BANKING - Shariah Banks Look to Farmers In an Effort to Grow Lending

Indonesia’s largest Shariah-compliant banks plan to increase lending to rural areas, where total agricultural loans have doubled over the past five years.

Bank Muamalat Indonesia is seeking to boost lending tenfold outside cities in 2011 after opening 30 new branches last year, said Luluk Mahfuda, head of Islamic corporate banking. BCA Syariah said it would add 15 outlets aimed at small businesses this year. (full story)

BANKING - Car Sales Leading Shariah Loans in Indonesia

Jan. 25 (Bloomberg) -- Record car sales in Indonesia helped fuel 50 percent growth in Shariah-compliant banking assets last year and Islamic lenders are setting up booths at automobile shows to further develop the market.

PT Bank Muamalat Indonesia, the country’s oldest Shariah- compliant lender, said consumer loans jumped 40 percent in 2010 after taking part in exhibitions last year. PT BCA Syariah, the Islamic unit of Indonesia’s biggest financial services company by market value, offers a rate of 11 percent on a five-year car loan. PT Bank Syariah Mandiri also attends the shows.

Tapping Indonesia’s burgeoning consumer loan demand will help the country’s Islamic finance industry catch up neighboring Malaysia, the world’s largest sukuk issuer. Shariah banking assets in Indonesia, home to the world’s biggest Muslim population, make up 3.2 percent of the total, compared with about 20 percent in Malaysia, after the government lagged behind in changing tax laws and offering incentives to spur growth. (source)