Foreign Islamic banks may soon be able to set up shop in the Philippines

A bill seeking to organise such lenders has passed committee level.

Islamic banking is gaining momentum in the Philippines after a bill seeking to organise and regulate Islamic banks has made it through the committee level at the House of Representatives, according to a report by state news agency PNA. 

Under Republic Act 7721, the central bank’s Monetary Board may authorise the establishment of Islamic banks which is defined as a banking business whose business transactions are in accordance with Shariáh principles and do not involve interest (riba) which is prohibited by laws.

It may also authorise conventional banks to engage in Islamic banking arrangements through a designated Islamic banking unit within the bank.

Foreign Islamic banks can also establish banking operations in the Philippines.

Around 6.01% of the Philippines' total population are Muslims with the southernmost island group of Mindanao home to the majority or around 93% of Filipino Muslims.