Ramadan, BNPL, and the Role of GRC in Sustainable Economic Growth

Veda Praxis | Mar 17, 2026 | Economics and Business

Amid the bustling markets, the aroma of spices, and the steady rhythm of people preparing to welcome a sacred day, Ramadan plays a role far beyond a spiritual observance. It functions as a powerful, invisible economic engine that becomes visible through rising transactions, the movement of money, and expanding business opportunities across the country.

More than a period of fasting, Ramadan offers a unique socioeconomic lens through which the interaction between Sharia principles, community values, blessings, and market dynamics can be observed. This intersection not only stimulates microeconomic activity at the household and micro, small, and medium enterprises (MSMEs) level, but also contributes to a broader macroeconomic ecosystem that is more inclusive and resilient. This interconnection illustrates how spirituality and economic productivity can reinforce one another to generate tangible economic growth.

Ramadan as a Catalyst for Economic Growth

Beyond its spiritual significance, Ramadan consistently serves as an economic multiplier. Even amid the current global economic environment marked by heightened geopolitical tensions in the Middle East, Ramadan continues to anchor Indonesia’s domestic demand. The traditions associated with Ramadan, from iftar meals and thrift shopping to zakat giving and the annual homecoming migration (mudik), stimulate demand across multiple sectors. As a result, household consumption typically rises during this period, contributing to national economic growth each year.

While publicly available comprehensive quantitative data specifically measuring Ramadan’s economic impact over the past five years remains limited, multiple reports from financial institutions and monetary authorities consistently point to similar patterns:

Strong domestic consumption growth in Indonesia during the fourth quarter of 2025, coinciding with year-end holidays close to Ramadan or Eid al-Fitr, helped sustain national economic growth above 5% annually.
Retail and traditional market activity increases significantly around Ramadan, particularly in food and beverages, fashion, and household products, affecting aggregate demand.

This trend shows how Indonesia’s MSMEs and the retail sector consistently experience Ramadan as a peak commercial season in the last five years. These recurring trends highlight Ramadan’s role as a seasonal driver of economic momentum within Indonesia’s domestic market.

At the same time, this year’s Ramadan unfolds within a complex global context. Escalating tensions in the Middle East following military actions by the United States and Israel against Iran on 28 February 2026 have become a major global concern. Given the region’s strategic role in global energy production, geopolitical tensions have the potential to trigger oil price volatility, supply chain disruptions, and instability in financial markets. In an increasingly interconnected global economy, such developments often produce ripple effects that extend far beyond the region itself, even countries with relatively strong domestic economies such as Indonesia.

Although the impact may be indirect, these global dynamics are still felt in Indonesia during Ramadan. Rising global energy prices can translate into inflationary pressures in transportation, logistics, and food sectors. These are sectors that simultaneously experience surging demand during the Ramadan period. This reality underscores the importance of maintaining domestic economic stability, strengthening financial system resilience, and reinforcing sound economic governance to preserve the positive contribution of Ramadan to the national economy. Within this broader framework, the financial sector, including Islamic finance, together with strong governance, risk management, and compliance (GRC) practices, plays a critical role in ensuring that Ramadan’s consumption momentum supports economic growth that is sound, inclusive, and sustainable.

BNPL as a Growth Enabler: Opportunities and Risks

The rapid digital transformation of the financial sector has introduced new financing innovations that are increasingly accessible to the public. One of the most prominent is Buy Now Pay Later (BNPL), a financing mechanism that allows consumers to purchase goods or services immediately and repay the cost in installments through digital platforms.

In Indonesia, BNPL has evolved beyond a purely financial innovation into a broader social phenomenon that is reshaping consumption patterns. Its popularity is driven by several factors, such as ease of access, rapid approval processes, the absence of collateral requirements, and seamless integration with e-commerce platforms, especially among younger consumers. However, the same convenience that drives adoption also introduces potential risks. Regulators have raised concerns about rising levels of over-indebtedness, impulsive consumption, and the potential misuse of personal data.

