The BSP revealed that Islamic banking was emerging as a major growth area in banking, with huge resources that were ready to be tapped for appropriate projects.
According to BSP Deputy Governor Alberto V. Reyes, the BSP was drawing up the regulatory policies that would govern Islamic banking and encourage the establishment of new Islamic banks in the country.
"There are about $250 billion worth of Islamic funds going around and the owners of these investments have the preference to invest through Islamic banks," said Reyes. "We are looking at this as an opportunity because it’s a specialized kind of banking that would benefit our Islamic communities."
According to Reyes, the BSP was looking at the possibility of tapping these investment funds for the rehabilitation of Al-Amanah which had been lined up for privatization by the Arroyo administration as early as 2001.
Reyes said the BSP could help facilitate technology transfer for prospective investors planning to set up Islamic banks but the regulatory framework would also require assistance from the international Islamic banking community.
"It is unique in that banking would be governed by the Sharia Advisory Council and the principles of Islamic banking is guided by the Q’oran," Reyes said. "We have to make regulatory adjustments in this respect."
Under the Shariah laws, earning of profit through interest is strictly prohibited. Islamic banking system requires that loans are asset-backed, and arranged as profit-sharing transactions.
Last year, President Arroyo appointed Datu Zacaria Candao, former governor of the Autonomous Region in Muslim Mindanao (ARMM) as head of the Al-Amanah Islamic Investment Bank.
Reyes said that the bank could tap investments from the Islamic banking community to bankroll its recapitalization and further development into a major bank in the country.