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Jakarta Post

Anticipating new rule on sharia banks

Jakarta   /   Fri, January 5, 2018   /  12:50 pm
Anticipating new rule on sharia banks Personal touch: A teller serves a customer at the sharia lender Bank Syariah Bukopin's head office in Central Jakarta on Feb. 7, 2017. (JP/Dera Menra Sijabat)

Soon Bank Indonesia (BI) will partially apply the averaging of reserve requirement to sharia commercial banks. So far, the reserve requirement for sharia commercial banks is just 5 percent daily, with no additional 1.5 percent as for conventional banks. Relaxing the reserve requirement will undoubtedly be good news, as the growth of sharia bank financing is slowing down. Total sharia bank financing as of September 2017 was Rp 186 trillion (US$13.8 billion), an annual increase of only 8 percent. On the other hand, third-party funds grew by 16.7 percent. Loan growth that is not comparable with third-party funds brings sharia banks to a more elementary issue, i.e. financial intermediary function. Sharia banks are able to raise funds, but find it difficult to lend them. This is confirmed by the financing to deposit ratio indicator, which has reached more than 80 percent. The impleme...

Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.