Indonesian Islamic banks see loans tripling

Jakarta

FLUSH with cash transfers from the state-controlled Hajj fund, Indonesia's Islamic banks see loan growth tripling in 2015 as interest rate cuts spur demand.

The government will finish shifting more than 30 trillion rupiah (S$3.1 billion) of the savings of Muslims planning a trip to Mecca to syariah-compliant lenders from non-Islamic banks this year, a process that started in 2013. That will help drive credit growth to 25.8 per cent, beating the 8.3 per cent in 2014 and a 16.5 per cent forecast increase in lending by both types of banks, according to estimates from the Financial Services Authority based on their business plans.