Islamic Banking and Finance in Indonesia:

Islamic Law was initially accepted as a philosophical theory in Pancasila (one of the nation’s Pillars). Since 1988, The Presidential Instruction No. 1 of 1991 provided that Islamic Law is accepted as a fundamental rule in Indonesia. Islamic Banking and Finance was first introduced to the nation in 1991 when Bank Muamalat Indonesia was established.

Position of Islamic Banking in Indonesia:

1. Law No. 3 Year 2006 on Court of Religion concerning the scope of judicial authority of Courts of Religion pertaining to Shariah Economy;
2. Law No. 10 Year 1998 (amending act to Law No. 3) concerning both conventional and Islamic Banking;
3. Statute No 21 of 2008 concerning Islamic Banking;
4. Statute No 23 of 2011 concerning Management of Zakat;
5. Statute No 41 of 2004 concerning Wakaf; and
6. Statute No 19 of 2008 concerning Shariah Obligation/Security.

Bodies responsible for Islamic Banking and Finance:

1. Dewan Syariah Nasional-Majelis Ulama Indonesia (DSN-MUI)
   • Creates the form of aspiration concerning the economy
   • To encourage Islamic means in economy/financial implementation according to Islamic laws
   • To encourage the efficiency and coordination measures taken by scholars in addressing economy/financial related issues
   • To encourage Islamic means implementation regarding economy and financial life
2. Dewan Syariah Nasional (DSN)
   • Supervises fatwa in shariah economy
   • Address out-of-court disputes
3. Badan Arbitrase Syariah (Basyarnas)
   • An alternative dispute resolution other than Court for Religious Affairs

Judicial Body:

• Court for Religious Affairs is responsible to hear cases on Islamic Banking and Finance

Islamic Banking and Finance in Brunei Darussalam:

The initial point of Islamic finance industry in Brunei started when His Majesty the Sultan of Brunei decreed in his royal speech of the importance of establishing Islamic banks as part of fardhu kifayah for a Muslim country such as Brunei itself. The royal speech was made during the meeting of Islamic Religious Council Meeting (Majlis Ugama Islam) on 25^th September 1990. The industry was then initiated when Tabung Amanah Islam Brunei (TAIB) was established on 29^th September 1991 as a trust fund to provide facilities for Muslims there to make pilgrimage to Mekah. TAIB was officially launched by His Majesty Sultan Haji Hassanal Bolkiah Mu’izzaddin Waddaullah ibni Al-Marhum Sultan Haji Omar ‘Ali Saifuddien Sa’adul Khairi Waddien, the current Sultan and Yang Di-Pertuan of Brunei. It was the first institution that conduct all its activities in accordance with Islamic beliefs.

Legal Position of Islamic Banking in Brunei Darussalam:

1. Banking Order, 2006.
2. Islamic Banking Act 1992 (Chapter 168).
3. Islamic Banking Order, 2008.
4. Pawnbrokers Order, 2002.
5. Perbadanan Tabung Amanah Islam Brunei Act (Cap 163).
6. Syariah Court Act (Chapter 184).
7. Syariah Financial Supervisory Board Order, 2006.
8. Securities Market Order, 2013.

Bodies responsible for Islamic Banking and Finance:

1. Brunei Darussalam Central Bank (BDCB) or was known as Autoriti Monetori Brunei Darussalam
2. Syariah Financial Supervisory Board
3. Shariah Financial Services Board

Judicial Body:

Section 2(3) of Pawnbrokers Order, 2002 recognises the function of Syariah Courts to interpret and resolves any issues relating to Islamic banking. The Courts include Syariah Subordinate Court, Syariah High Court and Syariah Appeal Court, per Syariah Court Act (Ch 184).

Islamic Banking and Finance in Australia:

Islamic banking and finance in Australia are relatively new in the country. The initial attempt in introducing the system was made by the Muslim Community Co-operative Australia (MCCA). Nonetheless, the MCCA, the Muslim Community Credit Union Ltd (MCCU) and Hejaz Financial Services are now on the way to becoming full-fledged Islamic institutions. The establishment of these organizations was made in response to the growth of Muslims in the country while simultaneously catering to the needs of the community.

