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.

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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.”

Read also: Explainer: What’s sharia banking and where’s Indonesia taking it?

BNI, traded on the Indonesia Stock Exchange (IDX) under the code BBNI, has converted 26 branch offices into BSI offices to support the transition. This year, the bank plans to convert the remaining six branch offices in the province.

BSI, which was established in February as the country’s largest sharia bank, has set its sights on serving 15 million customers to support the government’s goal of making Indonesia a hub for sharia finance.

Islamic banking has been gaining ground, as reflected by the total assets of sharia banks and businesses, which grew by 12.69 percent year-on-year to Rp 587.51 trillion (US$40.74 billion) in February amid a pandemic-induced downturn, according to data from the Financial Services Authority (OJK).

Fourteen sharia banks have also expanded their operations, with the number of sharia bank offices increasing to just over 2,000 in February. There are 52 operational head offices and branch offices, as well as 272 sub-branch offices in Aceh.

BRI, traded on the IDX under the code BBRI, has converted all its 11 branch offices, 15 sub-branch offices and 94 business units to BSI. As a result, 69 percent of the bank’s workers will be under BSI, and the other 31 percent will be relocated outside Aceh.

“BRI fully supports the regional administration’s policy with respect to the implementation of Qanun No. 11/2018 on sharia financial institutions,” BRI corporate secretary Aestika Oryza Gunarto told the Post on Monday.

“To implement that, we gradually diverted the savings and lending portfolios, as well as operational services, to BRI Syariah from July 2019 to December 2020. BRI Syariah has now merged to form [BSI].”

Read also: Govt launches Indonesia’s largest sharia bank. Observers sense opportunity.

On Tuesday at 3:14 p.m., the stock price of BSI was Rp 2,250, up 0.45 percent from the previous close.