The Bangko Sentral ng Pilipinas (BSP) on Wednesday said it is pursuing talks with Maybank Philippines and a foreign company to offer Islamic banking services.

“There are a number of interested applicants but only two are in the advanced stage of discussions,” Arifa A. Ala, BSP’s assistant governor for financial supervision, said.

If the management of the two banks come to a favorable assessment on expanding to Islamic banking, Ala said they might start submitting the related requirements within this year.

“They have not yet submitted applications but we have had dealings with them already, discussing the requirements for establishing Islamic banking,” she said.

Currently, there are only two banks engaged in Islamic banking in the country.

One is Al Amanah Islamic Bank which is a subsidiary of state-owned Development Bank of the Philippines and is headquartered in Zamboanga City.

The other is CARD Bank Inc. which is a microfinance firm established in Laguna but recently opened in January its first Islamic bank unit in Cotabato City.

Islamic faith principles

Unlike traditional banks, Islamic banks follow the principles of Islamic faith which means they do not accept interest payments and are more selective with types of products or services the borrowers want to be funded.

“In Islamic banking, instead of paying interest, you’re paying profits based on an underlying asset that is productive,” BSP Governor Eli Remolona Jr. said.

“Corporations that are proposing financing for alcoholic drinks or gambling are not allowed,” Ala added.

However, she stressed non-Muslims can still avail of Islamic banking products and services, including investments.

“They can be alternative investment options because, essentially, Islamic banking is about sharing of profits,” Ala said.

More Islamic banks needed in Mindanao

Remolona said more Islamic banks are needed in Mindanao, especially in the Bangsamoro Autonomous Region in Muslim Mindanao or BARMM, stressing only eight percent of its population have bank accounts.