Definition of Islamic Banking can be interpreted as a developed banking system based on sharia (law) Islam. Business establishment of this system is based on the prohibition in Islamic religion to pick up or borrow with interest or so-called ban on usury and investment for businesses classified as haram (example: business relating to the production of food / drink unlawful, efforts are un-Islamic media, etc. ), where this can not be guaranteed by the conventional banking system.
SOME PRINCIPLES / LAW embraced by SYARIAH BANKING SYSTEM:
(PRINSIP HUKUM YANG DIANUT)
- Payment of loans with different value of the loan value with a predetermined value is not allowed.
- Funders to contribute to share profits and losses as a result of institutional efforts to borrow funds.
- Islam does not allow the “make money from money”. Money is only a medium of exchange and not a commodity that has no intrinsic value.
- Element gharar (uncertainty, speculation) is not allowed. Both parties must know very well the results they would get from a transaction.
- Investments should only be given to efforts that are not forbidden in Islam. Such liquor business should not be funded by Islamic banks.
HISTORY OF SYARIAH BANKS IN INDONESIA
Islamic banking in Indonesia, was first pioneered by the Bank Artha Graha of Indonesia was founded in 1991. Banks are at the beginning of the establishment initiated by the Indonesian Ulama Council (MUI) and the government and received support from the Association of Indonesian Muslim Intellectuals (ICMI) and some Muslim businessmen. At the time of monetary crisis that occurred in late 1990, the bank was having trouble so that the remaining equity is only one third of initial capital. IDB and then give an injection of funds to these banks and in the 1999-2002 period can be up and generating profits.
Until the year 2007 there were 3 institutions of sharia banks in Indonesia, Bank Artha Graha of Indonesia, Bank Syariah Mandiri and Bank Mega Syariah. Meanwhile, commercial banks that already have sharia business unit is among 19 banks are large banks such as Bank Negara Indonesia (Persero) and Bank Rakyat Indonesia (Persero).
Islamic system has also been used by rural banks, has now developed 104 BPR Syariah.
Islamic banks working principle is the rule of Islamic law based on agreement between the bank and other parties for storage of funds and / or financing activities or other activities in accordance with Syariah.