Business

Sharia banking sees extraordinary
development

Sharia banking has been experiencing extraordinary developments in several countries including Indonesia, home to 191 sharia banks. In Indonesia, this particular banking system has been enjoying an average growth-rate of 40.2 percent per year from 2007 to 2011.

The figure was revealed during a one-day seminar on Islamic deposit insurance of the International Association of Deposit Insurers and Islamic Deposit Insurance Group (IADI-IDIG) held in Yogyakarta, on Monday.

“The potential of sharia banking is big,” director of the Risk Management Insurance Indonesia, Salustra Satria, said on the sidelines of the seminar on Monday.

Delegates from seven member countries of IDIG and six member countries of IADI participated in the seminar, which has been held regularly as a medium for exchanging views, discussions and evaluation on the sharia banking system for mutual improvements in the implementation of it.

Participating countries included Sudan, Malaysia, Indonesia, Kazakhstan, Jordan and Turkey. Also joining the seminar were representatives from the World Bank, USAID and International Centre for Education in Islamic Finance (INCEIF).

Roslan Abdul Razak of the INCEIF said that the combined assets of 1,000 sharia financial institutions in 75 countries currently was US$ 1.2 trillion.

“The growth is quite good, 15-20 percent per year. Sharia banking can really be a solution, especially during a global crisis,” Roslan said.

IADI-IDIG chairman Khairuddin Arsyad of Malaysia added that sharia banking could be a solution in a time of global crisis because it was based on the customers’ religious faith.

“Some Muslims trust the sharia system more. With such trust, the sharia system can be the financial system’s global solution, “ he said.

Yet, he did say that trust alone would not suffice. Better services, easy access and collateral are the main keys to success. “Still, we cannot leave the conventional banking system behind because we have a heterogeneous community.”

Paper Edition | Page: 14

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