Maybank Philippines Inc. now offers Islamic banking as the Bangko Sentral ng Pilipinas (BSP) promotes financial inclusion.

The BSP on Wednesday said it granted Maybank authorization to operate Islamic banking services on 4 July, making it the country’s second Islamic banking unit but the first commercial bank with such service.

Islamic banking applies Shari’ah principles or Islamic law practiced by Muslims.

“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,” BSP Assistant Governor for financial supervision Arifa Ala said.

Non-Muslims welcome

However, Remolona said non-Muslims can also benefit from Islamic banking as an alternative investment option as it is “essentially about sharing of profits.”

Remolona said more Islamic banks are needed in Mindanao, especially in the Bangsamoro Autonomous Region in Muslim Mindanao, stressing only 8 percent of its population have bank accounts.

“The BSP will continue to work closely with industry players to ensure the robust and sustainable growth of the Islamic banking sector,” BSP managing director Judith Sungsai said.

Philippine Economic Zone Authority group manager Aleem Siddiqui Guipal said expanded Islamic banking can also drive exports income to Filipino small and medium enterprises offering Halal products, which also comply with Islamic practices.

He shared that the Philippines shipped Halal products worth $560 million in 2018. The Department of Trade and Industry reported their global market value could grow up to $3.3 trillion.

Before Maybank Philippines, the BSP authorized CARD Bank Inc. which is a microfinance firm established in Laguna, and Al Amanah Islamic Bank which is a subsidiary of state-owned Development Bank of the Philippines and is headquartered in Zamboanga City.