Basic Mechanism of Islamic Banking

As a financial intermediary, the basic mechanism of Islamic banks is to receive deposits from investors (depositors) on the side of his liability (obligation) to then offer financing to investors on the asset side, with a pattern or financing schemes in accordance with Islamic Shari'a. On the liability side, there are two main categories, namely interest-free current and savings accounts and investment accounts based on the principle of PLS ​​(Profit and Loss Sharing) between the bank by the depositor. While on the asset side, that includes all forms of usury-free financing patterns and sharia standards, such as mudaraba, musharaka, istisna, greetings, and others.
To achieve the objective nature of accounting standards, the basic structure of investment activity to us to into two parts, the first, unrestricted investment accounts (investment accounts without limitations) and the second, which is restricted investment accounts (investment accounts with limitations). The purpose of the first point is the Islamic banks have the freedom to invest the funds it receives in various investment activities without being limited by certain provisions, including using it in conjunction with the bank owner's equity. While intent on the second point is the bank only acts as a manager who does not have the authority to mix funding received by the bank without the approval of owner's equity investors. Besides both cases, Islamic banks must also reflect its function as a zakat fund managers, and other charitable funds including funds qard hasan. Meanwhile, in the aspect of recognition (recognition), measurement (measurement), and recording (recording) each transaction in the accounting system of Islamic banks have in common with the processes that occur in conventional systems.
To maintain consistency, both internal and external bank, and to ensure compliance with Islamic law, then we need to define the purpose of standardization of financial accounting in Islamic banking. It is also an attempt to provide a general guide in determining the number of options based on the existing alternatives. The purpose of this financial accounting system is the first, to determine the rights and obligations of all interested parties, such as the depositor and the bank owners. Then the second is to ensure the security and safety of assets of Islamic banks, including guarantees the right of the bank concerned and the rights of other stakeholders. Third, ensure improved management and the productive capability of Islamic banks to always aligned with the goals and policies that have been specified. And the fourth is to provide financial reports that are useful for the users ¡ª such as shareholders, owners of accounts, fiscal authorities, etc. ¡ª allowing them to make legitimate decisions in conducting negotiations and transactions with the Islamic bank.
In order for a financial statement is completely accountable, then the quality of the information provided must meet several criteria, among others: (i) the principle of benefit, especially for the wearer, (ii) the relevance of financial reports with the aim of reporting, (iii) confidence level, (iv) comparability, which means that can be compared based on a specific time period, (v) consistency, which means that the methods used are consistent and not easily changed, and (vi) easy to understand, and no multi-interpretation. In addition to these six things, the information provided should also cover some aspects. First, the information available should be able to describe the achievement of existing goals and consistency with the Shari'a. If the banks do the deal on the transaction that is forbidden, for example related to the system of usury, it must be explained in detail about the separation of recording the transaction. And second, it should be able to help outsiders to evaluate the bank's capital adequacy ratio, investment risk, liquidity, and various other financial aspects of banking. This is very important to do, so that the credibility of the bank accountable.
At present, various efforts have been made to establish auditing and accounting system that is standard for the Islamic banking. Among them are the efforts made by the AAOIFI (Accounting and Auditing the Organization for Islamic Financial Institutions), based in Bahrain. Since its establishment in 1991, this institution has provided a significant contribution. But of course, much remains to be done by experts and practitioners of Islamic banking. This is due to greater challenges, including how to compete in a healthy and productive with conventional banks.
Among the toughest challenge ahead is how to create a standard accounting methodology to different types or patterns of Islamic banking financing schemes that can be accepted internationally. Then too is the challenge of regulation in general has not shown favoritism toward a more Islamic banking sector. But the writer believes, if all parties remain consistent in upholding the concept of Islamic banking as a whole, then gradually Islamic banking a hope for the future to replace the conventional banking system.
The establishment of Islamic banks was initially triggered by the fact that the presence of some Muslim population in Indonesia are not willing to use conventional banking services, due to incompatibility of their beliefs to the system of banking operations that use the instrument of interest. This is supported by the findings of a survey of BI that get 30 percent of Muslims who do not want to deal with hidden bank.Potensi interest of these groups by Prabowo (2000), would be a loss in the country's people prosper and move the national economy as a whole. Therefore, it appears the thinking of Muslim scholars to set up alternative banks (sharia) in Indonesia, which materialized in the form of the founding of the first Islamic banks namely Bank Indonesia at the end tahun1991 Muamalat. Islamic banks were introduced and emerged in Indonesia since 1992 with pioneer Bank Muamalat Indonesia. Accordingly, the start made the rules relating to the implementation of Islamic banking operations, including rules on accounting for Islamic banking. This rule has been defined in SFAS No. 59 on accounting Islamic banking, but in practice, rules-aturanyang used in the operations of the Bank Muamalat Indonesia does not fully use the rules in accordance with Islamic sharia, such as the concept of trusteeship yadul, profit sharing, cost management and mudaraba of mudaraba. On the one hand, Bank Muamalat Indonesia has fully implement rules set by the government related to the operation of Islamic banks. So, Sharia: Islamic law provisions that regulate human activities that contain both commands and prohibitions related to the vertical interaction relationship with God and horizontal interaction with fellow beings ". Transactions of the Sharia:" transactions made on the basis of sharia. " Entities Sharia: "Entities that implement Islamic transactions as a business based on sharia principles set forth in their statutes."

