BI plans conference on sharia banking

The Jakarta Post, Jakarta

Bank Indonesia is planning to hold an international conference on Islamic sharia banking to discuss its possible contribution to monetary stability.

The central bank's deputy governor, Ibrahim Maulana, was quoted by Antara as saying on Friday that the conference would discuss sharing banking systems, and review the impacts of the Basel II international banking accord.

The findings of the latest research on sharia banking will also be presented at the conference, which will run from Sept. 30 to Oct. 2.

According to Ibrahim, the conference will feature some 25 speakers from various international agencies, such as the Islamic Development Bank (IDB), International Monetary Fund (IMF), World Bank, and the International Islamic Rating Agency.

Representatives from a number of central banks whose countries have applied the sharing banking system are scheduled to attend the conference.

Titled "Risk management, regulation and supervision to unify international regulation", the conference will be a collaborative project between Bank Indonesia, the Ministry of Finance and the IDB.

Globally, some 140 banks or sharia financial institutions in 75 countries manage a total of US$230 billion in funds. They offer a wide range of products and services starting from simple retail products to financing for major infrastructure projects.

The sharia banking system works in line with the principles of Islamic sharia. While conventional banks gets interest from borrowers, sharia banks take a part of the profits made by borrowers under a profit sharing arrangement.

Ibrahim said the total assets of domestic sharia banks are predicted to jump by six percent by 2011.

According to Ibrahim, as of July 2003, the total assets of the country's sharia banks stood at Rp 5.6 trillion, or 0.48 percent of the total assets of the country's banks, which amount to Rp 1,111.68 trillion.

Currently, there are two full sharia banks in Indonesia, seven conventional banks that also provide sharia products and 86 small rural sharia banks, Ibrahim said.

According to Ibrahim, Hong Kong-based HSBC is going to launch a new sharia unit, while local bank, Bank Tugu, plans to focus on sharia products and to change its name to Bank Syariah Indonesia.