– Sharia People's Financing Bank (BPRS) is a financial institution that has great potential to grow. Sharia People's Financing Banks or BPRS are banks that carry out business activities based on sharia principles, which in their activities do not provide services in payment traffic.[1]https://www.ojk.go.id/id/kanal/perbankan/data-dan-statistik/Pages/Daftar-Alamat-Kantor-Pusat-BPRS.aspx

Just like conventional BPRs, Islamic People's Financing Banks have much narrower activities compared to the activities of commercial banks. This is because BPRS are prohibited from accepting demand deposits, foreign exchange activities, and insurance. Based on Law Number 21 of 2011 concerning the Financial Services Authority, the regulation and supervision of BPRS is carried out by the OJK.

BPR Syariah was established based on Law no. 7 of 1992 concerning Banking and Government Regulation (PP) No. 72 of 1992 concerning Banks Based on Profit Sharing Principles. Initially, BPRS was better known as an abbreviation of Islamic People's Credit Bank, only after Law no. 21 of 2008 there was a change from a Sharia Rural Bank to a Sharia Rural Bank.

The purpose of establishing a BPRS is to improve the economic welfare of Muslims, add new jobs, provide benefits and kindness to people in need and foster the spirit of Islamic brotherhood through economic activities in order to increase per capita income towards an adequate quality of life. Therefore, BPRS are specially designed with certain networks and limited functions unlike commercial banks.

  • What is a Shariah People's Financing Bank?
  • Founder and Owner of Bank Pembiayaan Rakyat Syariah
  • Business Activities of the Syariah People's Financing Bank
  • Things Prohibited from Doing by Syariah People's Financing Bank
  • History of Sharia People's Financing Bank

What is a Shariah People's Financing Bank?

Islamic People's Financing Banks are Islamic banks which in their activities do not provide services in payment traffic. BPRS is a bank that specifically serves small communities, especially those in sub-districts and rural areas.

The types of products offered by BPRS are relatively narrow when compared to commercial banks. As explained above, several types of bank services may not be provided by BPRS, such as opening a checking account and participating in clearing.

The establishment of the BPRS is expected to become a reliable banking institution in improving the standard of living of the middle class in each region which has different regional characteristics and conditions. BPRS in general have not been reached by commercial banks, especially people who live in rural areas.

Thus, BPRS is urgently needed to become the government's partner in realizing Indonesia's economic development, especially in rural areas that are not reached by commercial banks and are expected to become an extension of the government's hand to reach out and contribute to the welfare of micro-community life.

The existence of Islamic People's Financing Bank institutions has several advantages compared to commercial banks, namely BPRS can provide banking services with an easy process, disbursement of financing quickly, simply, and does not require complicated requirements as in commercial banks for the middle and lower class, especially for MSMEs who located in rural and urban areas to further develop their business.

Founder and Owner of the Sharia People's Financing Bank

A number of laws and regulations issued require adjustments to regulations regarding the type of establishment and form of BPR legal entity. The establishment of the BPRS was based on a request by the PSP candidate for a change of BUK business license to a BPR business license, as well as a change in LKM business license to BPR business license. Meanwhile, those who can become BPR founders and owners are:

  • Indonesian citizens or Indonesian citizens
  • Indonesian legal entities whose owners are all Indonesian citizens and/or local governments

If a BHI is proposed as a PSP candidate, it must have been in operation within the timeframe according to POJK PKK. OJK may determine the operating period of different legal entities, based on certain considerations. Finally, the party that can become the owner and founder of a BPR is the local government.

In terms of the form of a BPR legal entity, it can be a Regional Public Company (Perseroda) or a Regional Public Company (Perumda). Both forms of legal entity include BPRs with regional corporate legal entities that have not yet adjusted to become Perumda or Perseroda. Then also Cooperatives and/or Limited Liability Companies.

BPR must have articles of association that meet the requirements of the articles of association in accordance with statutory provisions and contain statements for:

  • Additional paid-in capital resulting in a change in PSP;
  • Changes in share ownership resulting in changes in PSP; and
  • Appointment of members of the Board of Directors and members of the Board of Commissioners, takes effect after obtaining approval from OJK.
  • BPRs that have not complied with the provisions regarding paid-up capital are required to adjust the scope of the articles of association at the GMS which is held for the first time after the POJK comes into effect.

Paid-up capital must be placed in the form of a deposit at a commercial bank or other BPR on behalf of the “OJK Board of Commissioners shareholders and/or BPR PSP)” with a description for the establishment of the BPR concerned and the disbursement can only be made after obtaining approval from OJK.

Placement of paid-in capital in the form of deposits is carried out in full in the amount of paid-up capital required according to the zone at the time of submission of the application for approval in principle for the establishment of the BPR. The paid-up capital for the establishment of the BPR must be used for working capital of at least 50%.

Based on the regulations, sharia people's financing banks are prohibited from accepting demand deposits, foreign exchange activities, and insurance. Want to have a house to live in or just savings as an investment? Check out the selection of houses in Parung Panjang near the train station, prices below IDR 500 million here!

Sharia People's Financing Bank Business Activities

Article 1 (point 4) of Law no. 10 of 1998 concerning Amendments to Law No. 7 of 1992 concerning Banking, it is stated that Islamic BPRs are banks that carry out business activities based on sharia principles which in their activities do not provide services in payment traffic.

