Islamic Banking and Islamic Insurance in Indonesia

Islamic Economics Modern existed since the mid-1940s that took place in Indonesia, in
Pakistan in the late 1950s, and in Egypt through the Mit Ghamr Savings Banks and Nasser Social
Bank (1971), although in the end the organization folded, but has give effect to a foundation or a
strong concept of the development of modern Islamic financial system. Asia-Pacific region did
not miss to participate in contributing to this usury-free banking system, the Bank with an
interest-free system was subsequently established in 1973 that the Philippine Amanah Bank
(PAB). The establishment of the bank in response to the Philippine government on the Muslim
insurgency in the southern region Filipina, The Bank specifically to serve the Muslim
community there and helped to rehabilitate and reconstruct communities in Mindanao, Sulu, and
other southern regions. A year later, the government of Saudi Arabia and the Organization of
Islamic Conference established the Islamic Development Bank (IDB) with a fund of two billion
dinars which makes IDB largest Islamic Bank. IDB is the Bank intergovernmental focuses on the
development of the country - a country which is a member of the bank, most of which is a
country that is predominantly Muslim, including Indonesia, the establishment of the IDB was in
the end become a momentum to the movement of Islamic banking which is then marked by the
establishment of the Bank of principled Sharia in some countries such as Dubai Islamic Bank
(1976), Faisal Islamic Bank of Egypt (1997). The islamic economy started in Indonesia since
1983. It was based on the emergence of the December 1983 package (pakdes 83) of regulations
that allowed the bank to perform no interest credit. Next, in 1991, Indonesia's muamalat bank
(bmi) stands as the first public bank to carry out business activities based on a principle for the
outcome, the syariah bank itself has a principle that prohibits usury in all transactions, in addition
to fairness, justice (fairness) and transparency, Must profit from honest labor as well as forge
partnerships that must benefit each other. In addition to where syariah Banks are saving, they are
required to issue and administer zakat to help the development of the environment. Following
bill number 7 of 1992 on the basis of a bank based on principle for the results, an official syariah
bank yuridically in Indonesia. Then six years earlier, in 1998, the bill was issued, the 1998 article
no. 10 act on Indonesia's legal policy of granting access to an unregulated public bank to syariah

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services as the bank of syariah through the dual or dual banking system. After the publication of
the law the conventional bank began to open syariah service, initiated by the foundation of Bank
Mandiri Syariah, after which Bank Mega, Bank Negara Indonesia, Bank Rakyat Indonesia and so
forth began to follow for syariah service.[1]

At the 1998 economic crisis that affected many countries, including Indonesia, the
islamic banking began to receive attention, where conventional Banks were influenced even
more negatively than the syariah bank, it was possible because an investment approach that was
used was less profitable and less risky than conventional Banks.[2]. The current economic crisis
has caused the islamic bank to begin to be viewed by the people as an alternative to the most
conventional bank system in Indonesia as the most Muslim nation in the world. The islamic
banking asset in Indonesia itself has seen an increase in 1998 that Rp 479 bilion by the end of
2007 to Rp 30.145 billion. In macro fashion, syariah banking can provide the strongest support
for national economic stability, in addition to the system for the outcome offered by syariah
banking to bring a more just benefit to all parties. The syariah bank is closer to the real sector
than the conventional bank, and the product offered by the islamic banking is no product of
uncertainty (gharar). The growth shown by syariah banking is higher than conventional banking
growth, resulting from both the creation and the distribution of finance by islamic banking.
Moreover, the flow of the socialitation program for islamic banking for the society immediately
strengthen the interest of the people in converting to islamic banking.[3]

In 2008 to emphasize the differences between the characteristics of Islamic banks and
conventional banks, various groups argue that it takes a special law governing Islamic banking. It
is also driven by the desire of people who want a more optimal practice of Islamic banks,
especially in terms of adherence to the principles of Islamic banks. To answer this challenge was
issued Law No. 21 of 2008 concerning Islamic Banking is essentially motivated by the intention
to improve the observance of Islamic banks to Islamic principles as stated in the al-Quran and al-
Hadith. Law is in line with the vision of national development towards the realization of the
Islamic banking system is healthy, strong, and focused on Sharia principles that uphold the
values of justice and equality, in order to achieve a prosperous society both materially and
spiritually. The Law No. 21 of 2008 concerning Islamic Banking provides institutional and
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regulation of Islamic banking products, the arrangements relating to the Committee on Islamic
Banking and separation (spin-off) UUS conventional banks and the implications for the future
progress of Islamic banking. Separation or spin-offs associated with these laws can be voluntary
or become a liability when the related bank had to meet certain requirements, voluntary
separation was made by PT.Bank Rakyat Indonesia (Persero) that separates her and UUS become
PT. Bank BRI Syariah. As at the 2016 Bank of Aceh which is a commercial bank with
conventional proposed permit changes in real conversion into commercial banks Sharia and
precisely on the 19th of September 2016 Bank of Aceh changed to Bank Aceh Sharia and
successfully implemented in all branches of Bank Aceh simultaneously, Law No. 21, 2008,
article 68 of the Islamic banking claim that if in the case of Conventional Commercial Bank
having a UUS whose asset value has reached at least 50% (fifty percent) of the total value of
assets of the parent bank or the 15 (fifteen) years from the entry into force of this Act, the
Commercial Bank is required to conduct the separation UUS become Islamic Banks. Fifteen
years since the enactment of the Act occurred in 2023.

