| April 2
April 2 Indonesia's Islamic banks maintained
double-digit asset growth last year while rural and non-bank
segments made further gains, broadening the industry's consumer
base in Southeast Asia's largest economy.
Indonesia has the world's largest Muslim population, but
that potential has yet to fully translate into the country's
Islamic banking sector which remains underdeveloped, lagging
behind neighbour Malaysia.
Islamic banking assets grew by 24.2 percent to 242.3
trillion rupiah ($21.4 billion) last year, giving the sector a
4.9 percent share of total banking assets, data from Indonesia's
financial service authority or Otoritas Jasa Keuangan (OJK)
Indonesia's 11 full-fledged Islamic banks added 32.7
trillion rupiah worth of assets in 2013, a 22.2 percent
increase, while the country's 23 Islamic windows added 14.5
trillion rupiah in assets, a 30.5 percent increase.
But beyond commercial banks, Islamic finance is making
inroads in other areas which could help it tap the country's
large consumer base - with a predominantly Muslim population of
There are now 163 Islamic rural banks in Indonesia which
posted a 24.1 percent growth in assets in 2013 to reach 5.8
trillion rupiah, lifting their share of total rural banking
assets to 7.5 percent.
Such growth came despite the size of their branch network
being almost unchanged with 402 branches across the country.
In a separate OJK report, Islamic financing companies posted
a five-fold increase in assets in 2012 to reach 22.7 trillion
rupiah. There were 35 such firms in Indonesia at the end of
2012, after 21 opened their doors that year.
Even Islamic pawn-brokers have made gains, they held a 9.8
percent share of total financing for that segment as of December
2012, the latest available data from OJK showed.
Indonesia's Muslim charitable organisations have also built
large asset pools which could support efforts to reduce poverty,
a study released on Tuesday found.
Regulators are also planning to roll out initiatives to
develop other areas of Islamic finance, which follows religious
principles such as a ban on interest and monetary speculation.
The OJK is now a full-member of the Malaysia-based Islamic
Financial Services Board, a major standard-setting body for the
industry. It said last week it would implement risk management
guidelines for Islamic insurance companies.
Indonesia's central bank is also developing a market for the
short-term sukuk issued by the International Islamic Liquidity
Management Corp, to help address a lack of highly-liquid sharia
compliant money market instruments.
Other proposed policies include regulating foreign exchange
markets, introducing Islamic repurchase agreements as well as
education and promotion initiatives.
($1 = 11,312.5 rupiah)
(Editing by Jacqueline Wong)