Marketable Securities continued Consolidated FS with Indep Auditors

PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2014 AND 2013 Expressed in millions of Rupiah, unless otherwise stated Appendix 534 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

o. Loans continued

Brief explanation for each type of sharia financing is as follows: Mudharabah financing is a co-operation for certain project between first party malik, shahibul mal or Subsidiary as owner of fund and second party amil, mudharib or debtors as fund manager whereas the profit sharing will be shared in accordance with percentage as stated in the agreement, meanwhile losses will be borne by the Subsidiary except if the second party does negligence, error or violate the agreement. Mudharabah financing is stated at the outstanding financing balance less allowance for possible losses. Musyarakah financing is a co-operation between two or more parties in a certain business wherein each party provides a portion of fund on condition that the profit shall be shared based on the agreement, whereas losses shall be borne in accordance with the portion of the fund of each party. Permanent musyarakah is musyarakah in which the fund portion of each partner is stated explicitly in the contract and remains the same until the contract expires. Declining musyarakah musyarakah mutanaqisha is musyarakah in which the fund portion of the Bank will be transferred in several stages to the other partner, resulting in the declining of fund portion of the Bank and, at the end of contract, the other partner will become the sole owner of the business. Musyarakah financing is stated at the outstanding financing balance less allowance for possible losses. Ijarah receivables are the financing on the availability of fund in relation to transferring the right to use and benefit of a good and service based on rental transaction which was not followed by transfer of the goods ownership to the lessee. Ijarah muntahiyah bittamlik is an agreement on the availability of fund in relation to transferring the use right and benefit of a good or service based on rental transaction with an option to transfer the ownership title of goods to the lessee. Ijarah receivables are recognised at due date at the amount of it lease income not yet received and presented at its net realisable value, which is the outstanding balance of the receivables. Murabahah receivables are the financing of goods by confirming purchase price to a buyer and the buyer pays it with a higher price as an agreed profit. Murabahah receivables are stated at the balance of the receivable less deferred margin and allowance for possible losses. Istishna receivables are the financing of goods in the form of manufacturing the ordered goods with the agreed criteria and specification by both of orderer or buyer Mustashni and manufacturer or seller Shani. Istishna receivables are presented based on the outstanding billings less allowance for possible losses. Qardh receivables are a borrowing at the condition that the borrower should repay the loan at specified period of time. The Subsidiary will obtain a free ujrah from this transaction, which is recognised upon receipt. Qardh receivables included Hawalah and Rahn financing agreement. Hawalah is transfer of debts from debtors to other party subsidiary which obligate to bear or paid. Rahn represents the mortgage of goods or assets owned by the customer for an equivalent amount of money. Assets or goods mortgaged are appraised based on market value, less a certain deduction percentage. The Subsidiary will obtain a fee ujrah, which is recognised upon receipt. Qardh receivables is stated at its outstanding balance less allowance for possible losses. Loans are classified as financial assets in loans and receivables. Refer to Note 2c for the accounting policy of loans and receivables.