In response, the Financial Services Authority (OJK) introduced OJK Regulation No. 32 of 2025 on BNPL, marking an important transition from a phase of innovation toward institutionalization. This development raises several important questions: How does the Ramadan consumption cycle intersect with BNPL services as a driver of economic growth? And what role should financial institutions, including Islamic banks, play within the BNPL ecosystem?

Each year, Ramadan brings a temporary increase in household spending, particularly among middle- and lower-middle-income households. In this context, BNPL can offer customers short-term liquidity flexibility without having to navigate complex financing procedures.

Like two sides of the same coin, BNPL carries both opportunities and risks. During Ramadan, the potential demand for instant financing increases significantly and can act as a catalyst for economic activity. The speed and convenience of BNPL services make them particularly attractive to consumers, helping households manage short-term cash flow, meet urgent consumption needs, avoid high-cost informal borrowing, and support economic activity in the MSME and retail sectors. However, excessive reliance on BNPL may also expose households to financial vulnerabilities. Without adequate financial literacy, risks such as impulsive spending, the accumulation of installment obligations, post-Ramadan financial pressure, and higher default rates may emerge.

These dual dynamics highlight the need for BNPL services to be managed in a professional, responsible, and ethical manner. In this regard, the issuance of OJK’s BNPL regulation represents a timely and necessary step toward regulatory institutionalization.

Positioning BNPL within the Financial System

The BNPL regulation stipulates that such services may be legally provided by:

Commercial banks
Financing companies

Both institutions may operate BNPL services under conventional or Sharia-compliant models, in accordance with prevailing financial regulations.

This regulation sends the necessary signal that BNPL should not be viewed solely as a technological feature but as a financing product that must adhere to prudential principles, sound risk management, and consumer protection standards.

From an Islamic finance perspective, BNPL is not an entirely new concept. Its structure can be aligned with several established Sharia financing contracts, including:

Murabaha (cost-plus sale)
Ijarah (lease)
Qardh (interest-free lending with at-cost administrative fee)
Wakalah bil ujrah (agency with compensation)

In essence, sharia-compliant BNPL represents the digital evolution of existing Islamic retail financing products, delivered through more streamlined technology and improved user experience.

The Role of Banks and Financial Institutions within the BNPL Ecosystem

Banks, including Islamic banks, possess significant funding capacity and more efficient operations, which allow them to participate in the BNPL ecosystem in several ways:

Directly financing BNPL products through internal credit facilities
Providing wholesale financing to fintech BNPL providers
Participating in financing syndications to expand lending capacity

With a well-developed risk management infrastructure, banks can also contribute sophisticated credit and risk scoring models as well as regulatory reporting frameworks. Integration with digital banking ecosystems, including mobile banking platforms, payment gateways, merchant networks, QRIS, and digital payment services, creates opportunities for cross-selling additional financial products such as savings accounts, microfinancing, and investment services.

Meanwhile, non-bank financial institutions, including financing and Islamic financing companies, hold important strategic advantages. Their business models are typically more flexible, their customer segments more specialized (e.g. motor vehicle and retail financing specialists), and their innovation cycles faster.

In practice, the strengths of banks often complement those of non-bank institutions. This dynamic naturally encourages collaborative models, allowing both parties to leverage their respective advantages to expand BNPL in a way that is innovative, competitive, and secure.

Ensuring Security: GRC in BNPL

Within the BNPL ecosystem, “security” extends beyond preventing fraud or loan defaults. True security involves building systems that are controlled, measurable, and accountable. This is where GRC frameworks become essential. Governance provides strategic direction and effective oversight, risk management ensures that exposures are identified and mitigated early, while compliance ensures that all activities remain aligned with regulatory requirements and ethical standards, including Sharia principles. Without a strong GRC foundation, financing growth risks turning into uncontrolled growth that could trigger a crisis of trust.

