Mutual banking institutions in light of Sharia law

Abstract

Mutual banking institutions engage in a diverse array of banking activities aim to achieve economic and social development. These institutions are predicated on a cooperative principle, which fundamentally differentiates them from their commercial banking counterparts. Such a cooperative ethos closely aligns mutual banks with Islamic financial institutions. Nonetheless, their failure to incorporate Sharia as the foundational basis for their transactions, coupled with the absence of Sharia supervisory board compliance, categorically excludes them from the Islamic financial sector.