Business Activities Prohibited in Islam

1. Avoiding business transaction that is forbidden in Islam. A Muslim must commitment in interacting with things that are permissible by Allah SWT. A Muslim businessman should not be doing business in the things forbidden by sharia. And a Muslim businessman claimed to always do bring good business and society. Business, not food kosher or halal not contain material, booze, drugs, prostitution or all of which relate to the world of sparkling like night clubs cafes discotic where mixing of men and women accompanied by a stomping songs, treat beverages and food not kosher and others (QS: Al-A'raf; 32. QS: Al Maidah; 100) is a business activity that is forbidden.  

2. Avoiding how to obtain and use property is not kosher. The practice of usury miserable to be avoided, Islam prohibits usury with severe threats (QS: Al-Baqarah: 275-279), while speculative transactions very closely related to the business are not transparent such as gambling, fraud, breach of trust so that likely to be detrimental. Hoarding of money to turn off the function for enjoyed by other people and narrow the space business and economic activity is a disgraceful act and being rewarded to the most severe (Sura: At-Tauba: 34 - 35). Redundant and a waste of money for purposes that are not useful and dissipate all of the excesses. All these properties is prohibited because it is a trait that is not wise in the use of property and contrary to the commands of Allah (Sura: Al A'raf; 31).  

3. Unfair competition is denounced by God as stated in Al-Quran surah Al Baqarah: 188: "Do not eat partially partially treasure you in a way that falsehood. " Monopoly also includes unfair competition Prophet denounced the act was: "Whoever did it is a monopoly he had been guilty "," A wholesaler was given by God as for a person's fortune who perform the accursed monopoly. " Monopoly done to obtain market control by preventing other players to compete with the various ways, often in ways that are not laudable aim is to memahalkan price for these entrepreneurs have a huge advantage. Prophet said: "Someone who intentionally do something to memahalkan price, Allah will promise to throne made of hellfire later in the day of Judgement. "  

4. Forgery and fraud, Islam strictly prohibits falsifying and deceptive because it can cause harm, injustice, and can lead to hostility and squabbles. Allah says in Surah: Al-Isra: 35: "And full measure when you measure and weigh with a right balance. " The Prophet said "If you sell it you shall not deceive people with sweet words." In the modern business at least we see the ways that improperly done some business in its offering of products, which prohibited in the teachings of Islam. Various forms of bidding (promotion), which prohibited the can be grouped as follows:  

a) Supply and recognition (testimonials), fictional, form of bidding conducted by the seller as merchandise offered at many buyers, or a artists who gave testimony to the benefits of a product even though he himself did not consume them.  