Sharia Banking Committee as contained in the Law on Islamic banking has gained its
operational regulations such as Regulation No. 10/32 / PBI / 2008 regarding Sharia Banking
Committee. Committee on Islamic Banking is a forum that provides experts in the field of
Shariah muamalah, economic experts, financial experts and banking experts who have the duty
to assist Bank Indonesia in implementing MUI be provisions to be poured into the Bank
Indonesia regulations on Islamic banking, in addition to the the Committee is also tasked with
the development of the Islamic banking industry, and the results of the implementation of the
tasks of the committee will be submitted to Bank Indonesia in the form of recommendations.
With the regulations on the obligation to spin-off or separation on UUS conventional commercial
bank and the banking committee of Sharia shows that there has been an effort which the real
from the government legally responsible for the development sector of Islamic banking in
Indonesia more quality so that operations will be optimized and closer the implementation based
on Sharia principles, true true. Specifically with the separation of the UUS in Indonesia would
make Islamic bank has more flexibility to develop Islamic banking activities in Indonesia
because it is not dependent on the parent, the authority becomes larger businesses and profit

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gained will certainly increase. Separation or spin-off does require a small cost, cause Sharia bank
has to be a self-sufficient to finance its operational, the banking system and human resources.

Besides syariah banking, there is one of the islamic economic products is islamic insurance.
Although it’s not like Islamic , islamic insurance development has had a positive increase over
the years. Islamic insurance grows and develops as syariah banking grows. [4] the beginning of
syariah insurance dates back to the time of the prophet Muhammad SAW called aqilah. Al-aqilah
has the meaning of being responsible and responsible between family members, as a price to pay
for the sacrifice is called aqilah. Takaful practices continue to be developed during the reign of
Umar bin Khattab, at that time, the Government pushed to do the al-aqilah thoroughly. Then
Umar bin Khattab ordered to establish Diwan al-Mujahedeen, whoso name was written in Diwan
al-Muhahidin then have to pay diyat or blood money for his actions, namely the murder of
someone in their tribe. Insurance in Islam always evolves over time despite the ups and downs,
for example in the 14-17 century, Sufi Kazeruniyya streams developing an insurance system that
is based on Islamic law that eventually decline as well. Then in the 19th Century, Hanafi jurist
Ibn Abidin raised the idea of insurance and legal basis of the law. Ibn Abidin also was the first to
make insurance as an official Institute, not only as a customary practice. The idea of Ibn Abidin
then open the eyes of the Muslims to accept the insurance. Takaful basically a more nuanced
social rather than economic nuances that prioritizes profit (profit-oriented). This is caused by the
aspect of helping that form the main basis in the practice of Islamic insurance. Mutual bear or
called takaful or al-Ta'mim very large very emphasized in Islamic law, so that's what's become
the principal basis of Islamic insurance. The principle is exactly what supports their sense of
calm, safe, and a sense of mutual help between policyholders so as to make Sharia insurance
quite popular in various parts of the world including Indonesia.

The presence of syariah insurance companies does not escape the conventional
equivalent of a long history, whereby the operation of the syariah bank is one of the very
implications of syariah insurance. The syariah insurance company of insurance was first
established in 1994 through Indonesian PT Syarikat Takaful Indonesia (STI), then by

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government data up to January 31, 2011, Indonesia has 44 companies in the field of syariah
insurance, And the latest data obtained from the Indonesian syariah insurance association (AASI)
early in 2019 has 63 companies and is even expected to grow by 2019 with premiums in 2018,
projected to be $10,63%, and by 2019 is expected to increase by 10,63% to $6.6 trillion. By the
basic concept, distinguishing syariah insurance from conventional insurance is the principle of
risk management. The principle of the management of syariah insurance risks is to share risk
sharing, which is a risk Shared by sesame insurance members, that from a fatwa and an insurance
man called MUI that syariah insurance is an activity of protection and help among a number of
people of means that the risks of the case will also be Shared among all syariah insurance
providers.[5]

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 References

[1] A. G. Anshori, “Sejarah Perkembangan Hukum Perbankan Syariah di Indonesia dan

Implikasinya bagi Praktik Perbankan Nasional,” La_Riba, vol. 2, no. 2, pp. 159–172,
2008.

[2] M. D. Sari, Z. Bahari, and Z. Hamat, “PERKEMBANGAN PERBANKAN SYARIAH DI

INDONESIA : SUATU TINJAUAN,” vol. 3, no. 2, pp. 120–138, 2013.

[3] T. Dalam, M. Mea, and H. Alamsyah, “Perkembangan dan Prospek Perbankan Syariah
Indonesia :,” April 2012, pp. 1–8, 2015.

[4] M. Cahyadin, “PRAKTIK EKONOMI ISLAMI DI INDONESIA DAN IMPLIKASINYA

TERHADAP PEREKONOMIAN Akhmad Akbar Susamto *),” vol. 5, 2008.

[5] N. Puspitasari, “Sejarah Perkembangan Asuransi Islam serta Perbedaanya dengan

Asuransi Konvensional,” Jeam, vol. 10, no. 1, pp. 35–47, 2011.

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 Daftar Lampiran Gambar

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