On Thursday, April 14, 2016, the fourth Bulaksumur Legal Discussion was held by the Research and Community Service Unit of the Faculty of Law UGM with Mr. Muhaimin, S.H., M.Kn. as the speaker and moderated by Mrs. Hartini, S.H., M.Si. The lecturer, who also served as the Head of the Department of Islamic Law, discussed a Study on the Sharia Compliance of Baitul Maal wa Tamwil (BMT) in the Special Region of Yogyakarta. Before further discussing the testing methods to assess the sharia compliance of BMTs in Yogyakarta Province, the speaker first explained several definitions of BMT. First, Baitul Maal wa Tamwil (BMT) is a combination of two terms/institutions, namely bait al-mal, which is a social/non-profit institution, and bait at-tamwil, which is a business institution with profit and commercial orientation. Furthermore, BMT is one type of non-bank financial institution operating on a micro scale.
BMT itself is classified as a Microfinance Institution (LKM) under Law No. 1 of 2013. An LKM is a financial institution specifically established to provide business development services and community empowerment, either through loans or financing for micro-scale businesses to members and the community, savings management, or business development consultancy services that are not solely profit-oriented. Since January 8, 2016, two years after the promulgation of the law, all BMTs have been required to comply with Law No. 1 of 2013 concerning Microfinance Institutions and must obtain a business license from the Financial Services Authority (OJK) pursuant to Article 39.
The business activities of LKMs include business development services and community empowerment, either through loans or financing for micro-scale businesses to members and the public, savings management, and business development consultancy services. In providing loans or financing and managing savings, LKMs may operate conventionally or based on sharia principles. If an LKM conducts business activities based on sharia principles, such activities must comply with sharia fatwas issued by the National Sharia Council and the Indonesian Ulema Council. In addition, to conduct business activities based on sharia principles, an LKM is required to have a sharia supervisory board. The sharia supervisory board is tasked with providing advice and recommendations to the directors or management and supervising LKM activities to ensure compliance with sharia principles (Articles 11, 12, and 13 of Law No. 1 of 2013), thereby realizing sharia compliance in the business activities of BMTs as sharia-based microfinance institutions.
Sharia compliance is the most important factor in both the concept and operations of Islamic financial institutions, in this case BMTs. This is because sharia compliance is an absolute requirement that must be fulfilled by financial institutions operating based on sharia principles. It is explicitly stated that sharia compliance is the raison d'être of BMT institutions. Sharia compliance is manifested through the fulfillment of all sharia principles in every activity carried out as a reflection of the characteristics of BMTs. For BMT service users, sharia compliance represents the core of BMT integrity and credibility, ensuring that transactions between BMTs and customers or third parties remain grounded in sharia principles. The existence of BMTs is intended for Muslim communities who wish to practice Islam comprehensively (kaffah), including in financial management through BMTs. Trust and confidence in Islamic Banks (BMTs) are based on and maintained through the implementation of Islamic legal principles adapted into the operational regulations of the institution. Without compliance with sharia principles, the public will lose trust in BMTs, which will damage the image of BMTs as Islamic microfinance institutions and ultimately threaten the very existence of BMTs. (Febri-Eka/PPM-FHUGM)
