MUI commission bans bank interest<\/p>\n
Dadan Wijaksana and A. Junaidi, The Jakarta Post, Jakarta<\/p>\n
The Indonesian Ulemas Council (MUI) Edict Commission said on
\nTuesday that it had agreed to declare interest on money as riba,
\nwhich is forbidden under Islamic law, but MUI deputy chairman Din
\nSyamsuddin said that the edict was not final.<\/p>\n
Ma'ruf Amin, chairman of the MUI Edict Commission, said that
\nthe commission had decided to prohibit the application of
\ninterest in financial institutions such as banks, insurance
\ncompanies, pawn houses, and cooperatives.<\/p>\n
\"We agreed that the interest is the same as the practice of
\nriba which was haram (prohibited) during the era of Prophet
\nMuhammad,\" Ma'ruf told reporters on the sidelines of a MUI
\nmeeting here.<\/p>\n
Ma'ruf said MUI would prohibit Muslims from using conventional
\nbanks once sharia banks were already operating in their area.<\/p>\n
\"We consider the current situation an emergency, so Muslim
\npeople are still allowed to use conventional banks. Someday, if
\nthe number of sharia banks is already adequate, we may prohibit
\nMuslims from using conventional banks,\" he said.<\/p>\n
Ma'ruf, who is also a deputy chairman of the country's largest
\nMuslim organization Nahdlatul Ulama (NU)'s lawmaking body, denied
\nsuggestions that the edict was aimed at helping sharia banks
\nattract customers from conventional banks, amid the current tough
\ncompetition among banks.<\/p>\n
MUI deputy chairman Din Syamsuddin, however, said that the
\ncommission's decision on interest was not final.<\/p>\n
\"It's not yet final. We, the chairmen and deputy chairmen,
\nwill hold a meeting soon to discuss the issue,\" Din, who is also
\ndeputy chairman of the country's second largest Muslim
\norganization Muhammadiyah, told reporters before attending the
\nclosing ceremony of the national gathering.<\/p>\n
He stressed that the MUI leadership would consider opinions
\nfrom other Muslim organizations, including NU and Muhammadiyah,
\nbefore deciding whether to ban bank interest or not.<\/p>\n
NU and Muhammadiyah as organizations had earlier said that
\nbank interest was not forbidden as it was different from the
\npractice of riba during Prophet Muhammad's era.<\/p>\n
NU owns Nusumma Bank, while Muhammadiyah manages Bank
\nPersyarikatan; both apply interest.<\/p>\n
Meanwhile, Vice President Hamzah Haz said on Tuesday that the
\nedict was not binding.<\/p>\n
\"We leave it all to the people. Muslims who consider the
\ninterest of conventional banks unacceptable can go to sharia
\nbanks. It is no problem because it (the edict) is not binding,\"
\nHamzah was quoted by detik.com as saying.<\/p>\n
Hamzah, who is also chairman of Muslim-based United
\nDevelopment Party (PPP), argued that bank interest could not be
\nbanned as it had been applied universally.<\/p>\n
Meanwhile, bankers regretted on Tuesday the decision of the
\nMUI Edict Commission to ban bank interest as it could hurt the
\nbanking sector.<\/p>\n
Sigit Pramono, the newly appointed president of Bank Negara
\nIndonesia (BNI) 1946, said that such a move could deal a huge
\nblow to the banking sector, which has not fully recovered from
\nthe crisis in the late 1990s.<\/p>\n
Sigit suggested that the country's highest Islamic body
\ncoordinate with Bank Indonesia as the sole agency overseeing the
\ncountry's banking sector.<\/p>\n
\"MUI indeed has the authority to declare something haram. But,
\ncoordination with BI will be the key in this regard,\" Sigit said,
\nwhile urging also that if the plan is to go ahead, alternatives
\nmust be provided.<\/p>\n
Another banker, Jahja Setiaatmadja, a director of Bank Central
\nAsia (BCA), told The Jakarta Post that the move was poorly timed.<\/p>\n
Not only could it slow down the pace of recovery in the
\nbanking sector, it could also backfire considering the limited
\nnetwork and number of sharia banks the country has at the moment,
\nJahja added.<\/p>\n
Three years ago, MUI issued a similar declaration, but it had
\nlittle impact on the banking practices. However, the edict is
\nexpected to encourage conventional banks to open Islamic bank
\nunits.<\/p>",
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