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View all search resultsMuhammadiyah channels funds into new rural sharia bank
The OJK hoped that the conversion of BSM could pave the way for the merger of other rural banks under Muhammadiyah, eventually forming a fully-fledged sharia bank.
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A student carries lunch boxes on the first day of a free meal program at a Muhammadiyah high school in Sidoarjo, East Java, on January 6. (AFP/Juni Kriswanto)
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ndonesia’s second-largest Muslim organization, Muhammadiyah, has encouraged all of its entities to put their operational funds in its newly established Bank Syariah Matahari (BSM).
The organization has also urged its units to use BSM’s financial services for managing institutional transactions, as well as supporting outreach efforts and actively participating in the development of BSM in their respective regions.
“This move is believed to bring significant benefits to the organization, surrounding communities and the development of sharia and inclusive economic values. The bank is expected to foster economic independence and serve as a platform for delivering dakwah [preaching] in the financial sector,” said Anwar Abbas, head of Muhammadiyah’s central executive board, in a letter.
The initiative follows the operational permit granted in June 18 by the Financial Services Authority (OJK) to convert BPR Matahari Artadaya, a conventional rural bank owned by Muhammadiyah’s Prof. Dr. Hamka University, into a sharia rural bank.
According to Muhammadiyah, the transformation is part of its strategic initiative to strengthen its internal sharia banking network.
The organization oversees various autonomous bodies and charitable businesses in sectors such as education, health, social services and the economy. It also manages more than 10 rural banks across the country.
Last year, Muhammadiyah decided to reallocate trillions of rupiah in funds from the state-owned Bank Syariah Indonesia (BSI) to other sharia banks. However, with the establishment of BSM, Anwar assured that this would not result in fund withdrawals from existing sharia banks.
