At least two lenders looking to set up PHL Islamic banking units
TWO TO THREE banks have expressed interest to set up an Islamic banking unit in the country, according to Bangko Sentral ng Pilipinas Managing Director Arifa A. Ala.
This follows the regulatory framework unveiled by the central bank following the implementation of the Republic Act No. 11439 or an Act Providing for the Regulation and Organization of Islamic Banks, which was enacted in August 2019.
The law will allow traditional banks to go into Islamic banking operations once they receive approval from the Monetary Board (MB).
Ms. Ala clarified that these banks have only expressed interest and have not yet submitted formal applications.
“So hindi pa talaga complete application (It’s not yet a complete application). Kasi ganun talaga, kaka-issue lang ng IRR (It’s like that because the implementing rules and regulations have just been issued) so they were exploring the possibility of establishing,” she told reporters.
“Even before the passage of this law, they were querying kasi (because) everyone in Southeast Asia — look at our neighboring countries, they have Islamic banks. Tayo lang ’yung isa lang ang Islamic bank natin (We are the only country with only one Islamic bank,” she added.
Under the new law, Islamic banks can accept current accounts, savings accounts, investment accounts and foreign currency deposits, among others. These banks can also go into the issuance of Shariah-compliant funding instruments including “sukuk” after securing approval from the MB.
Only the Al Amanah Islamic Bank operates on Islamic banking principles in the country. Its operations have been under the Development Bank of the Philippines since 2008.
Asked whether she expects formal application this year, Ms. Ala said: “Probably. When they’ve seen the requirement…the undertaking to establish a Shariah governance framework.”
“It’s a new type of banking. They need to set up those appropriate mechanisms to ensure that the products are indeed Shariah-compliant,” she said.
Ms. Ala said lenders eyeing to set up Islamic banking units need to have P3 billion to P15 billion of capital in order to be allowed to do so.
The minimum P3 billion is needed if only one branch or just the headquarters will be set up, while P15 billion will be needed for those looking to build up to 100 branches.
“Of course if it’s an existing bank, a commercial bank, na-meet na nila ’yun (they’ve already met that requirement),” she added. — L.W.T. Noble
