Legal Analysis of the Establishment of Islamic Banks from the Interest-Bearing Business Results of Conventional Banks

Widya Wahyu Utami; Muhamad Rizki; Faisal Santiago

doi:10.61860/jigp.v4i3.339

Authors

Widya Wahyu Utami Borobudur University Jakarta
Muhamad Rizki Borobudur University Jakarta
Faisal Santiago Borobudur University Jakarta

DOI:

https://doi.org/10.61860/jigp.v4i3.339

Keywords:

Conventional Bank; Riba; Sharia Bank; Spin-off; Tathhir al-Mal.

Abstract

The development of Islamic banking in Indonesia through spin-off mechanisms from conventional banks raises juridical-philosophical issues related to the legality and legitimacy of initial capital sources derived from interest-bearing (riba) businesses. This study aims to comprehensively analyze the establishment of Islamic banks sourced from the interest-bearing profits of conventional banks from the perspective of Indonesian positive law and Islamic law. As comprehensive qualitative research, this study employs a normative juridical method with statutory and conceptual approaches. The results show that from a formal-juridical perspective, the establishment of Islamic banks through spin-offs is permitted by national banking regulations, specifically Law No. 21 of 2008, which places greater emphasis on fulfilling capital and institutional aspects. However, substantively, Islamic law requires a process of separation and purification of assets (tathhir al-mal) to cleanse capital from elements of riba. Without this mechanism, the Islamic legitimacy of the bank becomes fragile, even if its formal legality is met. This study confirms that substantive sharia compliance, which includes the purity of capital sources, is a fundamental prerequisite for maintaining the integrity and public trust in the sharia banking industry in Indonesia.

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