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Conventional banks to leave Aceh amid sharia finance consolidation
Aceh's Qanun No. 11/2018 on sharia financial institutions has prompted at least five conventional banks to leave the province. Some are making their operations sharia-compliant, while others are leaving for good.
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Digital piety: A customer service officer helps a customer conduct a noncash transaction at a digital branch of Bank Mandiri Syariah in Jakarta on Thursday. (JP/Dhoni Setiawan)
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t least five conventional banks are leaving Aceh to comply with a local regulation requiring financial institutions to operate under Islamic law.
State-owned Bank Rakyat Indonesia (BRI), Bank Mandiri and Bank Negara Indonesia are planning to close their branch offices in the province and replace them with those of the newly established Bank Syariah Indonesia (BSI).
BSI is the result of a merger of the three banks’ sharia-compliant subsidiaries.
Publicly listed Bank CIMB Niaga has joined the three state-owned banks in converting their branch offices, but publicly listed Panin Bank will leave the province for good.
Aceh is one of a handful of Indonesian provinces that have been granted special autonomy. It is the only province to formally practice sharia law, codified under the Qanun Jinayat (Islamic criminal code), although local courts remain under the jurisdiction of the Supreme Court.
The banks must comply with Aceh’s Qanun No. 11/2018 on sharia financial institutions, which requires them to be sharia-compliant within three years of when the legislation came into force.
“BNI really supports and facilitates the conversion to sharia banks,” BNI corporate secretary Mucharom told The Jakarta Post on Monday. “Of course, the customers’ move to BSI from conventional banks will be entirely based upon the agreement with them.”
