TheJakartaPost

Please Update your browser

Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.

Jakarta Post

Explainer: What’s sharia banking and where’s Indonesia taking it?

  • Eisya A. Eloksari

    The Jakarta Post

PREMIUM
Jakarta   /   Thu, February 11, 2021   /  09:01 pm
The Jakarta Post Image
A Bank Mandiri Syariah employee serves a customer on Sept. 3, 2020 at the Islamic lender's Central Jakarta office. Indonesia has two types of sharia banks, full-fledged sharia banks and banks that are sharia business units (UUS) of conventional banks, like Bank Mandiri Syariah.(JP/Wendra Ajistyatama)

Indonesia recently launched its largest sharia bank, Bank Syariah Indonesia (BSI), as it seeks to develop the country into a sharia finance hub. The government of the world’s largest Muslim-majority country has been looking to develop its sharia economy since establishing the Indonesian Sharia Economy Master Plan 2019-2024 for becoming a prominent player in the global sharia economy. Despite the ambitious plan, information on Islamic banking and finance has been generally lacking for consumers. According to the Financial Services Authority (OJK), Indonesia’s sharia financial literacy rate was a mere 8.93 percent in 2019, far below the conventional financial literacy rate of 37.72 percent. Experts still maintain that sharia banking has potential to grow and even support the country’s larger halal economy. Read also: Sharia finance thrives despite pandemic, to...