Constitutional Justice Wahiduddin Adams chairing the preliminary hearing of the judicial review of Law No. 21 of 2008 on Sharia Banking, Wednesday (4/6/2022). Photo by Humas MK/Bayu.

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Thursday, April 7, 2022 | 03:12 WIB

JAKARTA, Public Relations—The Constitutional Court (MK) held a preliminary hearing of the judicial review of Law No. 21 of 2008 on Sharia Banking on Wednesday, April 6, 2022. The case No. 32/PUU-XX/2022 was filed by PT Bank Pembiayaan Rakyat Syariah Harta Insan Karimah Parahyangan (BPR Syariah HIK Parahyangan), a sharia microcredit bank (BPR).

The Petitioner challenge Article 1 point 9, Article 9 paragraph (2) letter a, Article 13, Article 14 paragraph (10), Article 21 letter d, and Article 25 letters b and e of the Sharia Banking Law. They argued that Article 1 point 9, Article 21 letter d, and Article 25 letter b of the Law had restricted or prohibited sharia microcredit banks from offering payment traffic services. Article 21 letter d stipulates that sharia microcredit banks cannot transfer money, either for their own interest or for the benefit of customers independently, but only through their accounts at sharia commercial banks, conventional commercial banks, and sharia business units (UUS).

Before the panel chaired by Constitutional Justice Wahiduddin Adams, legal counsel Ahmad Wakil Kamal asserted that restrictions and prohibitions on providing payment traffic services keep sharia microcredit banks from optimally providing banking services to the public, especially to micro and small businesses to encourage sustainable national economic growth. Furthermore, he said, Bank of Indonesia (BI) established a National Payment Gateway (GPN) policy aimed at smooth, safe, efficient, and reliable national payment system, and at taking into account the increasing, competitive, and integrated developments in information, communication, technology, and innovations.

“The policy does not recognize sharia microcredit banks as a party that can be directly connected to the GPN,” Kamal said.

Article 1 point 9, Article 21 letter d, and Article 25 letter b of the Sharia Banking Law have resulted in sharia microcredit banks unable to be directly connected to the GPN policy system.

“In order to be connected to the system, sharia microcredit banks must go through conventional or sharia commercial banks,” Kamal added.

Additional Fees

The issue has positioned sharia microcredit banks subordinate to sharia commercial banks, resulting in discrimination against them, which essentially provide the same financial services to the public and run some of the same businesses as sharia commercial banks. Both of them collect funding from the public in the form of savings and offer credits to customers.

On the other hand, many non-banking companies such as financial technology (fintech) and telecommunication companies may utilize and be connected to the GPN policy system, when they share similarities with sharia microcredit banks in their business activities.

Kamal asserted that the prohibition led to additional fees charged to customers, such as BI-mandated transaction fees.

“This resulted in the absence of equal treatment offered to other legal entities protected by regulations, which are able to choose to carry out direct fund traffic through BI or through conventional/sharia commercial banks or financial service companies,” he explained.

The prohibition, he said, deprives sharia microcredit banks from having other choices to add value or efficiency. It also results in difficulty in adapting and innovating with technology to offer the best services for their customers, leading their finances to an unhealthy state. In contrast, customers of conventional/sharia commercial banks are allowed tech-based payment traffic activities, which simplify transaction chain and can reduce operational costs. However, if this condition is left unchecked, it will certainly threaten the sustainability of sharia microcredit banking business.

In addition, he added, sharia commercial and microcredit banks are required to maintain a sound level, which includes at least capital adequacy, asset quality, liquidity, profitability, solvency, management quality that reflect capabilities in financial aspects, in addition to compliance with sharia principles and sharia management principles, as well as other aspects related to the business of sharia banks and sharia business units.

He also said sharia banks (including sharia microcredit banks) that are limited liability companies are allowed to raise capital from public funds in order to develop their business, for example through or outside of the stock exchange. However, considering that the activities of sharia banks are specific, because there are sharia restrictions, both the stock exchange and the Capital Market Supervisory Agency (BAPEPAM) must issue special regulations on sharia restrictions. 

Justices’ Advice

In response to the petition, Constitutional Justice Suhartoyo advised the Petitioner to strengthen their argument on the restrictions on sharia microcredit banks. He also advised them to clarify the background to the petition.

Meanwhile, Constitutional Justice Saldi Isra advised the Petitioner to elaborate the party who could represent the legal entity based on its statute/bylaw and other legislation. 

Writer        : Utami Argawati
Editor        : Nur Rosihin Ana
Translator  : Yuniar Widiastuti (NL)

Translation uploaded on 4/8/2022 08:33 WIB

Disclaimer: The original version of the news is in Indonesian. In case of any differences between the English and the Indonesian versions, the Indonesian version will prevail.

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