The legal form of the Representative Office and Branch Office domiciled abroad are following the legal forms of the bank headquarters. As for the rural banks consisting of : (a) Company Limited, (b) Cooperative, or (c) Regional Company (Financial Services Authority Regulation Number. According to the Law of the Republic of Indonesia Number 10 of 1998, the legal form of the conventional bank consist of : (a) Company Limited, or (b) Cooperative, or (c) Regional Company. Bank could be classified into: (1) Commercial Bank is a bank that conduct conventional business or based on Sharia principles in its activities which providing services in payment traffic, (2) Rural Bank is a bank conducting conventional business or based on Sharia principles in its activities without any services in payment traffic. In the other hand, the risks of refund are the responsibility of the bank and the credit must meet the standards of prudential principles. That is in line with the national development goals of Indonesia to achieve the creation of a just and prosperous society based on economic democracy, develop an economic system which is based on the values of justice, solidarity, equity, and benefit in accordance with Islamic principles Bank has a function as an intermediary institution.
It is an entity that collect funds from the public in the form of deposits and distribute them to the public as financing in order to improve the living standard of the people. Law of the Republic of Indonesia Number 21 of 2008 concerning Islamic Banking provides an understanding of the bank.
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