The Role of the Financial Services Authority for the Development of Islamic Banks Linkage with Other Financial Institutions

Abstract

Program linkage between Islamic Banks (IB) with the Islamic Rural Financing Bank (IRFB) intended to create an efficient synergy in developing the village economy. IB desire to expand in order to increase the number of SME customers can be realized without having to open new offices, but through the IRFB. The purpose of this study was to analyze the government's policy of linkage Islamic Banks (IB) with IRFB, Apex Organization and its implementation. The study was conducted in Jakarta, Lampung and Bekasi. Secondary data and primary data used in this study. Secondary data were obtained from the banking laws and regulations issued by Bank Indonesia. Primary data were obtained from the decision makers both at national and regional levels through in-depth interviews. The analysis used was descriptive qualitative.The results showed that the regulation regarding the linkage program between IB/IBU with IRFB not been issued by the government through Bank Indonesia and the Financial Services Authority. Actually in 2005, Bank Indonesia has issued a "Generic Model Linkage Program (GMLP)". Field findings indicate that the linkage program between IB and IRFB are necessary, especially for bank financial institutions that are still not able to finance customers with their own funds. Therefore GMLP regulation should be immediately set as BI/FSA and implemented.

Keywords: financial services authority, generic model linkage program, bank, Islamic