Dominated By Regional Banks, 12 Of The 20 Sharia Units Are Still Not Ready To Separate From Identification

Director of the Indonesian Banking Development Institute (LPPI) Eka Danuwirana. (Photo: Doc. Antara)

JAKARTA - Director of the Indonesian Banking Development Institute (LPPI) Eka Danuwirana said there are still many Sharia Business Units (UUS) that are not ready to spin off or separate themselves from their mothers.

"As an illustration of the current 20 UUS, as many as 9 to 12 UUS are not ready to face the deadline for the spin off in 2023," said Eka at the LPPI Virtual Seminar #86 quoted by Antara, Thursday, October 13.

He revealed that the number of UUSs that were not ready to carry out the spin off was dominated by the UUS of the Regional Development Bank (BPD). However, there are several Conventional Commercial Banks (BUK) that choose to convert rather than spin off, for example Bank Aceh Syariah and Bank Nusa Tenggara Barat Syariah.

Law (UU) Number 21 of 2008 concerning Sharia Banking regulates the obligation to spin off for UUS which has at least 50 percent of its parent bank total assets. The law also requires a spin off for UUS after 15 years of enactment of the law.

Therefore, 2022 and 2023 will be a decisive moment for the development of national sharia banking because in 2023 it is the ultimate limit for BUK, which has an UUS to release the UUS to become a Sharia Commercial Bank (BUS).

Eka explained that the goal to be achieved from the spin off is actually good, namely the government hopes that the share of the Islamic banking market in Indonesia can increase. However, there are challenges in carrying out spin off, including the fulfillment of total assets, readiness of human resources, and infrastructure, including information technology.

"Economic pressure due to the COVID-19 pandemic further complicates the preparation of the UUS for spin off, where BUK must provide backups to anticipate bad credit after the relaxation period ends which must be prioritized, so it is heavy when it comes to depositing capital on the UUS," he added.

In addition, he said, the willingness of BUK shareholders can also affect the decision of the spin off or instead take a conversion path, which is another option when the spin off is felt heavy.

However, these options are returned to the preferences of each BUK's health and readiness, particularly the preferences of BUK's shareholders, which can also affect the spin off decision or choose the conversion path.