Kuala Lumpur, (IINA) – The Indonesian government is pushing for the formation of a new Islamic bank through the merger of four domestic banks, IslamicFinance reported.

Bank Mandiri, Bank Negara Indonesia, Bank Rakyat Indonesia and Bank Tabungan Negara have been prompted to merge their Islamic finance operations and form the new institution with capital of $1.12 billion and combined assets of more than $8 billion reported Nikkei.

The push comes as Indonesia strengthens its Islamic finance industry domestically and promotes it internationally with the aim of forging multilateral relationships with Turkey and the Islamic Development Bank. Previously Indonesia and Turkey have said they were ready to put up $300 million each for the creation of an Islamic mega bank.

Turkish financial authorities plan to treble Islamic banking assets as a percentage of total assets within the domestic banking sector from the present 5.2 percent over the next 10 years, in a bid to nurture the country’s Islamic finance market.

Whilst the proposed Indonesian or Turkish banks will be hugely overshadowed by Gulf Islamic Banks in terms of assets and capital, they will have access to much bigger markets. Both Indonesia and Turkey being Muslim majority countries with combined populations of around 325 million offer greater growth prospects in engaging unbanked populations of their societies, as well as eating into the market share of conventional banks.

According to data from the IslamicFinance.com Islamic Bank Chart, the top six global Islamic Banks are all based in the Gulf with combined assets of just under $250 billion.