Islam group seeks gov’t approval to operate bank

The Arab Gulf Program for Development (AGFund) has applied for a license to operate an Islamic bank in the Philippines.

The bank, to be called “Ibdaa Microfinance Bank,” is expected to be operational within the year.

In a primer, AGFund said the bank’s objective is to help reduce poverty in the Philippines mainly by offering business loans to low-income earners.

AGFund is a regional institution based in Saudi Arabia. It pursues a development goal for various countries, particularly those confronted with a significant poverty problem.

“We believe the Ibdaa Microfinance Bank will be a virtual tributary to the opening of new business opportunities [and] integration of the poor in the financial process,” Prince Talal bin Abdul Aziz Al-Saud, funder of AGFund, said in a speech on Wednesday during a summit held at Fairmont Hotel in Makati City.

Currently, AGFund operates institutions in Jordan, Yemen, Syria, Sierra Leone, Lebanon and Sudan.

According to Nasser Alkahtani, executive director of AGFund, “Arab investors are interested in the Philippines…. They want to put in money here.”

Larry Reed, director of Microcredit Summit Campaign that helps promote Agfund’s development agenda in the Philippines, told the Inquirer that the Ibdaa Microfinance Bank would adopt the business concept of Islamic banking and AGFund’s social development principles.

This means the interest, and other forms of profit, to be earned by the bank will not be distributed as dividends to shareholders. Instead, these will be used for reinvestment in other development initiatives of the bank, such as through the provision of more financial services to its target market.