President Joko Widodo launched the operations of state-owned Bank Syariah Indonesia (BRIS) There has been a significant shift to Islamic-compliant banks in a country with the largest Muslim population in the world JAKARTA: Indonesia’s biggest Shariah-compliant bank, formed out of the merger of three Islamic lenders, began its operations on Monday with a combined asset value of 240 trillion rupiah ($17.1 billion), making it the Asian country’s seventh-biggest bank. President Joko Widodo launched the operations of state-owned Bank Syariah Indonesia (BRIS), the new single identity replacing the Islamic lending trio of Bank BRI Syariah, Bank Syariah Mandiri, and Bank BNI Syariah. Each of the banks was a subsidiary of their respective conventional banking companies, namely Bank BRI, Bank Mandiri, and Bank BNI. “Amid the (coronavirus disease) pandemic crisis, I am pleased to receive reports that the performance of Shariah banking in Indonesia recorded stable growth, and their growths were higher than the conventional banks,” Widodo said during the launch. He noted that Indonesia’s Shariah economy performance had ranked fourth in 2020, rising from 10th place in 2018 and fifth in 2019, according to the State of the Global Islamic Economy Report. BRIS President Director Hery Gunardi said the merger process began in March and on Feb. 1 the bank started operating under its new logo, which features a five-edged star to represent the Pancasila or the five national ideologies and five pillars of Islam. “Bank Syariah Indonesia is committed to being a banking institution that serves customers from all walks of life and upholds the Shariah principles,” Gunardi added. He pointed out that the bank was also aiming to be among the world’s top 10 Shariah-compliant financial institutions within five years. It has a core capital of more than 22.6 trillion rupiah, with 1,200 branches and 2,447 ATMs throughout Indonesia, and more than 20,000 employees. Financial authority data showed that Indonesia’s Shariah banks’ assets in 2020 grew 10.97 percent year-on-year while conventional banks’ assets rose by 7.7 percent. Loans from Shariah banks went up 9.42 percent, compared to 0.55 percent among their conventional counterparts. The growth showed that there had been a significant shift to Islamic-compliant banks in the world’s most predominantly Muslim population. On Monday, Erwin Dariyanto was surprised to discover he had become the first customer registered under the newly merged bank. “I was opening a new account at a former BNI Syariah branch when the customer service staff and the branch manager congratulated me for being the first customer under the new bank identity. They gave me a souvenir to mark the occasion. “I already have an account in a private Shariah bank, and I wanted to open an account in a state-owned one. I have shifted all my bank accounts to Shariah banks, except for one at a conventional bank where my salary is transferred,” Dariyanto told Arab News. Ebi Junaidi, the director of Islamic finances and economy at the Center of Reform on Economics (CORE) Indonesia think tank, said there was still huge potential for growth at the new bank. While Muslims make up around 75 percent of Indonesia’s 270 million population, Shariah-compliant lenders have a penetration rate of less than 8 percent. “Hopefully, now that we have a Shariah bank among Indonesia’s 10 biggest lenders, it will improve the Islamic banking sector performance, since previously there was no Shariah-compliant bank that had the competitive edge compared to the conventional ones on the top 10 list,” Junaidi added. With its major assets, Junaidi said the bank would have the potential for international exposure with the possibility of opening branches in the Middle East where global Shariah funds were primarily concentrated. “It can be part of the global Shariah fund liquidity and one of the players in the global Shariah economy,” he added.