MANILA, - The Bangko Sentral ng Pilipinas (BSP) is pushing for the development of Islamic banking in the country.
BSP Deputy Governor Nestor A. Espenilla Jr. said this financial reform will allow the central bank to create regulations that could spur investments and support economic development in Mindanao.
“We just want to have an enabling provision in the BSP charter that will allow us to develop regulations that can support (Islamic) banking,” Espenilla told reporters.
“Today, there’s only one operating (Islamic) bank, Al-Amanah (Islamic Investment Bank of the Philippines)... so this will pave the facility for developing an Islamic banking system and not only individual entities,” Espenilla said.
The BSP, under its proposed amendments to its charter, aims to provide “financial facilities for Islamic banks.”
Espenilla explained that they carefully worded the provision in a “generic” way as some products of Islamic banks tend to be different as compared with what conventional banks have.
Islamic banks generally offer the same facilities as conventional ones but they adhere to the laws of Sharia, the moral code and law set by Islam, he explained.
One of the main differences of Islamic banking and conventional banking is doing away with interest or fees for loans as it is prohibited under the principles of Sharia, Espenilla said.
Supporting the Islamic banking industry may be crucial to the economic development of Mindanao as Muslims tend to avoid banks or products non-compliant with their religious law.
With regard to foreign Islamic banks that may want to establish presence in the Philippines, Espenilla said the central bank will allow them as long as they comply with the regulations governing banks in the country.
(Phil.Star.Com / 24 Sept 2013)
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com