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Case Sharia Banking (chapt.2)
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The explanation of Sharia banking in depth with some sources.
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QUIZ SESSION 2Islamic banks and financial institutions in Indonesia recently have been growing rapidly. The
development of banking and financial institutions in Indonesia began with Bank Muamalat
Indonesia (BMI) in 1991 and operated in 1992. This was caused by the changed in social’s
view, economic and political conditions that the idea of establishing Islamic bank elevated in
1900s and it was initiated by Indonesian Ulama Council (MUI). This idea was supported by
several powerful groups such as Indonesian Ulama Scholar Association (ICMI), Muslim
businessmen and Government of President Soeharto that also provided politics and financial
support to establishment of Islamic bank. However, Indonesia is actually slow at developing
Islamic Banks or financial institutions compared to neighbour country, Malaysia, who
already established it since 1983. There are reasons behind it, and it’s because lack of
socialization and communication through the releasing and/or developing Islamic financial
institutions in Indonesia.
These days the Islamic banking is not considered as only a compliment to national banking,
but rather it works bigger and can be contributed to the country’s economy for last fifteen
years. As the biggest Muslim populated country, Indonesia has the biggest potential market in
developing monetary and Islamic banking industry. This tendency is shown by the high
growth of the Industry. In addition, it is the highest compared to other nations that has the
industry. Even so, the high growth is still considered small once it is compared to the huge
market which is available.
Based on previous statement, lack of communication and socialization to the public is not the
only problem they are facing on. Islamic Banks has several challenges to be solved. Among
others, there are three main challenges. The first challenge is the market share of the Islamic
banking industry, there some factors which limit the expansion of this industry. The second
challenge is lack of human resources, the growth of Islamic banking is not followed by the
appropriate supply of human resources which are well-Sharia educated employees. The third
challenge is lack of product development. While comparing to Malaysian’s, Indonesian’s
Islamic banking have limited products that to some extent, this condition might discourage
investors and depositors to involve in Islamic transactions with Islamic banking.
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