Sharia economy can be defined (in a simple way) as doing economic transaction and activity in a such sharia compliant manner, which means following Quran, Sunnah, and Hadist. Sharia compliant manner is important to distinguish sharia activity from the conventional ones. This means that sharia compliant manner can be applied on many daily life aspect.
Sharia economic has become so popular in recent years as awareness in doing sharia activity increasing among society. It can be concluded that sharia is not only popular among moslem but also non-moslem people. This factor has drive a significant growth in many sector like food and health, tourism, and especially in financial sector. Especially in Indonesia tt can be seen from positive growth in islamic banks asset to 278.9 trillion IDR in 2014 (source: OJK). And the trend is positive.
What is sharia compliant in islamic banking? As Khan mentioned in halalmonk.com it can be defined as banking or banking activity that is consistent with the principle of sharia and its practical application through the development of islamic economics. The popular aspect of sharia compliant in islamic banking is the prohibition of paying specific interest or fees on loans- we then call it as riba.
The question is now turn to: how to make sure that islamic banking is sharia enough? In Indonesia we have DPS (Dewan Pengawas Syariah). DPS has a main function to make sure sharia unit has operated under what-so-called as sharia compliant manner. It is included that DPS acted as mediator between DSN (Dewan Syariah Nasional) to communicate and monitoring in developing islamic banking product. From this, we can see a crucial role of DPS in ensuring sharia compliance is applied in islamic banking. If DPS doesnt work efficiently thus will create a mistrust from customer to the bank itself.
Another tool that can be use is ISR (Islamic Social Reporting) Index. ISR is not only supporting decision matters but it also help the bank or sharia unit to report their responsibility to Allah. ISR is standard of reporting social performance for sharia business unit. ISR founded by Haniffa in 2002 then developed extensively by Othman, Thani, and Ghani in 2009. Haniffa made 5 main theme in ISR; finance and investment, products and services, employees, community involvement, environment, and the last is corporate governance.
Finally we see the importance for islamic banks to stick on sharia compliant manner so it will not create a mistrust between customers, investors, and the bank itself. Means the products and process can be distinguished from the conventional ones. and although growth on islamic banking in Indonesia has positive growth it still left behind the neighbour country, Malaysia. So it does need more government support to develop better sharia-compliant bank.
Written by Febryani N (Staff of Research & Development Department)