Bank Pembiayaan Rakyat Syariah (BPRS) play a critical role in supporting micro, small, and medium enterprises (MSMEs) and advancing financial inclusion across Indonesia. However, a sharp rise in BPRS closures during the 2024–2025 period underscores structural vulnerabilities within the industry. This study aims to comprehensively analyze the multidimensional causes of BPRS closures by evaluating regulatory, financial, macroeconomic, and governance factors. Utilizing a qualitative-descriptive-thematic approach, this research synthesizes data from regulatory documents, financial performance indicators, and secondary literatures from Scopus-indexed studies. The thematic analysis reveals that BPRS closures are multifactorial, driven by stringent capital requirements under POJK 3/2022, weak liquidity management, rising Non-Performing Financing (NPF), institutional risk-taking behavior, and passive Sharia governance. Furthermore, regional disparities and fragmented coordination between the Financial Services Authority (OJK) and the National Sharia Board (DSN-MUI) compound these failure risks. While consolidation through mergers offers a structural mitigation pathway, long-term sustainability requires an Integrated Sharia Governance Framework, digital capacity building, and enhanced internal risk management. This study contributes a holistic policy framework for regulators and practitioners to prevent systemic bank failures.