b) Ads that do not fit with reality, a variety of ads that often we see in the medium of television, or displayed in print media, indoor and outdoor, or we listen to the radio often give false testimony.  

c) Exploitation of women, such as products, cosmetics, body care, as well as Other products often exploit the female body for its ads considered attractive. Or in an exhibition that many companies using scantily clad women into the guard booth exhibition products and assign them to woo buyers for the woman to do purchase of their products. Promotion model can we categorize violate 'akhlaqul karimah', Islamic as a comprehensive religion that regulates the human way of life, each section not can be separated with the other. Therefore, in the process of buying and selling should be associated with 'Islamic ethics' as a major part. If the authorities want to get blessed fortune, and with the profession as a trader would want to be raised degree equivalent to the prophet, then he should follow the Islamic Shariah comprehensive, including the 'ethical trading'.

Review of Contemporary Islamic Economic Approach

According to Prof. Volker Nienhaus, 13 from Germany, in his Writings

"Islamic Economics: Policy Between Pragmatism and Utopia", there are four main approaches in the study of Islamic economics so far. First, the pragmatic, the tendency is marked by the rejection of economic ideologies, followed by Efforts to synthesize or ekleksi, the which mixes a variety of ideas and theories That Are Considered most practical to implement. According to this trend Nienhaus That many taken. Second, resitatif; approach refers to the texts of Islamic Teachings, this approach refers to the legal Jurisprudence, theology, ethics, economics. Third, utopian approach. Utopia is a picture of the World We Want. This approach was developed by formulating a model human being, Such as homo economicus, or human being altruistic. Furthermore, the model developed societies aspired:

"Baldah wa al-Thayyibah Rubbun Ghafur." The approach last, fourth, adaptive; Trying to make adjustments based on local conditions and history of EACH Muslim, like the idea of ​​Islamic socialism, democratic socialism, socialism democracy. According to Ahmad Muchtar Islamic economics cans During this study categorized into four (4) corak.14 First, economic studies Within the scope of normative Islam, in the sense of effort to Explain the basic- Philosophical or normative basis of an economic assessment in accordance with Islamic guidance, According to the standard Teachings in the Koran and Hadith. Second, studies of Islamic economic thought or investigation results of the Jurists, Economists, sociologists, and others Such as Ibn Khaldun, Ibn Taymiyya, Abu Yusuf, Umer Chapra, etc. done critically, Either through examination of theories and theses raised and through its examination of the behavior Muslim economy. Third, comparative studies Between the behavior Islamic economics with the concept of an Islamic economic system is theoretical. Or the economic behavior of Muslims to confront the values Islam. And fourth, comparative study Between the concept of system Islamic economic system and the Socialist and capitalist economies contemporary economic development (symptom development system world economy). Also cans Comparison be added here Among Economists thinking of Islam itself, as is done by Mohamed Aslam Haneef (1995) in his book "Contemporary Islamic Economic Thought: A Selected Comparative Analysis ".

islam and the Concept of Economic

The lives of those pure-colored with sharp Islamic social stratifies with the psychological implications accompany it. There are a small number of community members WHO have all access to power, economic, political, intellectual and religious - cultural. Various sides of these advantages That intertwine in turn, puts a small group of people are in a position Very Important with all the privileges he Had. While a large number of others are in a position very contrast. They have Almost no access to any power, Including his personal freedom as a human being, and civil rights the very basic. They are the people poor and the slave-bondsman WHO inherited the hereditary nature Their lives without Realizing Their basic rights as human Beings. Prophet Muhammad was born to make radical Various changes and all, to reform the total inequality of human life the which is full of it. Religion is taught carry the aspirations and ideas of monotheism, democracy (politics) and social justice (economic). In accordance with the level of development thinking and social growth stage time, the Prophet Gave operational guidelines and concrete examples through his Sunnah. As a goal (Ideals) Islamic Teachings perfect have been delivered by the Prophet to his people (QS.5: 4). However, in Further application context, the principal Teachings of Islam steps require systematization and interpretation-new interpretations in order to adjust to the level of development of human life and the growing aspirations increase is, Itself According to human development. That statement Goldziher borrowing the truth of Islam That exists now it has not been unanimous. unanimity still waiting for the work-the work of Generations of Muslims Further.

