Nowadays, the society is very enthusiastic ith the sharia banking. Sharia banking not only collects the fund from society, but also channels its fund to assist the people in running and developing their business. The expansion of sharia banking in Indonesia has created a very strong competition towards conventional banking. The society enthusiastic towards sharia banking has forced the conventional to start constructing and releasing the branch of sharia under their authority. Moreover, some conventional banks has been converted themselves become sharia banking.

The basic difference between conventional banking and sharia banking is its operational principle based on interest and profit sharing. This difference of system results different consequence in getting economical benefit. In conventional system, the estimation and transparency of results are easier because the interest applies direct calculation and without benefit of fund process. However, this benefit substantively has the character of illusion because it does not provide implicit justice aspect, like risk distribution. Meanwhile, in the concept of sharia, interest rate is not used. The instrument applied is profit sharing of effort which is instructed directly to investment sector which is implicit in it justice and distribution risk.

The product offered by sharia banking are able to compete with those from conventional banking. For instance, financing product in sharia banking can attract customer to use this product to run their business. Moreover, the difference between credit in conventional banking with financing in sharia banking is in its relationship with customers, collateral, business defrayal, credit due date, amount credit based on duration installment, harmonization between the lender, borrower, and stockholder.



Research Location : PT Bank Muamalat Indonesia



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