In a move towards diversifying the financial sector in the Philippines, the Bangko Sentral ng Pilipinas (BSP) announced on Wednesday, April 17, that it is currently in discussions with two institutions eager to establish Islamic banking operations within the country.
Assistant governor of the BSP, Arifa Ala, disclosed in a press conference that among the potential applicants is Maybank Philippines Inc., which is contemplating the inauguration of an Islamic banking window. Although formal applications are pending, Ala mentioned that discussions with Maybank are already underway, indicating a proactive approach towards the potential expansion.
Additionally, Ala highlighted another interested party, a foreign bank poised to augment CARD Bank Inc., a microfinance institution that already operates an Islamic bank within the Philippines. While specific numbers are yet to be determined, Ala emphasized the BSP's welcoming stance towards fostering more Islamic banking entities within the country.
Bridging Financial Gaps
Islamic banking operates on the principles of the Shari’ah, with a meticulously structured system aimed at ensuring compliance with divine law derived from sources such as the Qu’ran and Sunnah. BSP's move to encourage Islamic banking aligns with its broader agenda of fostering financial inclusivity in the Philippines.
BSP governor Eli Remolona emphasized the importance of extending financial services to marginalized sectors, citing statistics that reveal a significant portion of the Bangsamoro region—approximately 92%—remains unbanked. By promoting Islamic banking, the BSP aims to bridge this gap and create a more inclusive financial ecosystem.
Greater Financial Inclusion
Remolona articulated the BSP's ambitious goal of encompassing 70% of the population within the formal financial system. This initiative underscores the BSP's commitment to fostering economic growth and development by ensuring that a larger segment of the population has access to banking services.
As discussions progress and potential applicants formalize their plans, the Philippines stands poised to witness a significant diversification of its financial sector. The emergence of new Islamic banking entities not only promises greater accessibility to financial services but also signifies the country's openness to embracing diverse financial paradigms. With these developments, the Philippines takes another step towards realizing its vision of a more inclusive and resilient economy
