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Ramadhan a boon for sharia business
Careful checking: Bank Muamalat employee carefully checks figures on a deposit slip handed over by a bank customer
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Careful checking: Bank Muamalat employee carefully checks figures on a deposit slip handed over by a bank customer.
Despite the majority of Indonesia's population being Muslim, banks operating in accordance with sharia banking principles have seen slow growth, prompting several players to seek new ways of luring customers.
Indonesia's sharia banking sector has recorded slow growth as it nears the end of this year's second quarter, compared to the same period last year, according to a recent report from the Financial Services Authority (OJK).
Several banks with sharia business unit (UUS), however, have seen the slow growth as a driving force to lure more customers, especially with the fasting month of Ramadhan ' one of the five pillars of Islam ' around the corner.
The banks have their own ways of attracting more customers and maintaining good relationships with their respective depositors.
Bank BNI Syariah, for instance, has drawn up a plan to maximize its banking services across the country.
'With the approach of the holy month, we will focus our activities on services, cash availability and programs related to our Hasanah card and wise spending,' said BNI Syariah business director Imam Teguh Saptono, as quoted by kompas.com.
'This is to anticipate the rise in spending that usually accompanies the fasting month,' he said.
'We will also optimize our internet banking and mobile banking services,' he added.
BNI Syariah had total assets of Rp 16.68 trillion by May 2014.
Like BNI Syariah, UUS OCBC NISP has also prepared special programs to welcome the fasting month.
UUS OCBC NISP spokesman Koko T. Rachmadi revealed the bank's intention to introduce several programs.
THR iB, for example, is a savings deposit program offering a prize to customers on murabaha contracts, he said.
To join the program, customers are required to save Rp 99.9 million over three years, including a minimum of Rp 100,000 every month.
'This program is expected to meet our annual third-party funds target,' he said.
UUS OCBC NISP has set its target of third-party funds at Rp. 2 trillion by year's end.
The bank regulator has reportedly attempted to slow down credit disbursement by conventional banks amid the economic slowdown, which has been seen by operators of banks with UUS as an opportunity to penetrate the market.
'The policy is expected to help our efforts to seek third-party funds generated from sharia customers,' he said.
At present, savings contribute to around 50 percent of third-party funds, or Rp.1.2 trillion by March 2014.
The bank also cooperates with Rumah Zakat to help customers wishing to pay zakat (alms) via ATM, internet banking and mobile banking services.
The last program is related to annual tradition of mudik, which literally means 'going home', or 'returning to one's place of origin'.
The program is set to kick off on July 22, 2014.
As the world's largest Muslim-majority country, Indonesia is seen as a fertile environment for banks operating in accordance with sharia banking principles, which include, for example, the prohibition of fixed or floating payments as well as the taking of set interest or fees, known as riba, on loans.
However, despite the market potential, the growth of Islamic banks has been very slow. Since the first sharia bank ' Bank Muamalat ' began operations in 1992, little has been achieved in the Islamic banking sector.
Currently, there are 11 sharia banks operating as independent business entities in the country, and another 24 UUS that operate as the Islamic banking divisions of existing commercial banks. By March 2013, the combined assets of sharia banks still accounted for just 4.6 percent, or Rp 209.6 trillion (US$21.08 billion), of total banking assets in Indonesia.
Bank Syariah Mandiri (BSM) and Bank Muamalat were listed as the two largest sharia banks with total assets of Rp 55.48 trillion and Rp 46.47 trillion, respectively.
The OJK disclosed earlier its plan to issue a revised regulation on sharia banks' minimum capital requirement to assist lenders in the face of a wider scope of risks.
The revised regulation will contain two additional indicators to measure the capital sufficiency of each bank to cope with business risks, according to OJK executive director for sharia banking Edy Setiadi.
'It will be similar to what has been implemented in the sharia and conventional banking industries. The difference is that while there are eight indicators being implemented now, in the future we will see 10 because we will also include risk measurements for profit sharing and investment,' he said.
A Bank Indonesia (BI) regulation on sharia banks' minimum capital, issued in 2005, sets the banks' minimum capital at 8 percent of their risk-weighted assets. Some of the indicators applied include those to measure credit, market and foreign exchange risks.
BI was previously in charge of banking supervision, but handed over the authority to the OJK in late December 2013.
