Jakarta. Muhammadiyah, one of Indonesia's largest Islamic organizations, has announced its decision to reallocate its savings funds from Bank Syariah Indonesia (BSI) to minimize concentrated risks and stimulate fair competition within the Sharia banking sector.

It is not clear how much of the funds were reallocated but estimates put it at around Rp 13 trillion. Following Muhammadiyah's announcement, BSI's shares, traded as BRIS on the Indonesia Stock Exchange (IDX), experienced a 3.98 percent decline to Rp 2,170 on Thursday.

Anwar Abbas, Chairman of Muhammadiyah's Central Leadership, emphasized that the organization's financial assets had become overly concentrated in BSI, with minimal investments in other Sharia-compliant banks. This concentration, he said, posed a significant business risk commonly referred to as concentration risk.

"As a consequence, other Sharia banks struggle to compete with BSI's favorable terms, both in fund placement and financing. If left unchecked, this trend could compromise the healthy competition among existing Sharia banks—a situation we are keen to avoid," Anwar said on Wednesday.

Reiterating Muhammadiyah's support for Sharia banking, Anwar affirmed the organization's commitment to rationalizing and consolidating its financial strategies.

Muhammadiyah aims to foster healthy competition among Sharia banks, particularly concerning its affiliation. "Hence, Muhammadiyah deems it necessary to address various financial matters, including fund placements and financing, particularly within the banking sector," added Anwar.

Reports surfaced regarding Muhammadiyah's decision to redistribute its funds from BSI to several other Sharia banks, as outlined in a memo issued on May 30.

In response, BSI's Corporate Secretary, Wisnu Sunandar, reaffirmed the company's dedication to meeting stakeholders' expectations by adhering to fair, balanced, and beneficial principles in line with Islamic Sharia.

"BSI remains committed to delivering exemplary service and contributing to the advancement of Sharia economics in Indonesia," Wisnu said.

 As of April 2024, BSI's total saving funds reached Rp 293.24 trillion, marking a 9.41 percent year-on-year increase.

"We strive to be a modern and inclusive bank, providing services to all members of society while upholding Sharia principles," affirmed Wisnu.