Bankziska and loan sharks eradication in Souhteast Asia: Evidence from Indonesia

Abstract

Loan sharking is still prevalent in the Muslim majority countries in Southeast Asia such as Indonesia, Malaysia, and Brunei Darussalam. Several policies has been drawn by government and non-government institutions with negative result in eradicating the prctice of usury. The phenomenon of Banziska as a new type financial institution, which combines the principles of Islamic microfinance and charity in Ponorogo City, Indonesia, has the great potential of becoming the solution in eradicating riba in society. Since its first operation up to the last three years now, it has liberated 65 percent  of 585 active partners form loan sharks and conducted 1807 rounds of financing. It now has been duplicated in other neighboring cities. The reserach approach is a combination of desk research (literature review and case studies), primary research (data collection through surveys and interviews), and analysis (qualitative and quantitative methods). The result is decription of Bankziska model. The concept is creating ecosystem involving many elements in society such the societal/religious organisations, the partners, charity institutions, and volunteers. It follows a pattern that aims to transform mustahiq into muzakki and achieve the objective of sharia of zakat.