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Business trends

Islamic finance in Indonesia fends off coronavirus chill

Banks and app tap growing demand in world's largest Muslim country

A Bank Mandiri employee meets with a customer in Jakarta. To comply with Islamic law, banks can offer lease deals instead of interest-bearing loans. (Photo by Koya Jibiki)

JAKARTA -- Islamic finance has thrived in Indonesia despite the coronavirus, with banks and fintech companies rushing to tap the growing field even as the pandemic squeezes the country's banking sector overall.

The trend benefits from a master plan for creating an economy compliant with Islamic law announced by President Joko Widodo in 2019. Differences include the prohibition of interest under Islamic law. Sharia-compliant banks instead might earn income in the form of dividend payments from an investment.

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