Sharia Financing Slumps 25%

By Editorial Team 10/09/2019
Summary

The Islamic finance business in Indonesia is still sluggish as the Financial Services Authority (OJK) note the sharia multifinance only channeled Rp 17,08 trillion during January to July 2019, dropped by 25.64 percent from Rp 22.97 trillion in the same period of 2018. Head of OJK Non-Bank Financial Industry Supervision Department, Bambang W. Budiawan said on Monday (9/9) that the new down payment regulation was behind the drop.

Sharia multifinance had the advantage of lower DP compared to conventional lenders. However, OJK through the Circular Letter (SEOJK) No. 47/2016 on the Number of Down Payments for Vehicle Financing set the minimum down payments to refer to non-performing financing (NPF) and problematic productive asset ratio of every company. With such provision, only finance companies with NPF and problematic productive assets of one percent can charge minimum advances of five percent to finance motor vehicles purchase.

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