MICROCAPITAL BRIEF: HSBC Allocates $2m for Distribution Via Shariah-Compliant Microfinance Branches of PT Permodalan Nasional Madani (PNM) of Indonesia

HSBC Amanah Shariah, the Islamic financial services division of the HSBC Group, a banking and financial services organization based in the United Kingdom, recently announced that it would allocate IDR 18.5 billion (USD 2.12 million) to the development of micro-, small and medium-sized enterprises (MSMEs) through PT Permodalan Nasional Madani (PNM), an Indonesian state financial institution, under an agreement that complies with Islamic law, also known as the Shariah. The Shariah prohibits interest payments and fees, so Islamic banking is centered instead on the concept of joint venture and profit sharing.

Lintang Nugroho, director of finance and operation for PNM said that it would channel the funds from HSBC to MSMEs through its Shariah-based microfinance branches. PNM operates 378 branches in Indonesia of which seven engage in Islamic microfinance services. Clients of PNM borrow primarily for trading, agriculture and service businesses. Financial information for PNM is not available.

By Julie Moksim, Research Associate

About HSBC Amanah Shariah: HSBC Amanah Shariah is the Islamic financial services division of the HSBC Group, a banking and financial services organization based in the United Kingdom. HSBC Amanah was established in 1998 and operates in the Middle East, Asia, the Pacific, Europe and the Americas. Islamic law, called the Shariah, prohibits interest payments and fees, so Islamic banking is centered instead on the concept of joint venture and profit sharing. Financial information is not available for HSBC Amanah Shariah.

About PT Permodalan Nasional Madani (PNM): PNM is a government-owned financial corporation that was founded in Jakarta in 1999. PNM’s principal tasks are to provide financing solutions to micro-, small and medium-sized enterprises (MSMEs) and cooperatives. PNM supports business development in the following industries: agribusiness, estates, fisheries, livestock farming, forestry and trade. PNM operates 378 branches in Indonesia of which seven engage in Islamic microfinance services AS OF 2011. Financial information for PNM is not available.

Sources and Additional Resources:

The Jakarta Post: “HSBC Allocates Rp 18.5b for Microfinance”, April 1, 2011, http://www.thejakartapost.com/news/2011/04/01/hsbc-allocates-rp-185b-mic…

MicroCapital.org Brief, November 29, 2010: Microfinance Dominates Shariah Lending in Indonesia, Commercial Banks Take Notice, https://www.microcapital.org/microcapital-brief-shariah-microfinance-invo…

MicroCapital’s Microfinance Universe Profile: HSBC Amanah Shariah

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=HSBC+Amanah+Shariah

MicroCapital’s Microfinance Universe Profile: PT Permodalan Nasional Madani (PNM)

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=PT+Permodalan+Nasional+Madani+%28PNM%29

Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/

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