The Policies of Conventional Financial Institutions in Implementing Sharia Financial Institutions Procedures in Aceh

Abstract

With the implementation of Aceh Qanun Number 11 Year 2018 on Islamic Financial Institutions in Aceh, this article aims to identify and explain the policies that have been implemented by conventional banks and conventional insurance, as well as the impacts and challenges that have arisen in conventional banks and insurance. An empirical juridical methodology was used to conduct this research. Primary and secondary data are mainly composed of the research's data. Primary data was gathered through field research on Aceh's conventional banking and insurance financial services sector and its offices center in Jakarta. The study's findings demonstrated that the financial services sector (IJK), the study's subject, has adopted a number of policies. IJK, which already has a Sharia network subsidiary in Aceh, entirely discontinued all of its conventional activities and customer-facing policies, and subsequently transitioned its customers to be under its subsidiary businesses. According to its employment, employees had the alternative of being transferred to the nearest branch office, being permanently laid off, or being laid off and given the chance to join the subsidiary as employees while assets were gradually transferred to the subsidiary. The first challenge in implementing the Islamic Financial Institutions (LKS) Qanun is the high cost of conversion, followed by the short conversion period specified in the Qanun, the Financial Services Authority (OJK's role) as the regulator that continuously monitors and supports the conversion preparation process, and the IJK process that has ceased operations in Aceh.