Syariah risk rules seen lifting Indonesia banks

Jakarta

INDONESIA'S Islamic banks say new rules acknowledging the lower risk of profit-sharing loans will help revive industry growth from the slowest pace on record.

The Financial Services Authority is introducing reserves ratios that will vary depending on banks' risk profiles and setting more flexible guidelines for assessing the quality of Syariah-compliant assets, it said in a Nov 19 statement. While the rules will mean higher ratios for some lenders, the overall impact is positive as loans that use profit-sharing structures will be deemed less risky, said Hendiarto Yogiono, finance director at PT Bank Muamalat Indonesia.