishment of the shariah banking institutions, in many ways, can not be separated from the then political circumstances.