Indonesia is pushing forward its plans to create a new $8bn Islamic bank to combat dominant foreign competitors in the country and help Islamic banking industry offer services at more competitive rates.
The planned Islamic bank is set to be created through the merger of state-owned Shariah compliant banks Bank Mandiri, Bank Rakyat Indonesia and Bank Negara Indonesia.
A small unit of Bank Tabungan Negara is also expected to be roped in for the amalgamation.
The merger is expected to happen as early as this year.
Indonesia’s Financial Services Authority chairman Muliaman Hadad said that the new bank would have lower operating costs and would help fund larger infrastructure projects in the country owing to its combined assets base.
Indonesia’s Financial Services Authority has also drafted a roadmap for Islamic finance which intends to correct the imbalance between the country’s Muslim population which is the world’s largest, and their low use of Shariah-compliant financial products and services.
The roadmap will also see that the new bank’s risk management and capital requirements comply by international standards.