Bangko Sentral allows Maybank to set up local Islamic banking operations
The Philippine unit of Malayan Banking Berhard (Maybank) has obtained a license from the Bangko Sentral ng Pilipinas to open an Islamic banking window (IBW) amid a strong regulatory push to develop a vibrant Islamic banking ecosystem in the country.Speaking to reporters on the sidelines of an event hosted by the Chamber of Thrift Banks, BSP Deputy Governor Chuchi Fonacier said the central bank had approved the application of Maybank to establish its own IBW. Fonacier said another firm had obtained authority to operate IBW but declined to name the other entity.
IBW license allows conventional financial institutions to conduct Islamic banking operations by setting up a subsidiary that offers Shari’ah-compliant financing.
“It’s already approved for both,” said Fonacier, head of the BSP’s financial supervision sector, which is mainly responsible for the regulation of banks.
Prior to the approvals, there were only two players in the Islamic banking sector: Al-Amanah Islamic Investment Bank of the Philippines and the Islamic branch of the Center for Agriculture and Rural Development Bank Inc.
In 2019, then President Rodrigo Duterte signed Republic Act No. 11439, which mandates the BSP to exercise regulatory powers and supervision over the operations of Islamic banks.
Islamic banking, as defined in RA 11439, refers to a banking business with objectives and operations that do not involve interest (riba) that is prohibited by the Islamic or Shariah Law, and which conducts its business following the principles of the Shari’ah.
The lack of a legal framework and necessary infrastructure in the past had hampered the development of a dynamic Islamic banking ecosystem in the Philippines, where the Muslims account for about 10 percent of the population.
BSP data showed that 29 percent of the cities and municipalities in the Philippines remain unbanked, with the Bangsamoro Autonomous Region in Muslim Mindanao being the most unbanked region.
Islamic banking and finance can promote inclusive finance by making it available to groups that avoid using existing conventional banking facilities due to their faith.
It can also be attractive to non-Muslims, particularly investors within or outside the Philippines who may be looking for new asset classes, instruments and products to diversify their portfolios. INQ
