Executive Director of Legal Department of Bank Indonesia Rosalia Suci Handayani testifying virtually at the judicial review hearing of Law No. 21 of 2008 on Sharia Banking, Wednesday (8/10/2022). Photo by Humas MK/Ifa.
Wednesday, August 10, 2022 | 15:10 WIB
JAKARTA (MKRI) – The fundamental difference between commercial banks and microcredit banks (BPRs), both conventional and sharia, is that BPRs are not demand-deposit banks (BPUG), as BPRs and BPRSs (conventional and sharia microcredit banks) are prohibited from offering payment traffic services, thus cannot store demand deposits and participate in payment traffic, pursuant to Article 25 letter b of Law No. 21 of 2008 on Sharia Banking and Article 14 letter a of the Banking Law.
This statement was made by the Executive Director of the Legal Department of Indonesia’s central bank Bank Indonesia (BI), Rosalia Suci Handayani, at the judicial review hearing of the Sharia Banking Law on Wednesday, August 10, 2022. The case No. 32/PUU-XX/2022 was filed by PT Bank Pembiayaan Rakyat Syariah Harta Insan Karimah Parahyangan (BPR Syariah HIK Parahyangan).
“Thus, there are 4 bans imposed on BPRs/BPRSs on offering payment traffic services: they cannot receive demand deposits from customers; they cannot issue checks or written transfer instructions; they cannot clear checks or follow up on written transfer instructions; and they cannot open an account at BI for clearing and settlement,” Rosalia said on behalf of BI as a Relevant Party.
She explained that if BRPs/BPRSs were allowed to participate in payment traffic directly albeit with restrictions as the Petitioner requested—such as transfer, National Payment Gateway (GPN), and BI-Fast—it would obscure their function as non-BPUG institutions. She added that the payment traffic services that they cannot offer are direct ones without involving commercial banks. “However, BRPs/BPRSs can offer indirect payment traffic services by opening an account in or collaborating with commercial banks,” she asserted.
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Rosalia added that the restrictions imposed on BRPs/BPRSs by the Banking Law and the Sharia Banking Law were because initially demand deposits can only be cleared by BI with checks and written transfer instructions as payment instruments for which overdraft in banks was possible.
“Banking savings products developed and it is possible to transfer funds between savings accounts without going through BI clearing, but through switching. Thus, BPRs/BPRSs are allowed to transfer funds between banks through BPRS accounts at conventional commercial banks, sharia commercial banks, and sharia business units (as indirect participants),” she explained.
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Meanwhile, Zulkarnain Sitompul, an expert for the Government, said a bank is a company with special characteristics: its main business activity is lending, and funds disbursed by it as credit loans comes from funds deposited by customers.
“This means that the bank’s main business activities are financed by public funds. Second, funds deposited by the public in the bank must be returned by the bank whenever it is billed by the owner of the funds, while funds disbursed by the bank as credit loans can only be collected by the bank in accordance with the credit agreement. This means that banks face liquidity risk all the time,” he explained.
In order to mitigate liquidity risks, he added, banks are required to maintain its soundness, such as by having sufficient capital as determined by the OJK (Financial Services Authority). This capital depends on the type of bank and is based on the business activities that the bank is allowed to carry out.
He also said that banks must implement risk management following Article 38 of the Sharia Banking Law, whose elucidation stipulates, “‘Management risk’ is defined as a series of procedures and methodology applied by banking to identify, measure, monitor, and control risks that emerge as a consequence of bank businesses.” In other words, the more expansive the businesses a bank carries out, the bigger the risk. “One of the ways to mitigate risk is capital. Capital acts as a bumper for potential losses that banks might face. Therefore, banks are obligated to manage their risks,” Sitompul emphasized.
Also read: Ban Against BPRSs in Payment Traffic Affects Services to Customers
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 8/11/2022 09:47 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.
Wednesday, August 10, 2022 | 15:10 WIB 388