The Bangko Sentral ng Pilipinas (BSP) is actively promoting Islamic banking and finance in the Kingdom of Saudi Arabia.
One of BSP's main come-on is that its business model adheres strictly to the Shari’ah governance and risk sharing principles “to foster equity, justice and transparency.”
“The business model of Islamic banking is beneficial to all types of banking clients regardless of religion. Hence, the goal is to provide the public, in general, whether Muslims or non-Muslims, with appropriate financial choices that suit their risk appetite and financial needs and make the Philippines aligned with global developments,” says BSP Assistant Governor Atty. Arifa A. Ala. She is the lead advocate on Islamic banking and finance and the Chairperson of the Islamic Finance Coordination Forum.
Last month, the BSP announced the approval of the Philippines’ first Islamic banking unit (IBU) under the Islamic banking law of 2019 or Republic Act No. 11439. The BSP issued the IBU license to an unnamed conventional or non-Muslim bank.
BSP invites Saudi Arabia's Islamic banks
At a glance
The pro-active Bangko Sentral ng Pilipinas (BSP) has collaborated with the Philippine Embassy in the Kingdom of Saudi Arabia to promote Islamic banking and finance in the Philippines.
The BSP said Wednesday, Sept. 6, that its strategy of promoting Islamic banking and finance is part of its financial stability mandate. It also emphasizes that its Islamic banking and finance business model adheres strictly to Shari’ah governance and risk sharing principles “to foster equity, justice and transparency.”
“The business model of Islamic banking is beneficial to all types of banking clients regardless of religion. Hence, the goal is to provide the public, in general, whether Muslims or non-Muslims, with appropriate financial choices that suit their risk appetite and financial needs and make the Philippines aligned with global developments,” according to BSP Assistant Governor Atty. Arifa A. Ala, the lead advocate on Islamic banking and finance and the Chairperson of the Islamic Finance Coordination Forum.
The BSP said it has successfully engaged with the Philippine Embassy in Riyadh, to promote Islamic banking and finance in the Philippines.
Ala and other BSP officials visited Saudi Arabia last month and held a stakeholders briefing on Aug. 17.
During the talks, Ala informed Saudi Arabian investors attending the forum of the milestones in the development of Islamic banking and finance ecosystem in the country, such as opportunities for investments and potential benefits in the area of financial inclusion.
Last month, the BSP announced the approval of the Philippines’ first Islamic banking unit (IBU) under the Islamic banking law of 2019 or Republic Act No. 11439. The BSP issued the IBU license to a conventional or non-Muslim bank.
BSP Deputy Governor Francisco G. Dakila Jr. did not disclose who the conventional bank is when he announced it, but he did say there are at least five foreign banks that are currently exploring the establishment of either a stand-alone Islamic bank or an IBU.
Before the first IBU license, the Philippines only has one Islamic bank which is the state-owned Al Amanah Islamic Investment Bank. It is a subsidiary of the Development Bank of the Philippines and created by a presidential decree in 1973.
The country’s Islamic banking and finance market is expected to attract more investors from Muslim nations in the Riyadh-based Gulf Cooperation Council region and also non-Muslim countries looking for diversified investments.
The BSP expects more banks and Muslim investors will approach the BSP and this bodes well for the government’s plan to issue its first sovereign Sukuk bonds.