| PHOTO: Official Facebook page of Maybank
Maybank Philippines Inc. has officially started its Islamic banking operations, the Bangko Sentral ng Pilipinas (BSP) said on Wednesday.
In a statement, the BSP said the Islamic banking unit (IBU) of Maybank opened shop on Aug. 14 after receiving its license from regulators on July 4.
This is the second IBU licensed by the BSP. The first was CARD Bank, Inc. (a microfinance-oriented rural bank) in June 2023.
Under BSP regulations, an IBU is a division, department, office, or branch of a conventional bank that operates in accordance with Shari’ah principles. Maybank, which held a soft launch for its Islamic banking operations on July 15, is the first commercial bank in the country to have IBU license.
Apart from Maybank, BSP Deputy Governor Chuchi Fonacier earlier said the central bank also approved the application of another company to establish its own IBU. She declined to name the firm.
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Prior to the approvals, there were only two players in the Islamic banking sector: Al-Amanah Islamic Investment Bank of the Philippines and CARD Bank.
In 2019, former President Rodrigo Duterte signed Republic Act (RA) 11439 which mandates the BSP to exercise regulatory powers and supervision over the operations of Islamic banks.
Islamic banking, as defined in RA 11439, refers to a banking business with objectives and operations that do not involve interest (riba) that is prohibited by the Islamic or Shari’ah Law, and which conducts its business following the principles of the Shari’ah.
The lack of a legal framework and necessary infrastructure in the past had hampered the development of a dynamic Islamic banking ecosystem in the Philippines, where the Muslim population accounts for about 10 percent of Filipinos.
BSP data showed that 29 percent of the cities and municipalities in the Philippines remain unbanked, with the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) being the most unbanked region.
Islamic banking and finance can promote inclusive finance by making it available to groups that avoid using existing conventional banking facilities due to their faith.
It can also be attractive to non-Muslims, particularly investors within or outside the Philippines who may be looking for new asset classes, instruments, and products to diversify their portfolios.