Conventional Bank Case Study

1900 Words8 Pages
Conventional bank is bank that run the business activities in a conventional way and based on its type consist of commercial bank and rural bank (Booklet Perbankan Indonesia, 2014). Conventional bank could also be defined as in the definition of commercial bank in article 1, paragraph 3 of Law No. 10 of 1998 by removing the phrase “and or based on Islamic principle”, that is bank that run the business activities conventionally which in the activities providing services in payment traffic.
Based on Booklet Perbankan Indonesia (2014), the business activities of conventional bank consist of:
1. Collect funds from the public in the form of deposits, time deposits, certificates of deposit, savings, and/or the other equivalent form;
2. Giving credit;
…show more content…
The operation of Islamic bank is based on the principle of syariah, as well as using the appropriate products and devices according to syariah. Meanwhile conventional banks are not based on Islamic law, but based on positive law. Below are the operating system of Islamic bank and conventional bank:
1. The principle of deposit (Al-Wadi’ah)
In Islamic bank, Al-wadi'ah interpreted as pure deposit of one party to the other party, either individually or with a legal entity. This deposit must be kept and will be returned at the time of the peer wants. In banking, incentives or bonuses may be granted, at the discretion of the bank concerned. This is done in order to stimulate the spirit of people to save, also an indicator of the health of banks. This bonus is not prohibited, as long as not required previously, and the amount is not set as a percentage or nominal in advance, which means it should really be the policy of the bank.
In conventional bank, it is called current accounts, where bank as the receiver can utilize this principle and as a consequence, all profits earned from deposits will belong to the bank. While the depositor or peer will get guarantee of security as well as other current accounts

More about Conventional Bank Case Study

Open Document