History of Islamic Bank in Indonesia: Issues Behind Its Establishment

This paper aimed at making a critical review of the history behind the establishment and development of Islamic bank in Indonesia. This review revealed that the establishment of Islamic bank in Indonesia emanated from the undertowed and it’s divided into three phases. These phases are the phase of idea or thinking, the phase of rethinking, and the phase of establishmented and maturation. The main issues and problems that inhibited the establishment of Indonesian Islamic banks were political issues, lack of government support, legal issues, social problems, economic problems (lack of capital) and the debate among scholars about the legal prohibition of halal-interest conventional banks. These issues and problems delayed the establishment of Islamic bank in Indonesia.