Bank Central Asia launches Islamic lending division

BCA Syariah is lender's answer to growing demand for Islamic banking of  85% of Indonesia's population.

PT Bank Central Asia, the nation’s biggest financial services company by market value, began operating an Islamic banking business on Monday, the unit’s president director announced.

PT BCA Syariah has Rp 296 billion ($32.7 million) of capital, Yana Rosiana said in the statement. The Jakarta-based bank wants to capitalize on the Muslim population in Southeast Asia’s largest economy, said Suwigyno, a director of consumer and retail lending at BCA.

About 85 percent of Indonesia’s 240 million people are Muslims, with the nation’s economic growth fueling demand for Shariah banking. The $514 billion economy is forecast to expand by 5.6 percent this year from 4.5 percent last year, Bank Indonesia reported last month. Islamic law bans charging interest as well as forbidding investment in businesses such as tobacco, alcohol and gaming.

To lay the groundwork for its new business, BCA bought PT Bank UIB for Rp 248.3 billion ($27.47 million) last year and converted it into a Shariah lender.

View the full story in The Jakarta Globe.