2 potential applicants to vie for Islamic banking licenses
There are at least two financial institutions that are looking to set up Islamic banking operations in the Philippines, officials of the Bangko Sentral ng Pilipinas (BSP) said yesterday.
BSP Assistant Governor Arifa Ala said there are two possible applicants wanting to set up Islamic banking units in the country, one of them being Maybank Philippines Inc.
“We are seeing two potential applicants, but they have not yet submitted applications. We have held meetings with them already, discussing the requirements for establishing the Islamic banking unit,” she said, adding that the second potential application came from a foreign bank.
BSP Governor Eli Remolona Jr. said the two may submit their applications within this month.
The BSP aims to promote Islamic banking in the Philippines, as only eight percent of people in the Bangsamoro region have bank accounts, leaving the remaining 92 percent unbanked.
“What we want to do is create an inclusive banking system, a sustainable and vibrant Islamic finance ecosystem within the country to complement the banking system we already have,” Remolona said.
Ala said the BSP has granted an Islamic bank license to CARD Bank Inc., a large microfinance-oriented rural bank.
The rural bank launched its Islamic banking branch in Cotabato City earlier this year.
The BSP has dangled additional incentives as sweeteners to lure more interest in venturing into Islamic banking in the country, after the central bank opened up the sector to new players.
The BSP has issued Resolution 493, approving the modified minimum capitalization requirements for conventional banks with Islamic banking units to expand access to Shari’ah-compliant banking products and services to all Filipinos.
The guidelines allow conventional commercial banks or subsidiary banks of a universal bank that meet the minimum capital requirement for their respective banking category to operate an Islamic banking unit within a transitory period not exceeding five years.
Qualified conventional banks with Islamic banking units will also be given prudential relief in meeting the minimum capital requirement, which shall be based on the actual number of branches being used in Islamic banking operations.
“We recognize that the main hindrance in promoting Islamic banking and finance is the low awareness or low understanding of Islamic banking and finance,” Ala said. “So we need to launch information campaigns and capacity building.”
She added that the Philippines could generate more investments for various infrastructure projects by promoting Islamic banking and finance.
Regulatory reforms on Islamic banking licensing, as well as Shari’ah governance and taxation have been instrumental in making the Philippines an attractive site for Islamic banking.