The government is confident that the sharia units of state-owned banks will play a key role in boosting the market share of the struggling Islamic banking industry after a major overhaul.

Islamic banks’ market share in Indonesia, the world’s largest Muslim-majority country, has remained below 5 percent for the last several, despite having existed since the 1990s.

In an effort to stimulate the growth of nationwide sharia bank assets, the State-Owned Enterprises Ministry is mulling a proposal to allow Islamic lender subsidiaries owned by the four state-run banks — Bank Mandiri, Bank Negara Indonesia (BNI), Bank Rakyat Indonesia (BRI) and Bank Tabungan Negara (BTN) — to be merged into two new entities. Previously, the ministry floated the idea of merging all four sharia lenders — Bank Syariah Mandiri (BSM), BNI Syariah, BRI Syariah and BTN Syariah — into one.

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