Second Islamic bank starts operations

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)