Is Islamic Financing Expensive or Cheap? Here's the Explanation

JAKARTA — Amid public scrutiny regarding whether Islamic financing is expensive or affordable, PT Bank Syariah Indonesia (BSI) has emphasised that the key factor is not merely the margin figure, but rather the choice of contract that determines risk patterns and certainty for customers. Deputy Chief Executive Officer Bob Tyasika Ananta explained that the company’s current financing structure is dominated by two primary contracts: murabahah and musyarakah. As of end-2025, murabahah accounts for 46.83 per cent and musyarakah for 45.44 per cent. The remainder comprises ijarah, mudharabah, and qardh.

Murabahah is a sale-purchase contract with a margin agreed at the outset. This scheme is widely used for housing and consumer financing. Instalments remain fixed throughout the tenure.

“Customers gain certainty about their instalments from the beginning. This is important for families to plan their long-term finances,” Bob told Republika on Friday, 27 February 2026.

Meanwhile, musyarakah is based on partnership. The bank and customer jointly invest capital, then share profits according to business performance. This scheme is widely used in the productive sector, including SMEs and corporations.

Under this contract, when business grows, profit-sharing increases. Conversely, when business slows, the amount the customer pays correspondingly decreases. This pattern is seen as providing breathing room for business operators amid economic fluctuations.

Bob affirmed that contract selection does not stand alone. BSI applies risk management according to customer profile and business type. “The division of profit-sharing and margin proportions is determined based on financing risk. That is what keeps our structure healthy,” he said.

Throughout 2025, BSI’s financing reached Rp 319 trillion or grew 14.49 per cent year-on-year. The financing-to-deposit ratio (FDR) stood at 83.74 per cent, reflecting effective intermediary function with adequate liquidity support.

To the public, these contract differences often remain invisible because only the instalment figure appears on the surface. However, behind it lie different legal consequences and risk distribution compared to interest-bearing loans.

In murabahah, the price and margin are locked in at the outset so customers are not exposed to increases in benchmark interest rates. In musyarakah, business risks are shared jointly so the burden is not borne entirely by the business operator.