The Bangko Sentral ng Pilipinas (BSP), the central bank of Philippines, is reportedly planning to grant domestic banks permission to set up Islamic banking business.

Bangko Sentral ng Pilipinas deputy governor Chuchi Fonacier was quoted by Bloomberg as saying: “The BSP is pushing for an open approach where conventional banks can operate Islamic banking windows or to establish subsidiary Islamic banks.”

The move is part of the Philippine government’s strategy to encourage Shariah-compliant banking in the country.

Even though Muslims constitute only 10% of the country’s population, the Philippine government enacted a legislation to promote Islamic finance in August his year. It, however, asked the central bank to finalise the details.

The central bank believes that standalone subsidiaries will enable the banks to provider a variety of Shariah-compliant services.

Before the end of 2019, the central bank aims to publish the implementing rules for the new law related to Shariah-compliant banking.

Out of 45 universal and commercial bank groups in Philippines, only Al-Amanah Islamic Investment Bank of the Philippines runs its business based on Shariah principles.