LEGAL ANALYSIS ON THE PRACTICE OF SHARIA BANKING SERVICE PRODUCT (FEE BASED SERVICE)

Abstract

Islamic bank are the free interest banking in selling their products to earn
their income from profit sharing, margin, administration and fee.
Administration and fee are bank’s income from the service sector. Fee
based service is the sector which developed by Islamic banks. New
various products are issued by Islamic banks under licenced by Dewan
Syariah Nasional (National Sharia Council). Through Islamic financial
engineering method, Islamic banks produce several variety products
that compatible with sharia principles. Nevertheless, the products
still refer to the contracts that have been known in Islam such as
wakalah, kafalah, hawalah etc. In a fact, there are discrepancy
between regulations and practices in the fields. We found many products
that are not run based on the rules such as the client’s misunderstanding
in sharia contract, the uncompatible fee and some obstacles in
application of National Sharia Council’s messages.