Banks in Indonesia Plan to Spin-off Their Shariah Business Units as 2023 Deadline Draws Near

Local media reports explain that banks in Indonesia are drawing up plans to spin off their respective Shariah-compliant business units (UUS) into independent Shariah Business Entities (BUS). With the deadline set at no later than 2023, banks are realising that they need to get started with the necessary steps if they are to stay on track.

According to media reports, arguments for the postponement of this deadline are twofold. First, the performance of existing BUS appears to be lagging than that of the UUS. Second, majority of the UUS, especially those connected to Regional Development Banks in Indonesia have capital constraints.

Director of Syariah Banking CIMB, Niaga, Pandji P. Djajanegara, stated that discussions with Indonesia’s Financial Services Authority...