MUDHARABA FINANCING IN ISLAMIC BANK (Case Study at Bank Nagari Sharia Padang Branch Office)

OKTA, VILYANA (2013) MUDHARABA FINANCING IN ISLAMIC BANK (Case Study at Bank Nagari Sharia Padang Branch Office). Masters thesis, Universitas Andalas.

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Abstract

Background Hundreds of the world economy has been dominated by the system of interest. Almost all economic agreements in the fields associated with interest. Many countries have been able to prosper with this system in the poverty rate of other countries so that the gap persists. Based on experience under the domination of the economy with interest rate system for hundreds of years have been proven there is an inability to bridge this gap. In the world, between the developed and developing countries is widening the gap, while in the developing countries and even then the deeper the gap. Although not openly acknowledged, but all of us fully aware that the system of capitalist-based economy and interest base, also with put the money as a commodity traded on a large scale even give it serious implications for damage to economic relations in a fair and productive. Atorf (1999) suggested that the exchange rate crisis that occurred in mid-1997 has made a national bank having a very poor condition. It is characterized by the amount of debt in foreign currencies are soaring, the high non-performing loans, and declining bank capital. The condition is worsened by the sharp rise in interest rates in line with monetary policy to dampen exchange rate volatility, so that many banks are experiencing negative spread. Level of banking conditions getting worse, this is a result of the bank's management is not careful in acting. On the other hand there is view of 3 experts that the application of the system of interest has exacerbated the decline of the national banking system. Number of facts that describe the gaps that occur due to the practice of interest, make us think that the system of interest can be a valid date and must be replaced with another system that can provide better benefits and have a positive contribution to develop a prosperous economy. One alternative system is based on the principles for the banking system that operates based on the principles of Islam. The rationale for the development bank based on the principle of sharing is to provide services to some communities in Indonesia that cannot be served by existing banking, because banks are using the system of interest. In conducting its operations, Islamic banks do not recognize the concept of interest, and borrowing money. So that operations known as some Islamic banking products among other products with the principle of Mudharaba and Musharaka. Mudharaba is done by agreeing on the principle of profit sharing ratio of benefits to be obtained, while the risk of loss arising to the owner of all the funds there is no evidence that the manager did not commit fraud. A study by Antonio (2004) stated that the principle of Musharaka is an agreement between the parties to include the capital in an economic activity to the division of profits or losses according to an agreed ratio. Development of financial institutions that operate with a sharing principle is inseparable from the legal entity in the form of banking act No.7 of 1992 as amended by act no. 10 in 1998. This Act allows banking institutions to use the principle of sharing, even allowing banks to operate with a dual system, which 4 operates the system of interest and profit sharing, as practiced by some banks in Indonesia. In addition to several acts that have been set for the operation of Islamic banks, now also has established a set of rules governing the accounting for specific transactions relating to the activities of Islamic banks, namely the implementation of Statement of Financial Accounting Standards No. 59 about Islamic banking accounting. As we know that Islamic banks was introduced in Indonesia in 1992 in line with the enactment of the act No. 7 of 1992 on banking. Islamic banks in Indonesia can actually be said to be relatively new and it is in the process of strengthening themselves primarily in terms of internal management and image formation to the public. Because its existence is still new, people are generally not familiar with Islamic banks and well equipped. Suryo (2003) suggested that the rise of Islamic banking in the world was not without criticism. It is precisely the criticism came from the scientists of Islam itself. They argued that Islamic banks in the conduct of Islamic banking transactions it has done contrary to the words and power of Shariah. Implementation of the business activities of Islamic banks has caused the issue of morality. So the question whether the organization of the business activities of Islamic banks is that in fact intends to avoid collection of interest and the parties intend to take issue with, it has been held in accordance with that purpose or whether its implementation was just a mere replacement of the term. Based on the background of the above problems, the author is interested in doing research with the title: "Mudharaba Financing in Islamic Bank (Case Study at Bank Nagari Sharia Padang Branch Office)".

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