MANILA: Filipino Muslims will have access to a wider range of Islamic banking services under a new law signed by President Rodrigo Duterte.
The expansion of the Islamic banking system in the country will be carried out under the supervision of the Philippines Central Bank and its Monetary Board.
Muslims, including those in the autonomous Bangsamoro region in the southern Philippines, stand to benefit from the move, which central bank Gov. Benjamin Diokno said will “unlock the full potential of Islamic financing in fostering inclusive economic growth.”
Under the new law, conventional banks also will be allowed to engage in Islamic banking arrangements, providing they segregate the transactions from conventional business.
The legislation is also expected to pave the way for the entry of foreign Islamic banks into the Philippines.
However, the Monetary Board will regulate the number of participants in the Islamic banking system, taking into account the requirements of the economy, financial stability and the need for healthy competition.
Currently the Al-Amanah Islamic Investment Bank of the Philippines is the only Islamic lender operating in the country.
Diokno praised the new law, which he said will promote inclusive economic growth.
“With a well-defined regulatory framework now in place, the Bangko Sentral ng Pilipinas (BSP) looks forward to seeing greater participation in Islamic financing by both domestic and foreign banks,” he said.
“This is expected to widen opportunities for Muslim Filipinos, including those from the Bangsamoro region, in accessing banking products and services. This is a great stride in our financial inclusion mandates.”
An interagency working group has been set up to develop a regulatory framework for Islamic banking and finance.
According to the BSP, Islamic banking and finance promote growth by making finance available to groups that avoid using conventional banking facilities due to their faith.
Muslims make up about 10 percent of the population of the Philippines.
Islamic banking and finance can also be attractive to non-Muslims, particularly investors within or outside the Philippines looking for new asset classes, instruments and products to diversify their portfolios.