Indonesian Islamic Banks going strong: PRMinds

Government support, improving confidence on Islamic banking system and comparatively higher panic in conventional banks due to financial crisis will help the Indonesian Islamic banking institutions to procure more deposits.
According to a recent research report, “Indonesian Islamic Banking Outlook to 2013” by RNCOS, a leading research firm, with the government support and improving consumer confidence on the Sharia-compliant financial products, the deposits with the system are expected to grow at a strong CAGR of nearly 47% between 2009 and 2013.

The government representative, Central Bank of Indonesia, is following a blueprint for Islamic Banking Development aimed at creating a strong Islamic banking industry by 2015. Under the blueprint, development of the industry will focus on laying strong foundation for prudential provision and supervision; increasing the efficiency of Islamic banking, with the support of a secure and efficient Islamic financial market (to be established by 2009); conforming to international Islamic banking standards; and integrating Islamic banking into the Islamic financial industry. This development strategy, as well as a broader Islamic religious revival in the country that is helping to increase the popularity of Sharia banking products, will lead to continued strong growth in this sector during the forecast period.

The report also found that the financial meltdown has had no negative impact on the development of Sharia banking in the country. While the global gloomy economic environment is raising uncertainties over the global traditional financial system, the Indonesian Sharia banking industry stands to gain from the world economic downturn and anticipates to continue fast growth in the coming years. This optimistic view is based on it very nature (avoid involvement of interest rates) and a robust growth in deposits in the recent months despite financial crisis in world.

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