Clear role allocation between banks and non-bank institutions is therefore critical for a strong governance: who owns the risk, who manages the risk, and who supervises it. Risk management must also extend beyond initial credit assessments. It should incorporate early warning systems, real-time portfolio monitoring, and responsible exposure limits to prevent excessive consumer indebtedness. Compliance frameworks must also be based on prudence, covering consumer protection measures, cost transparency, and accurate regulatory reporting. For Sharia-based financing structures, compliance also includes adherence to contract structures, validation of underlying transactions, and oversight by an independent Sharia Supervisory Board.

Another critical dimension for a “secure” BNPL is Personal Data Protection (PDP). In modern GRC frameworks, data management is an integral part of governance and compliance. Indonesia’s Law No. 27 of 2022 on Personal Data Protection (PDP Law) establishes strict obligations for financial institutions, both banks and non-banks, regarding the lawful, transparent, and proportionate handling of consumer data, including collection, processing, storage, and utilization. Because BNPL systems rely heavily on digital credit scoring and cross-platform data integration, compliance with the PDP Law has become a prerequisite for operational legitimacy.

From a GRC perspective, PDP law reinforces three aspects: governance through clear designation of data controllers and processors; risk management through the mitigation of data breaches, misuse, and cyber threats; and compliance through mechanisms such as explicit consent, data subject rights, and breach notification requirements. Thus, a “secure” BNPL ecosystem is not only protected from credit risk but also resilient in data protection, preserving public trust in an increasingly privacy-sensitive digital economy.

Security derived from strong GRC does not hinder innovation. Rather, it creates the foundation for sustainable growth. Collaboration in BNPL between banks and non-bank financial institutions can become truly competitive when supported by disciplined governance, adaptive risk management, and consistent regulatory compliance. Such safeguards protect not only institutional balance sheets but also the stability of the financial system and public trust, two of the most valuable assets in the financial industry, particularly within Sharia-based financing that carries both economic and moral responsibilities.

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Collaboration between Organizations and GRC Advisors

For organizations seeking sustainable growth amid rapid digital transformation and economic change, GRC expertise has become increasingly strategic. GRC advisors act as navigators for management teams, helping identify emerging risks, develop governance and compliance frameworks, and align operational practices with evolving regulatory expectations, including Sharia principles and modern business practices. Without such guidance, organizations risk prioritizing short-term gains at the expense of long-term reputation, financial gains, and stakeholder trust.

Effective collaboration with GRC experts also helps foster organizational cultures that are healthy, transparent, and adaptable. Companies that successfully integrate operational excellence, digital innovation, and regulatory compliance within a unified framework are better equipped to make decisions with clear awareness of risks, ethical considerations, and long-term strategic objectives. This approach enables organizations to achieve not only stronger financial performance but also greater stakeholder confidence, higher employee loyalty, and a broader positive impact on society.

Importantly, the benefits of strong GRC extend beyond individual organizations. It has broader implications for the economy and society. Robust GRC practices strengthen service quality, improve business performance, and enhance trust.

Consistent, integrated, and large-scale GRC implementation also promotes greater economic inclusion, enabling more people to participate in economic activity and contributing directly to overall growth and prosperity.

Toward Sustainable Economic Growth

Indonesia’s economic trajectory, periodically energized by Ramadan’s consumption momentum, supported by financial innovation such as BNPL and Islamic finance, and reinforced by robust GRC practices, highlights the importance of pursuing economic growth that is not only strong, but also inclusive and sustainable.

Active collaboration between businesses and GRC advisors plays a critical role in this transformation.

When organizations integrate sound governance, risk management, regulatory compliance, and ethical financial principles, the impact extends far beyond individual institutions. Public services improve, economic participation expands, public trust deepens, and sustainable growth opportunities for MSMEs increase.

The convergence of Ramadan’s economic momentum, financial innovation, proactive regulatory frameworks, Sharia principles, and disciplined GRC implementation represents a powerful opportunity for growth. What remains is the collective commitment to realize it, starting not tomorrow, but today.