Religious texts (al-Nushush al-shariyyah) contains a lot of messages related to the field of life economy, Either explicitly (sharih) or implicitly (ghairu sharih). It's just overall accentuation of texts is more on the Teachings or moral messages of universal, in accordance with the basic spirit of the Koran, that is the spirit of Itself and emphasizing moral ideas of social justice and economic.

1 For example, the Islamic view about the world of work, the principle is freedom and honesty in the business, labor productivity, and forth. And worldview (weltanschaung) Islam overall the concept is closely related to theology and Eschatology. Among the principal Teachings of the example Is That human position on this earth are as caliph of God (al-Baqarah: 30) with a mandate of his (al-Ahzab: 72) for create prosperity and welfare (Hud: 61). Humans Should not be Afraid to nature. Because of this nature created for serving Would Their interests (al-Baqarah: 29; al-Jatsiyah: 13). They must not sit passively, but They Should actively seek and work (al-Jumuah: 10; al-Ra, 'du: 13). Should They look for a kosher section rizki. In Their attempt Should ignore the value of honesty (al-A, A'raf: 85); on a voluntary basis without constraint (al-Nisa: 29) in Fields That allowed the shariah and not a false (al-Maidah: 3 .)

Although They are free to get and have any laboratory results-weariness, but They Also Must Consider the function of social wealth for the good results of his people WHO Efforts That the fate of less fortunate (al-Hasyr: 7; al-Tauba: 34 ; al-Rum: 30). Also They must be frugal and efficient in spending wealth (Al-Isra: 26; al-Furqan: 67) and so forth. Against the messages of the Koran, and these and other existing in the hadith or sunnah Apostles, there Should Be interpretation and conceptualization into a systematic form of teaching That will from Easier to be understood, internalized, and in the resume practicing by anyone. Thus the noble Teachings are no longer only is a moral appeal but Becomes a live order system, WHO lived as a way of life and the rule of the game That followed. That's how religion will of Actually take effect significantly to Improving human welfare, birth and the heart.

MUDHARABAH

According Language: Residents Iraq used the term to refer to the care of commercial mudaraba resurfacing. Mudharabah taken from the word الضرب فى الأرض. That is, a trip which is generally to trade and seek sustenance. There is also a saying taken from the word dharb (took) advantage to the shares held. In the language of Hijaz, Qiradh (قراض) specifically said the issue rather than qardh (قرض) who intend to cut. This contract is called so kerana investors 'cut' sebahagian his property to be given to entrepreneurs who will menguruskannya .. Urusniaga is also recognized as muqaradhah (مقارضه) kerana equally intent on both sides berkongsi profit. According syarak: Akad between investors and entrepreneurs in which investors would hand over his property sebahahagian to someone as an entrepreneur to diniagakan. Benefits also will dikongsi along with revenue that is understandable. In Islamic jurisprudence mudaraba is one form of cooperation between the rab al-mal (investor) with a second party (mudharib) that serves as the manager of the trade. The term mudaraba by fiqh scholars mentioned by Qiradh Hijaz. Mudharabah derived from the word dharb, mean hit or walk. Definition of hit or run it more precisely is the process of someone hitting his leg in running the business. In terminology, the Fiqh scholars define Mudharabah or Qiradh with: "Owners of capital (investors) submit their capital to the workers (traders) to be traded, while trading profits that belong together and divided by agreement." Mudharib donated labor and time and manage their joint venture in accordance with the terms of the contract. One of the defining features of this contract is that the profits, if any, will be divided between the investors and mudharib based on pre-agreed proportion. Losses, if any, will be borne solely by the investor