Legal Literacy - Sharia banking in Indonesia is often praised as a fair Islamic financial solution. It is touted as transparent, in accordance with Sharia principles, and far from the conventional interest system that is considered usury.

Data also supports this optimism. The Islamic banking industry continues to grow, its assets are increasing, and its market share is expanding. However, does this numerical growth guarantee the quality of its Sharia implementation?

Unfortunately, quantitative development does not automatically guarantee that practices in the field are in line with idealism. Many academic criticisms highlight that the contracts and business models of Islamic banks today are increasingly similar to conventional banks: focusing on fixed margins, minimal profit sharing, and avoiding risk.

In this article, we will review four main aspects that show that the essence of Sharia—such as justice, risk-sharing (risk sharing), and benefit—has not been consistently realized.

1. Dominance of Murabahah: "Sharia" in Traditional Credit Packaging

One of the most fundamental problems is the dominance of the murabahah contract in Islamic bank financing in Indonesia. Although formally murabahah is a sale and purchase contract, in practice it often feels like a regular interest-bearing loan.

The main problems include:

  • Not Pure Sale and Purchase: Many banks do not…