Rural Banks conducting business activities based on sharia principles are further regulated according to the Decree of the Director of Bank Indonesia No.32/36/KEP/DIR/1999 dated May 12, 1999 concerning Rural Banks Based on Sharia Principles.

Technically Islamic BPRs can be interpreted as financial institutions like conventional BPRs, whose operations use sharia principles. Basically, as an Islamic financial institution, Islamic BPRs can provide financial services similar to those of Islamic commercial banks.

In the public fund budgeting business, sharia BPRs can provide financial services in various forms. However, compared to Islamic commercial banks, the operational activities that can be carried out by Islamic BPRs are more limited. As an Islamic financial institution, it is basically a Credit Bank

People of Sharia (BPRS) can provide financial services similar to Islamic commercial banks. However, according to Banking Law no. 10 of 1998, BPR Syariah can only carry out the following efforts:

  • Collecting funds from the public in the form of deposits in the form of time deposits, savings and or other equivalent forms.
  • Give credit
  • Provide financing and placement of funds based on sharia principles in accordance with the provisions stipulated by Bank Indonesia.
  • Placing funds in the form of Bank Indonesia Certificates, time deposits, certificates of deposit, and/or savings at other banks.

Things Prohibited to Do by Islamic People's Financing Banks

The basic difference between Commercial Banks and Rural Banks, both conventional and Sharia, is that BPRs are not Banks that create Demand Deposits (BPUG). This is in accordance with the prohibition for BPR/BPRS to provide services in payment traffic which cannot be separated between the prohibition for BPR/BPRS to accept deposits in the form of demand deposits and participate in payment traffic.

Restrictions on payment traffic services as stipulated in the Banking Law and Sharia Banking Law prohibit BPRs that are not Banks for Making Demand Deposits (BPUG) from being involved in the demand deposit process, considering that initially demand deposits were only carried out through clearing at BI. for Checks and Bilyet Giro as payment instruments that can overdraft at the bank.

In this regard, the prohibition for BPR/BPRS to provide services in payment traffic is given in 4 (four) activity limits, namely:

  • Unable to receive demand deposits from customers
  • Cannot issue checks or demand deposits
  • Unable to participate in clearing checks or giro bills
  • As well as not being able to open an account at BI for clearing and settlement purposes

BPR/BPRS are permitted to participate in payment traffic directly even with 'limited' activities as requested by requests such as transfers, National Payment Gates and BI-FAST. The reason is, this will obscure the function of BPR/BPRS as non-BPUG in contrast to Commercial Banks which are BPUG.

Payment traffic services that cannot be carried out by BPR/BPRS in accordance with the Banking Law and Sharia Banking Law are payment traffic services that are carried out directly without intermediary Commercial Banks. BPR/BPRS can still provide payment traffic services indirectly by opening an account or working with commercial banks.

History of Sharia People's Financing Bank

The People's Credit Bank (BPR) was introduced for the first time by Bank Rakyat Indonesia (BRI) at the end of 1977. BRI has the task of being a Bank for Supervising local financial institutions (within a certain scope) such as Village Barns, Market Banks, Village Banks, Banks Employees and other similar banks. During the coaching period carried out by BRI, all of these banks were named People's Credit Banks (BPR).

According to Presidential Decree No. 38 of 1988 what is meant by Rural Banks (BPR) are the types of banks listed in paragraph (1) of article 4 of the Law. No. 14 of 1967 which includes village banks, village granaries, market banks, employee banks and other banks. In the pact dated October 27, 1988, the legal status of Rural Banks (BPR) was recognized for the first time, as part of the Financial, Monetary and Banking Policy Package.

Rural Banks are the embodiment of several financial institutions, such as Village Banks, Village Barns, Market Banks, Bank Servant Select Nagari (LPN), Village Credit Institutions (LPD), Village Credit Agencies (BKD), District Credit Agencies (BKK), Business Credit Small People (KURK), District Credit Institutions (LPK), Village Work Bank (BKPD) and or other similar institutions. Since the issuance of Law no. 7 of 1992 concerning Basic Banking, the existence of these financial institutions whose legal status is clarified through permission from the Minister of Finance.

In its development, BPRs emerged with principles of Islamic law. These BPRs were named Sharia People's Credit Banks (BPRS). The first Sharia BPR to be established was PT. BPR Dana Mardhatillah, kec. Margahayu, Bandung, PT. BPR Berkah Amal Sejahtera, kec. Padalarang, Bandung and PT. BPR Amanah Rabbaniyah, kec. Banjaran, Bandung.

On October 8, 1990, the three Sharia Rural Banks received principle permits from the Minister of Finance of the Republic of Indonesia and began operating on August 19, 1991. In addition, the background for the establishment of Sharia Rural Banks was as an active step in the context of restructuring the Indonesian economy as outlined in various policy packages. finance, monetary, and banking in general.

Islamic people's financing bank is one of the Islamic banking financial institutions, whose operational pattern follows sharia principles and Islamic muamalah. BPR Syariah was established based on Law no. 7 of 1992 concerning Banking and Government Regulation (PP) No. 72 of 1992 concerning Banks Based on Profit Sharing Principles.

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