The Evolution of Waste Bank in Indonesia

Abstract

Along with the call towards a climate-neutral economy, one solution that has in recent years become popular is the circular economy. Indonesia has local wisdom, which is a form of circular economy, namely 'waste bank.' The waste bank is a practice of social engineering that encourages people to sort waste from its source so that it can generate economic value. Besides preserving the environment, the waste bank in Indonesia also helps to increase financial inclusion through nano finance for its customers. Through literature studies, observations or field studies, interviews, and using nethnography, this study aims to describe the evolution of waste banks in Indonesia in supporting the circular economy. This study found that waste banking brings not only implications for economy and environment, but also brings implication for social and religious value at the same time. Nano finance in the waste bank is similar to qard al-hasan. In Islamic finance, qard al-hasan is a kindness loan that is recommended as the most appropriate contract to be implemented in ultra-micro community groups.