Arifa Ala, managing director of the Bangko Sentral ng Pilipinas, talks about the provisions of the new Islamic banking law in the Philippines and how this will address the lack of regulatory framework and low customer awareness, in order to provide better banking services to a significant number of underserved Muslims in the country.
November 15, 2019 | Arifa Ala
- The government shall provide programs that will increase customer awareness and capacity building
- A broader set of regulations is set to stretch the coverage of the Philippine financial system
- The regulatory framework will be adjusted to accommodate Islamic banking’s unique requirements, particularly the Shari’ah compliance
Islamic banking and finance is quite a mystery, especially in the Philippines. We have many of us who have a clear understanding of what Islamic banking is all about. For this reason, the Islamic banking law mandated the government to provide programmes that will increase customer awareness and capacity building on Islamic banking and finance.
We have an ongoing capacity building for the government regulatory agencies, such as the Bangko Sentral ng Pilipinas (BSP), Philippine Deposit Insurance Corporation, Department of Finance, Bureau of Internal Revenue, Insurance Commission and even the National Co mmission. Most of the Filipinos are benefiting from that capacity building that is ongoing under the technical assistance of the Asian Development Bank.
To many, who are more familiar with conventional banking, the concept of no interest paid or received is quite difficult to comprehend. There may be no opportunity to giving or to create wealth in such an arrangement. However, this is far from the principles of Islamic banking and finance. In fact, Islamic banks or financial institutions take a more active role in creating wealth and opportunities by ensuring that the financial transactions are supported by genuine economic activity. Hereby, providing real linkage between the finance and the real economy. Such an arrangement would discourage unbridled innovation and exce...
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Keywords: Islamic Banking
, Islamic Finance
, Alternative Financing
, Regulatory Framework
, Banking Infrastructure