Huge Interest in Islamic Banking in the Philippines as Maybank and Foreign Company Plan to Enter Sector
MANILA, Philippines — Maybank Philippines and a foreign company are eyeing the Islamic banking sector in the Philippines, as confirmed by the Bangko Sentral ng Pilipinas (BSP).
During a press conference, BSP Assistant Governor Arifa Ala disclosed that Maybank is set to apply for an Islamic banking license and is expected to submit its application within the month. Discussions have been ongoing between the BSP and Maybank regarding the necessary requirements for this endeavor.
Maybank Philippines, a member of the Maybank Group, is the largest bank in Malaysia in terms of assets and ranks as the fourth biggest in Southeast Asia.
Aside from Maybank, the BSP official also mentioned that a foreign company is showing interest in joining the Islamic banking sector in the Philippines. Currently, only two players operate in this sector: Al-Amanah Islamic Investment Bank of the Philippines and the Islamic branch of the Center for Agriculture and Rural Development (CARD) Bank Inc.
The enactment of Republic Act 11439 in 2019, signed by former President Rodrigo Duterte, mandated the BSP to regulate and supervise the operations of Islamic banks in the country.
Islamic banking, as defined in RA 11439, follows the principles of Shari’ah Law and does not involve interest (riba) prohibited by Islamic beliefs. This legal framework has been crucial in fostering the growth of a vibrant Islamic banking ecosystem in the Philippines, where the Muslim population constitutes around 10% of the total population.
According to BSP data, 29% of 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 hold the potential to promote financial inclusion by catering to individuals who avoid conventional banking facilities due to religious reasons. Moreover, it can appeal to non-Muslim investors seeking new asset classes and products to diversify their portfolios.
“I think by introducing Islamic Banking, we can bring more people into the formal banking system,” Ala remarked during the press conference.
