Islamic banking first appeared in Egypt without the frills of Islam, because of fears the regime in power at that time would see it as a fundamentalist movement. The leader of this pioneering effort Ahmad El Najjar, took the form of a savings bank based on profit sharing (profit sharing) in the town of Mit Ghamr in 1963. This experiment lasted until 1967, and it was already standing 9 banks with a similar concept in Egypt. These banks, which do not collect or receive interest, most businesses invest in trade and industry directly in the form of a partnership and share the profits with savers.
Still in the same country, in 1971, Nasir Social Bank was established and declared itself as an interest-free commercial bank. Although not mentioned in the deed of establishment of religion or references to the Islamic Shari'a.
Islamic Development Bank (IDB) was established in 1974 and sponsored by the countries belonging to the Organization of Islamic Conference, although the major banks are inter-governmental bank aimed to provide funds for development projects in its member countries. IDB provides fee-based financial services and profit-sharing for these countries and explicitly declare themselves, based on Islamic sharia.
Dibelahan other countries in the period of the 1970s, a number of Islam-based bank then appear. In the Middle East, among others, stood Dubai Islamic Bank (1975), Faisal Islamic Bank of Sudan (1977), Faisal Islamic Bank of Egypt (1977) and Bahrain Islamic Bank (1979). She Asia-Pacific, Phillipine Amanah Bank was founded in 1973 by presidential decree, and in Malaysia in 1983 stood Muslim Pilgrims Savings Corporation that aims to help those who want to save money to perform the pilgrimage.
History of Indonesian Sharia banking
In Indonesia, the pioneer of Islamic banking is the Bank Muamalat Indonesia. Established in 1991, the bank was initiated by the Indonesian Ulema Council (MUI) and the government and support from the Association of Indonesian Muslim Intellectuals (ICMI) and several Muslim businessmen. This bank was affected by the monetary crisis in the late 90s that left only a third of its equity capital. IDB then give an injection of funds to these banks and in the period 1999-2002 to rise and generate profit. [1]. Currently, the existence of Islamic banks in Indonesia have been arranged in the Law of Law. 10 of 1998 on the Amendment Law. 7 year 1992.
Until the year 2007 there are 3 institutions of Islamic banks in Indonesia, Bank Muamalat Indonesia, Bank Syariah Mandiri and Bank Syariah Mega. Meanwhile, commercial banks have sharia business unit is among 19 banks are large banks such as Bank Negara Indonesia (Persero) and Bank Rakyat Indonesia (Persero).
Islamic system has also been used by the Rural Bank is now developing 104 BPRS
I. What are the basic principles of Islamic Finance?
The fundamental principles governing Islamic Financing are the receipt of interest is prohibibited and Sharia prohibits transactions in the which Some or all of the Following elements are gambling, uncertainty, prohibited commodities and activities.
Basically Islamic Principles, as described above is to avoid the sunset:

    * Gambling (Gambling)-May apply to dealings in futures and options to extents That They are speculative.

    * Gharar (uncertainty) in contracts, there is a Prohibition on the sale of items whose existence or characteristics are not perform certain, and upon the which contractual terms are ambiguous or unclear.

    * Riba (interest) - it is interpreted as any returns on money the which is predetermined in amount and therefore includes the modern interest-based financing

    * Haram (prohibited) commodities and whose activities are prohibited. For instance Such as: pork, alcohol, gambling services, prostitution, machinery for the manufacturing of alcohol, and liquor, etc. But, different views exits on many cases as tobacco, and hotels.
II. What type of Islamic banking products?
Sharia banking products can be divided into three parts, namely: 1) Product distribution funds, 2) Raising Product fund, 3) Items related to banking services provided to its customers.
III. Product distribution of funds
Distinguished within 3 (three) categories that are distinguished by their intended use;

    * Financing transaction which is intended to have the goods, carried out with the principle of buying and selling

    * Financing transaction which is intended to get the service done by the principle of lease

