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Sunday, 20 February 2011

Islamic banking burgeoning in Indonesia

It is only in Indonesia that Sharia banking assets are growing at the rates never seen before, reaching 47 percent to US11.14 billion dollars in 2010.

Transactions are done like regular banks here in Bank Syariah Mandiri Jakarta, one of the biggest Sharia commercial banks in the country with up to 530 branches scattered throughout the nation.

And like most banks, Sharia commercial banks also advertise their products through the internet, deploying internet banking, mobile banking while offering similar financial services and additional products that offer more benefits to its Moslem and non moslem customers.

Bank Muammalat, another notable Sharia commercial bank, has exercised Sharia principles since May 1992, years before the Indonesian Central Bank, Bank Indonesia, regulated the incorporation of Sharia principles in Sharia bank practices in 1998.

In 2008, Bank Indonesia passed a law that allows banks to offer services that comply with Islamic ban on interest charge.

Expecting to pass similar Sharia banking law, the Ugandan central bank has recently sent delegates to learn about the success of Islamic finance in Indonesia, planning to open the first Sharia bank back home at the start of 2012.
Growing at an exhilarating rate, more conventional banks have started to consider opening their own Sharia counterparts, moving to Islamic finance as another alternative to expand.


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