Muhammadiyah cool on Islamic bank edict

Muhammadiyah cool on Islamic bank edict

Sri Wahyuni, The Jakarta Post, Yogyakarta

Muhammadiyah chairman Ahmad Syafii Maarif called on Muslims on
Wednesday to play down an edict that bans bank interest and
suggested that they continue using conventional banks.

Syafii, who leads the country's second largest Muslim
organization, said the issue of bank interest remained
controversial even among ulemas.

"As an opinion, an ijtihad (individual interpretation or
judgment), we appreciate the edict. But, I think it was hastily
formulated as there has been no agreement among ulemas regarding
the issue," Syafii told reporters at Muhammadiyah headquarters
here.

The Edict Commission of the Indonesian Ulemas Council (MUI)
announced a ban on Tuesday on the payment of interest on deposits
and loans involving financial institutions such as banks,
insurance companies, pawnbrokers and cooperatives, saying it
resembled the practice of riba that was haram (prohibited) during
the era of the Prophet Muhammad.

The commission also said it would ban Muslims from using
conventional banks once sharia banks were operational, but
conventional banks would be accepted in areas where sharia banks
were absent.

Syafii, however, said that the edict could not work in that
way as most of the sharia banks operating in the country were
managed by conventional banks.

"This is actually a classic issue. It has been around for
years. There was a similar edict in the past, but it proved
unworkable," he said.

Syafii, therefore, suggested that Muslims remain calm in
response to the issue, quoting the opinion of a prominent ulema
who said that bank interest was not haram as long as there was no
riba practice involved.

"The law on riba is very, very clear. It's haram and will stay
that way until the end of the world. But, the question is, is
bank interest with no element of exploitation also to be
considered as riba?" said Syafii, adding that he would ask
Muhammadiyah's Tarjih (supervisory) Commission to further study
the matter.

Syafii also expressed support for the operation of what are
termed "Islamic" banks in the country, provided that they were
able to serve the needs of modern society.

"It hasn't happened yet, has it?" Syafii asked.

He said the assets of the banks currently using the Islamic
label accounted for only some 0.6 percent of the total assets
held by the country's banks, with the rest being controlled by
conventional banks.