First of its Kind

BMT Tamzis originated from Kertek, Central Java, with the local traders as the target customer who had no direct access to the banks, and relied on loan sharks. Saat Suharto, a young muslim activist, thus, began a small organization in 1992 that used funds from zakat (obligatory charity) and other charity based collections to give interest-free loans to traders. As their organization gained popularity amongst the locals, the demand for more diverse financial services started coming in.

In 1994 they added a commercial finance division to their organization, becoming a financial intermediary based on cooperative model. They collected deposits and used the money to give small loans. As the business requirements grew, they put the social division under the supervision of a zakat management institution, and branded their commercial finance division as as Baitul Tamwil Tamzis. Over the next decade, BMT Tamzis became one of the largest BMTs in the country with assets over IDR 21.78 billion (2007).

Operational Practices and Challenges for TAMZIS

Tamzis financing products fall in three main categories - micro enterprise financing, consumer financing for pilgrimage and umrah, and general business financing. They use mudarabah-musharakah (entrepreneurial plural partnership), murabaha (cost plus profit), kafalah (guarantee), or ijarah (lease agreement), based on the requirement of the transaction.

Unlike other BMTs that mostly prefer murabaha based products, Tamzis prefers the mudarabah (investor to entrepreneur) based financing which they believe is the most suited for trade finance based on ideological precedent. This type of contract poses challenges as small traders usually do not keep a proper record of their income and expenses. Tamzis has devised a plan to first educate the traders to record their transactions.


Both parties then agreed on the profit-sharing portion, based on the estimated nominal value of income. While a trader has the option to report an increase or decrease in the income, the contract generally states that both parties have agreed to be happy with  the share of income paid in the installments, to ensure that all installments meet the religious criteria of being halal (permissable).

Savings side

Since mudarabah based financing pose financial challenges, Tamzis has successfully managed to offset this by developing a mudarabah based deposit side. On the savings side, they offer savings accounts, special (purpose based) deposits and time deposits. Savings account is their most popular micro-saving product which is based on a wadi’ah (trusteeship) contract.

Benefits of a Personal Touch

The advantages for this kind of a business model are plenty. For instance, the intense focus on familial relationship building between its customers leads to lesser needs for fraud and risk management. The high OSS (Operational Self-Sustainability) of Tamzis is due to the stability provided by the two tier mudarabah model of this BMT.

Moreover, the personal relationship building helps both sides of the dynamic to maintain trust and figure out the needs of the customer. Accordingly, Tamzis offers on-field studies to aid the customer in determining the requirements of the business or trade. Like other BMTs, Tamzis also relies on these non-price services to compete against microbanks and loan sharks.

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