IBS Journal September 2015
New Islamic microfinance entity pondered in the Philippines
Quezon City, Philippines © Patrickroque01, Wikipedia
The National Commission for Muslim Fili- pinos (NCMF) is discussing a possibility of establishing the first microfinance entity in the country that would operate according to Shari’ah principles of finance. It will be aimed at helping poor local Muslims and according to Yasmin Busran-Lao, NCMF’s secretary, such an institution should be quite straightforward to set up. On the technology side, the low-end
sector is dominated by FAO-GTZ with its Windows-based MBWin system. FAO-GTZ and its product is a collaborative effort between the Food and Agriculture Organi- sation of the United Nations and a sustaina- ble development organisation from Germany. A more recent technology entrant is
Mambu, a Germany-based core banking software provider that specialises in cloud- based solutions and services. Its simple and inexpensive offering has seen a rapid take- up around the world since its launch in 2011, largely in the emerging markets. In the Phil- ippines it has six users, all in the microfinance space. These include Mega Mitch Credit, Mentors International and Venture South. International vendors are also in the
Philippines market in force, including FIS, Fiserv, Misys, Temenos, Intellect Design Are- na (Polaris), Infosys and Oracle FSS, although they are prevalent amongst larger banks.
18 © IBS Intelligence 2015
Discussions with local businesses are
underway as well as an appeal for the reg- ulators to develop a fully-fledged Islamic banking framework. There are approximately 4.7 million
Muslims living in the Philippines, who constitute just over five per cent of the country’s population. At present, there are no Islamic financ- ing mechanisms in the microfinance indus- try of the Philippines. There is one bank in the country that offers Islamic banking ser- vices, Al-Amanah Islamic Bank. The bank has been owned by a state-owned banking group, Development Bank of the Philip-
pines, since 2008. There were talks a couple of years ago regarding a potential sale of the Islamic bank by its parent due to the latter’s lack of expertise in Islamic finance, but no ownership changes have occurred to date. NCMF believes that the proposed
microfinance institution model will be sus- tainable as it could generate enough funds through zakat, a charitable donation of ten per cent from the profits that Muslim indi- viduals and companies make. Meanwhile, the borrowers will be able to get the mon- ey with no interest (riba) as the Shari’ah law prohibits usury.
Tanya Andreasyan IN BRIEF
Kuveyt Turk Bank (KT Bank) has become the first Shari’ah-compliant bank to open its doors in Germany. It hopes to capitalise on the banking needs of around 4.8 million Muslims living in the country, representing the largest Muslim community in the European Union. Local vendor, Pass Consulting, is supplying the bank with the German core bank-
ing part, including accounting, SEPA payments, regulatory reporting and AML, and will also provide the complete data centre services. KT Bank is based in Frankfurt and is owned by a Turkish banking group, Kuveyt
Turk Participation Bank, which promotes interest-free (participation) financial services in its home country. The group’s largest shareholder (62 per cent) is Kuwait Finance House. Islamic Development Bank holds a nine per cent stake. —Tanya Andreasyan
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