Secretary-General of the Ministry of Finance Heru Pambudi testifying at the judicial review hearing of Law No. 21 of 2008 on Sharia Banking virtually, Thursday (6/23/2022). Photo by Humas MK/Ifa.
Thursday, June 23, 2022 | 14:23 WIB
JAKARTA, Public Relations—The Constitutional Court (MK) held another hearing for the judicial review of Law No. 21 of 2008 on Sharia Banking on Thursday, June 23, 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 (BPRS).
At the hearing, the House of Representatives (DPR), represented by Commission III member Sarifuddin Sudding, asserted that regulations on BPRS (sharia microcredit bank) in the Sharia Banking Law were in line with BPR (microcredit bank) regulations as the Banking Law stipulates that BPRS has the same function as BPR. The difference is only that BPRS is guided by sharia principles in Islamic law.
Sarifuddin said BPR aims to serve the community in a smaller scope than commercial banks, thus provides a narrower range of services. Therefore, the House asserted that BPR—which also extends to BPRS—should not be given the same authority as commercial banks, which operates in a wider scope. Such authority would disregard the background of the establishment of BPRS that distinguishes it from the sharia commercial bank.
“Payment traffic has a very broad scope, extending to all services both domestic and abroad. The central bank is required to maintain the quality of public services at all times in accordance with the shifting demands of society in the digital era,” he said virtually before a panel led by Chief Justice Anwar Usman.
Also read: Sharia Microcredit Banks Requests Equality in Payment Financial Traffic Services
Sarifuddin said the digitalization of commercial banks needed to be in line with efforts to maintain monetary stability, the financial system, and the design of the payment system. He believed the complexities of financial traffic services required comprehensive regulations and supervision. Based on his explanation, payment traffic in banking was not as easy and simple as the Petitioner argued. The functions and duties of each bank are to carry out business activities based on their respective capacities.
Sarifuddin also emphasized that the amendment to the Banking bill had explored the differences between BPRs and commercial banks in payment traffic services—where commercial banks are given the authority to provide payment traffic services, while BPRs are not.
“BPRs are not involved in services for foreign exchange and giro. This also applies to BPRS, as regulated in the Sharia Banking Law. To deal with increasingly rapid technological developments, sharia banks are encouraged to develop technological infrastructure so that they can serve customers faster and better,” he said.
Also read: BPRS HIK Parahyangan Revises Petition on Sharia Banking Law
Sharia Banking Not Provides Payment Traffic Services
At the same hearing, the Government, represented by Secretary-General of the Ministry of Finance Heru Pambudi, said that BPRs and BPRSs do not provide payment traffic services. The BPR and BPRS are intended to be a community bank whose market is more the small community around them as well as micro, small, and medium enterprises (MSMEs). Their different design from commercial banks and microcredit banks is also reflected in their scope of business activities and the types of their products.
“The establishment of a BPR and the restriction on the locations of its central and branch offices are intended for higher customer reach so as to meet the intermediation needs of micro-scale customers. Even though capital is limited, BPRs and BPRSs are intended to be the first-tier financial service providers most accessible for rural communities or areas that have not been reached by commercial banks,” Heru said.
In addition, Heru added, BPRs and BPRSs are designed to function as banking service providers and provide basic education about how banking works, especially to micro and small businesses. Considering the regulations for establishing a BPRS refer to the establishment of a conventional BPR, the restrictions on activities for a BPR also apply to a BPRS.
Heru also explained that equity participation is outside banking business activities, but it absorbs bank capital and cannot be used for business development. If a BPRS invests in other banks, it will not be able to utilize the capital to provide financing to the public, which is its source of income through interest.
Heru asserted that banks that participate in equity must have excess funds for their main business activities. Therefore, the bank’s investment in equity potentially affects BPRS’ business continuity, since its capital is smaller than that of sharia commercial banks.
At the preliminary hearing, the Petitioner alleged that Article 1 point 9, Article 21 letter d, and Article 25 letter b of the Sharia Banking Law had 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).
The Petitioner asserted that restrictions and prohibitions on providing payment traffic services had kept sharia microcredit banks from optimally providing banking services to the public, especially to micro and small businesses to encourage sustainable national economic growth. Furthermore, Bank of Indonesia (BI) had 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. However, 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. Therefore, the Petitioner requested that the a quo articles be declared unconstitutional.
Writer : Utami Argawati
Editor : Lulu Anjarsari P.
PR : Fitri Yuliana
Translator : Yuniar Widiastuti (NL)
Translation uploaded on 6/24/2022 13:04 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.
Thursday, June 23, 2022 | 14:23 WIB 970