    * Financing for the transaction of business cooperation which are aimed to get as well as goods and services, with the principle of profit sharing.
Sell ​​1.Prinsip
The principle of buying and selling, dealing with the transfer of ownership of the goods or things. Bank's profit level is determined at the front and be a part of the price of goods sold. Sale and purchase transactions are distinguished on the form of payment and delivery of goods as follows:
a. Murabaha financing
The Bank acted as the seller and the customer as a buyer. The selling price is the purchase price plus gains Bank of suppliers. Both parties must agree on price and payment terms. The sale price included in the sale and purchase agreement, and did not change during the contract validity. In this transaction the goods are delivered after the ceremony, while the payment is tough.
b. Greeting
Sale and purchase transactions where goods are bought and sold does not exist. Therefore, the goods are delivered in a tough, being paid in cash. Bank acts as a buyer, a customer as a seller. At first glance this transaction similar to buying and selling debt bondage, but in the salutation, quantity, quality, price and delivery time for certain specified goods. In practice, goods that have been submitted to the Bank, the Bank may resell the goods in cash or installment. The sale price set is the purchase price plus a profit.
These transactions generally applied in the financing of goods that does not exist, such as the purchase of agricultural commodities by the bank, for later resale in cash or installment.
General Terms of greeting:

    * Purchase products should be clearly known specifications: type, brand / shape, size, quality and quantity.

    * If the production received no match, the customer must be responsible, among others, return the funds that have been received or replace the goods to order.

    * Because the bank did not use the items purchased / ordered as stock (inventory), the Bank's possible to perform a greeting ceremony at the third party. The mechanism is called the parallel greetings.
c. Istishna
Resembles greeting, but the payment can be made by the bank in some payment terms. Skim istishna in Islamic Banking, commonly performed for manufacturing and construction financing. Specification of the ordered items to be clear, such as: type, size, quality and quantity. The sale price included in the contract istishna and should not be changed during contract enactment.
2. Principle rental (Ijarah)
Ijarah transaction based on the transfer of benefits. When the sale and purchase transaction objects are items, then the object ijarah services. At the end of the lease, the bank may sell goods to customers disewakannya. The sale price and rental price agreed upon at the beginning of the agreement.
3.Prinsip Profit Sharing
Principles for the results split into two, namely:
a. Musharaka
Musharaka transactions based on the desire of the parties to work together to increase the value of assets they own jointly.
General rules: All capital projects put together to be a capital loss sharing and managed together. Every owner has the right of capital to participate in determining the business policies that run by executing the project.
b. Mudharabah
Is a form of cooperation between the 2 (two) or more parties where the owner of the trust capital to the managers of capital (mudharib) with a profit-sharing agreement.
General rules:

    * Total capital is handed over to customers as the manager of capital, must be in cash, can be either cash or goods that otherwise its value in units of money. If capital is gradually handed over, to be clear and mutually agreed stage

    * Results calculated with the management of two (2) ways: 1) revenue sharing, who comes from project revenues, and 2) profit sharing, the benefits of the projects.

    * The Bank reserves the right to supervise the work, but no right to interfere in the work / business customers.
4. Akad Complementary
To facilitate financing actors, required supplementary contract. Although not intended for profit, in the supplementary agreement are allowed to ask for replacement costs incurred to implement this agreement. Great replacement cost just to cover the costs actually incurred.
a. Hiwalah (rather doubtful)
The facility is common to help suppliers get the cash capital in order to continue production. The Bank received compensation for services transfer fee amounts.
b. Rahn (mortgage)
To give guarantee repayment to the Bank in providing financing. Pawned goods must meet the following criteria: a) owned their own customers, b) Clearly the size, nature and value, determined on the basis of real market value, c) can be controlled, but should not be used by the bank.
c. Qard
It is borrowing money.
Qard applications in banking, among others:

    * As a bridging loan pilgrimage, where customers pilgrim was given a bridging loan to deposit eligible costs of the pilgrimage. Loans repaid before leaving for Hajj.

    * As a cash loan (cash advance) from Islamic credit card products.
d. Wakalah (representative)
Occurs when the customer authorized the Bank to represent him carry out the work of certain services, such as bookkeeping L / C (Letter of Credit), collection and transfer money.
e. Kafalah (Bank Garnsi)
Given with the aim to guarantee the payment of a payment obligation. The Bank may require the customer to place certain funds from this facility as a rahn (mortgage), as well as the Bank may also receive funds with wadiah principle. Banks allowed to receive compensation costs for services provided.