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

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

Ala said Maybank and another foreign firm plan to open an Islamic banking window but they have yet to submit an application.

Requirements discussion

“We have held meetings with them already and have discussed the requirements. We’ve heard information that Maybank may submit within this month,” 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.

No interest payment

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.

Meanwhile, Remolona said more Islamic banks are needed in Mindanao, especially in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM), pointing out that only eight percent of its population have bank accounts.

Eastern Visayas comes second as the most unbanked region in the country, Ala added.

She also shared that 29 percent of cities and municipalities nationwide are still unbanked.

Remolona said the BSP continues to create policies and campaigns for financial inclusion to increase the number of banked Filipinos to 70 percent of the country’s adult population this year.