Banks are expressing interest to put up Islamic units in the Philippines following the release of new regulations by the Bangko Sentral ng Pilipinas (BSP), an official reported.
“There are banks both foreign and domestic banks who signified their interest in Islamic banking,” BSP Financial Supervision Subsector 3 Managing Director Arifa Ala told reporters during “GBED Talks” press chat at the BSP Complex in Manila on Thursday.
Asked for further details, Ala said two to three banks are exploring the possibility of setting up units that cater to the Muslim banking community.
She stressed that banks are required to have a capitalization of P3 billion to set up a head office for their Islamic banking business.
Meanwhile, they need to have at least P15 billion to open up to 100 branches of Islamic banks, Ala added.
In December last year, the BSP underscored regulations that resounded its promotion of strong corporate governance and consumer protection cover the licensing framework on the establishment of Islamic banks and Islamic banking units and its expectations on the Shari’ah Governance Framework for them.
Debt watcher Fitch Ratings said earlier that the new BSP regulations for Islamic banking would support the establishment of a cohesive Islamic finance regulatory framework in the Philippines.
“The BSP’s new regulations aim to allow the sector to compete on an even regulatory playing field,” it explained.
“If the move is able to support financial inclusion and economic development, particularly in the Autonomous Region in Muslim Mindanao, an area with one of the largest Muslim populations in the Philippines, it would be broadly in line with the government’s agenda for inclusive growth,” Fitch Ratings added.
Despite its potential, the credit rater highlighted the development of an Islamic finance ecosystem would take time, saying Islamic banks were not expected to take a significant market share from well-established conventional banks over the medium term.
It said limited funding sources, as well as a lack of public awareness and trust in Islamic financial services, would continue to constrain the sector’s growth, at least in the medium term.
Source: The Manila Times