NON-PERFORMING FINANCING, QARDH LOAN AND ZAKAT: ANALYSIS OF QARDH LOAN PRACTICES AT BAZNAS MICROFINANCE PROGRAM

The Financial Services Authority (OJK) has documented a rising trend in sharia financing over the last four years, encompassing both Sharia Commercial Banks and Sharia Business Units. This increase is evident in both the financing amounts and the financing health ratio. According to OJKs Sharia Banking Statistics (SPS) report, there has been a general rise in financing, which includes contracts like mudharabah, musyarakah, murabahah, qardh, istishna, and ijarah, alongside a reduction in Non-Performing Financing (NPF) from 2020 to 2023. In Islamic finance, NPF refers to financing that fails to generate income for Islamic financial institutions due to customers not fulfilling their payment obligations, categorized as substandard, doubtful, and bad debts. BAZNAS Microfinance Desa (BMD) acts as an alternative financing source, complementing Islamic banks and non-bank Islamic financial entities like Baitul Mal wat-Tamwil (BMT), which were established earlier. BMD is a program by the National Amil Zakat Agency (BAZNAS) aimed at distributing productive zakat funds through a qardh loan financing model. This study examines the qardh loan practices in BMD Bedono, Central Java, in relation to the financing health ratio factor, Non-Performing Financing (NPF). The qardh loan practices using zakat funds show distinct dynamics at the community level, where zakat, as a tool for poverty reduction, is interpreted differently based on the fiqh perspectives adopted. This variation affects the collectability of BMD financing, leading BMD to establish a new standard for the quality ratio of problematic financing debts, called Non-Performing Qardh (NPQ). NPQ indicates the quality ratio of financing debts derived from zakat funds. However, this study does not explore NPQ theory in a formal legal context, unlike NPF developed by regulator. This limitation provides an opportunity for further research on different topics.