The Straits Times, Tuesday, November 18, 2003
Jakarta body to issue fatwa on use of non-Islamic banks
By Devi Asmarani
JAKARTA - Indonesia's highest Islamic body, the Indonesian Council of Ulemas
(MUI), plans to issue a fatwa, or religious decree, banning Muslims from investing in
conventional banks that yield profits through interest rates.
This is to encourage more Indonesian Muslims to use the growing number of Islamic
banks in the country, known here as syariah banks.
These banks apply the Islamic no-interest principle where borrowers pay no interest
while depositors get a share of the profits.
But the plan - first revealed in a seminar earlier this month by the head of MUI's
Syariah National Council, Mr Ma'ruf Amin - has raised more objections than support.
Indonesia's two largest Islamic organisations, Muhammadiyah and Nahdlatul Ulama
(NU), oppose the move to declare that non-Islamic banks practise usury and that 'it is
forbidden for Muslims to deposit money or get financial assistance from them'.
'The decree should be issued by the end of this year or next year at the latest,' said
Mr Ma'ruf.
The MUI had issued a decree in 2000 declaring that bank interest rates were haram or
forbidden, he said.
At that time, there was no absolute ban because there were few syariah banks, he
added. 'But this time, the fatwa which we will issue will be absolute.'
In the last four years, more Indonesian banks have converted to syariah banks, along
with the revival of Islamic sentiments.
The banks are gaining popularity as numerous commercial banks go through major
restructuring or fold up due to poor performance.
But the syariah banks are still outnumbered by conventional ones. 'In the near future,
every district should have at least one syariah bank,' Mr Ma'ruf said.
But Muhammadiyah, the country's second-largest Islamic group, is worried that the
proposed fatwa could spark a nationwide rush away from the commercial banks.
Muhammadiyah official Din Syamsuddin, who is also an MUI secretary, said not
everyone in the council accepted the plan.
The 40-million-strong NU has also expressed its disapproval. 'Banks do not practise
usury just because they charge interest rates,' said Mr Masdar F. Masudi, who heads
the group's legal body.
In most cases, interest rates compensate for inflation or currency devaluation, he
noted. 'That's why it cannot be generally categorised as haram.'
Economists do not think the proposed fatwa will have a significant impact.
Mr Umar Juoro of the Habibie Centre told The Straits Times: 'The majority of people
will continue to bank with the non-Islamic banks for practical reasons.'
Copyright © 2003 Singapore Press Holdings. All rights reversed.
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