Default Analysis in Islamic Banking Financing: Case Study of Bukittinggi Religious Court Decisions in 2016-2019

Abstract

This research aims to analyze the practice of default in financing in Islamic banking that occurred in the jurisdiction of the Bukittinggi Religious Court during the period 2016 to 2019. The phenomenon of default is understood not merely as the customer's failure to fulfill contractual obligations, but as a structural problem rooted in systemic weaknesses both on the part of the customer and the Islamic bank institution. This study uses a juridical-empirical approach, with a documentation method of case data obtained from the Case Tracking Information System (SIPP) of the Religious Court and the Bukittinggi District Court. The results of the analysis show that of the seven sharia economic cases recorded, six of them involved Islamic banks, and three were default cases. These cases indicate that dispute resolution tends to be done through litigation and collateral execution, instead of using sharia-based deliberation or mediation mechanisms. The causes of default are found to come from two sides, namely the weakness of risk analysis on the part of the bank and the limited economic capacity and legal literacy on the part of the customer. This practice shows the weak implementation of maqāṣid al-syarī'ah principles, especially the aspects of justice (al-'is) and protection of property (ḥifẓ al-māl). Thus, a reformulation of the Islamic economic dispute resolution system that is more just, humanist, and contextual is needed, so that the existence of Islamic banking is truly able to realize the vision of ethics and social justice at the level of praxis.