The Islamic Finance Handbook: A Practitioner's Guide to the Global Markets

Chapter 10IndonesiaThe Resilience and Prospects of Islamic Banking

Rifki Ismal

Assistant Director, Islamic Banking, Bank Indonesia

The Indonesian Islamic banking industry has grown progressively at an annual average rate of 35–50 percent, a much higher rate than that of the world's Islamic banking industry, which is 10–20 percent. As of May 2013, there were 11 Islamic commercial banks, 24 Islamic banking units (special windows in conventional banks), and 159 Islamic rural banks (which operate in suburbs and rural areas), with 2,782 offices in all provinces in Indonesia. Their total assets were Rp220 trillion, their total deposits were Rp167 trillion, and their total financing was Rp173 trillion (see Table 10.1).

Table 10.1 Selected Islamic Banking Indicators

Source: Bank Indonesia (May 2013)

Banking Indicators	2000	2003	2006	2007	2008	2009	2010	2011	2012	2013
Islamic banks (unit)	2	2	3	3	5	6	11	11	11	11
Islamic banking units (unit)	3	8	20	25	27	25	23	23	24	24
Islamic rural banks (unit)	79	84	105	114	131	138	150	154	156	159
Total offices (unit)	146	337	567	683	951	1,223	1,763	2,054	2,344	2,782
Total assets (trillion Rp)	1.79	7.86	26.72	36.53	49.55	66.09	97.51	127.15	194.34	220
Total financing (trillion Rp)	1.27	5.53	19.53	27.94	38.19	46.88	68.18	96.8	147.59	173
Total deposits (trillion Rp)	1.03	5.72	20.67	25.65	36.85	52.27	76.03	101.81	147.95	167

In addition, the operations of Islamic banks are also quite robust as shown by a strong financial intermediary function ...