LENDING & CREDIT | Cesar Tordesillas, Indonesia

Bank Negara Indonesia Syariah confident of meeting loan target

Bank Negara Indonesia's Islamic bank says it is confident of meeting its target of issuing $830 million or Rp 8 trillion in loans this year.

The figure is a 35 percent increase from its 2011 issuance.

BNI Syariah disbursed Rp 6.2 trillion in loans from January to August, with 80 percents going to the retail and consumer sectors, including mortgages and automotive financing.

“We are strong in the consumer segment. The rest of our financing comprises medium-size businesses and corporate,” said Imam Teguh Saptono, BNI Syariah’s business director.

Bank Indonesia in February introduced a Rp 250 million-per-person cap on the amount of gold that could be pawned at Shariah banks, and also limited gold-based financing to 20 percent of the total loan or 150 percent of the capital, whichever is the lowest. Imam said the rule had limited BNI Syariah’s ability to grow.

“At its peak our gold pawn business contributed 7 percent to our financing growth,” Imam said, “If there’s no regulation, we would have been able to reach 40 percent growth this year.”

The central bank also plans to limit Shariah financing on houses, cars and motorcycles by the end of this year.

It follows similar regulation earlier this year imposed on conventional banks that sets minimum down payments on housing and car loans of 30 percent, and motorcycles and work vehicles of 25 percent.

Imam acknowledged that the proposed regulation would have an impact on BNI Syariah because consumer financing accounts for 40 percent of its business, “while our capacity to expand in others sector such as infrastructure is limited due to our size.”

Still, Imam said he was confident that Shariah financing would remain a competitive alternative to conventional lending.

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