The central bank of Philippines last December gave its nod in principle for setting up of foreign Islamic banks in the country.
Following this consent, foreign Islamic banks can now set up their operations in the predominantly Christian nation.
This also allows indigenous banks to open an Islamic banking option or to start a subsidiary Islamic bank focussing on the country’s southern region of Mindanao, where there are large swathes of Muslim masses who don’t even possess a bank account of their own.
The Bangko Sentral ng Pilipinas (central bank) said that it seeks to foster a congenial atmosphere, which will facilitate Islamic banks to carry out their activities in tandem with traditional banks by adopting the same regulatory framework, while also adhering to exclusive Sharia-compliant practices.
However, the final decision to allow Islamic banks into Philippines rests on the central bank’s monetary panel. As there is no central regulatory authority on Sharia-compliance in the country, there is no law governing Islamic banking.
The latest Islamic banking law was approved by Rodrigo Duterte, the Philippine President on August 22, 2019. It brought to a halt the 10-year lull period of Islamic banking services in the nation.
This revival of sorts is bound to present great avenues for prospective new parties in the Islamic banking and finance domain in Philippines, which has a potential Muslim customer base of nearly 11 million in the southern region of Mindanao alone.
While various domestic banks are gearing up to establish their dedicated Islamic banking windows, a foreign bank too is keen to apply for an Islamic banking licence. Although the overseas bank was not identified, sources say that it is likely to be a major Malaysian Islamic bank.