Second Islamic bank starts operations

JAKARTA (JP): Bank Syariah Mandiri (BSM), the second commercial bank operating under Islamic law, officially launched its operations on Wednesday.

The bank's president, Nurdin Hasibuan, said BSM opened with five branches in Jakarta and three others in Bandung, Surabaya and Medan.

BSM offers conventional banking services such as savings, time deposits, leasing and trade financing.

Nurdin said the difference between BSM and other banks was the principle of its operation, in which all of its services are based on a profit-sharing scheme rather than on interest or fees.

BMS, with total equity of Rp 330 billion (about US$47 million), is 99 percent owned by Bank Mandiri, a state bank recently established from the merger of four state banks: Bank Dagang Negara (BDN), Bank Bumi Daya (BBD), Bank Expor Impor Indonesia (Bank Exim) and Bank Pembangunan Indonesia (Bapindo).

Nurdin said BMS, formerly known as Bank Susila Bakti, a medium size bank, was owned by one of BDN's subsidiaries. The ownership of the bank, which received its license to operate as an Islamic bank only last month, was transferred to Bank Mandiri as part of the merger.

He said it planned to open 12 more branches next year as part of its short-term business plan.

"We hope we will have 100 branches within the next five years," he added.

The country's first Islamic bank was Bank Muamalat, which was established in 1992.

Although there are only two commercial banks operating under Islamic law, the number of rural banks offering services under the same principles has reached over 50.(hen)