Fundamentally, the expansion of Islamic banking and finance there has been slow due to numerous reasons. However, several other organizations have been established to further strengthen the Islamic banking and financial system in the banking industry. For instance, Islamic Co-operative Finance Australia Limited (ICFAL) and Iskan Finance provide for Islamic finance facilities. There are also Crescent Investments and LM Investment offering Islamic fund management to the Islamic community there.

Bodies Responsible for Islamic Banking and Finance:

1. Australian Prudential Regulation Authority (APRA);

• The body is responsible to regulate legislation governing the interests of insurance policyholders, depositors and fund members.
• The regulations shall govern every Islamic deposit-taking institution as well, especially banks that operate Islamic insurance (Takaful).
• APRA acts as a supervisory body through the insertion of conditions and requirements that banks should comply with.

2. Reserve Bank of Australia (RBA);

• RBA is an independent institution that regulates and issues directives and guidelines to all Islamic finance service providers.
• In addition, RBA is also responsible to supervise all financial institutions on monetary policies to ensure the stability of the financial system in the country.

3. Australian Securities and Investment Commission (ASIC).

• ASIC supervises matters in relation to financial securities, financial instruments and stock exchanges.
• ASIC also imposes guidelines and conditions on financial institutions practicing the Islamic system.
• Any breaches will be investigated by the commission.

Islamic Banking and Finance in the United Arab Emirates:

The establishment of the Dubai Islamic Bank (DIB) has become the initial point of the development of Islamic banking and finance all around the world. DIB being the world’s first Islamic commercial bank was established by the UAE’s government with the view to introduce full-fledged Islamic banking and finance into the financial system. The vision was successfully achieved when Sharjah Islamic Bank, or formerly known as National Bank of Sharjah, was the first bank in the world to be converted from a conventional bank to an Islamic bank in 2002. To date, the nation has triumphantly established more than five (5) full-fledged Islamic banks with 20 others practicing Islamic financial systems and products.

Position of Islamic Banking in UAE:

1. Federal Law No. 6 of 1985;
   • The law regulates Islamic Banking, Financial Institutions and Investment Companies in the nation.
   • Article 3 states that Islamic institutions have the right to carry all or part of banking, commercial, financial as well as investment services.
2. Federal Law No. 10 of 1980;
   • The law is pertaining to the method of operations that shall be practiced by financial institutions there.
   • Essentially, all financial institutions have the right to engage in all kinds of services and operations.

3. Federal Law No. 8 of 1984;
   • The law is in relation to commercial companies practicing Islamic financial systems.

4. Resolution No. 4 of 2010;
   • The law is concerning takaful regulations that are applicable to all takaful operators.
   • In essence, the regulations that are governing takaful operators are non-identical to the regulations governing conventional insurers.

5. UAE Central Bank Resolution 164/A/94;
   • A regulating law that provides for regulations of financial institutions and investment consultation establishment.

6. UAE Central Bank Resolution 89/3/2000;
   • A supplemental law relating to the amendments made to Central Bank Resolution 164/A/94.

7. UAE Central Bank Resolution 21/2/88;
   • The law provides for the regulations for investment systems to financial institutions in the state.

8. ESCA Resolution 48 of 2008;
   • The law is concerning financial advice and analysis given to financial institutions in the state.

Bodies Responsible for Islamic Banking and Finance:

1. The Insurance Authority (IA);
   • IA is the regulating body for the insurance market in UAE.
   • The body introduced an extensive set of regulations to regulate local takaful industry in 2010.

2. The Islamic Centre for Reconciliation and Commercial Arbitration (IICRCA);
   • IICRCA is the dispute resolution avenue that parties may resort to in resolving a dispute relating to the finance industry there.
   • IICRCA assists the parties to resolve any dispute through reconciliation or arbitration.
   • IICRCA is the only forum for parties to resolve Islamic financial disputes since the civil courts, as well as shariah courts, do not entertain issues relating to Islamic financial disputes.