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Bank Indonesia looks at developing a Shariah banking blueprint

Bank Indonesia looks at developing a Shariah banking blueprint

(6 June 2013 – Indonesia) Shariah banking is expected to take a 5 percent share of banking in Indonesia by the end of the year.

Bank Indonesia, the central bank said Shariah banks’ assets grew to US$21.8 billion (A$22.5 billion) in 2012.

Bank Indonesia Governor Agus Martowardojo said the bank believes that progressive Shariah banking and financial development needs to be managed strategically.

With the development of a blueprint, the growth of Shariah banking will be more significant, he said.

"To increase the financing contribution of Shariah banking toward the economy, it is important to develop a strong and comprehensive Shariah financial system. That includes Shariah banking, non-Shariah banking and a Shariah stock market," Agus said.

He noted that there is a strong tie between Shariah banking, the takaful industry, or Islamic insurers, and Shariah stock markets.

Up to 80 percent of Shariah lending goes to micro, small and medium enterprises.

Islamic lenders comply with the Shariah law that prohibits the receipt of interest payments by receiving a pre-arranged percentage of revenue to repay a loan.

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