REPUBLIKA.CO.ID, JAKARTA -- PT. Bank Syariah Mandiri (BSM) said it plans to use sharia bond valued at Rp1 trillion in the last quarter of this year.

Director of the subsidiary of the state lender Bank Mandiri, Yusman Yandi, said the fund would be used to refinance maturing debt of Rp500 billion in bond its issued earlier, and to strengthen its capital.

With addition of around Rp500 billion in capital, the bank's capital adequacy ratio (CAR) will increase to around 14 percent from 13.3 percent in May 2016 and its capital would rise to Rp6 trillion.

Yusman said with the additional capital, the Islamic bank could expand its business coverage and increase its capital reserve.

He said the liquidity of the bank is enough to expand its financing capacity by 10 percent, as the bank already has Rp13 trillion liquidity excess in Bank Indonesia.

BSM also has assets in government project-based sharia bond valued at Rp5.7 trillion.

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