Prudential Principles in Murabaha Financing in Sharia Banking During the Covid-19 Pandemic

Abstract

The outbreak of coronavirus disease 2019 (covid-19) globally has had a direct or indirect impact on the performance and capacity of customers (debtors) in fulfilling their obligations to financing payments, which impact on performance and capacity of debtors and will increase the risk of Murabaha financing which has the potential to disrupt banking performance and financial system stability so that it can affect the community's economic growth as a countercyclical. This study aims to determine the application of the prudential principle in Murabaha financing during the Covid-19 pandemic, using normative juridical research methods, and primary and secondary legal materials as well as primary data as supporting data. The legal research materials used are primary and secondary legal sources. Data was analyzed descriptively that finally was concluded deductively. The results of the study show that in applying the prudential principle, Islamic banks are required to apply an assessment of prospective customers based on the 3C principles (Character, Capacity, Collateral), namely an assessment of the character of the prospective customer, business feasibility, and collateral submitted to Islamic banks. Furthermore, a Murabaha financing restructuring program is needed in the form of restructuring, rescheduling, and settlement of financing payments through the execution of customer assets. It is recommended that in Murabaha financing during the Covid-19 pandemic, Murabaha Product Standards and their alignment with fatwas, sharia standards, and Compilation of Sharia Economic Law are needed including alignment with Financial Services Authority Regulation (POJK) No. 11/POJK.03/2020, PJOK Number 48/POJK.03/2020, and POJK No. 17 /POJK.03/2021 concerning the Second Amendment to POJK No. 11/POJK.03/2020 concerning National Economic Stimulus as a Countercyclical Policy for the Impact of the Spread of Coronavirus Disease 2019. In addition, it needs a good and effective risk management system, relaxation of financing according to the conditions of customers affected by the Covid-19 outbreak, and submission of relaxation requests can be made without physical customer contact.