ANSWER TO PARLIAMENTARY QUESTION ON: Islamic Banking
For Parliament Sitting on 04 Aug 1999
Question: To ask the Deputy Prime Minister if he will give a progress report on the introduction of Islamic banking facility in Singapore and whether his Ministry has any plan to encourage local and foreign banks to provide the facility in order to attract local and foreign deposits.
Answer: 1. MAS allows banks in Singapore to offer Islamic banking products and services as part of their banking activities. For example, one of the local banks is offering Al-Wadiah savings and current accounts. There are also unit trusts in the market which are managed in line with Islamic philosophy and laws.
2. The MAS has not received any application from Islamic banks to set up operations in Singapore. We have embarked on a gradual programme of liberalisation, to give foreign banks with strong global track records and sound credit ratings greater access to our domestic market. We would consider applications for banking licences in Singapore by Islamic banks which meet these criteria, as with all other foreign banks.
3. Our approach is to allow market forces to drive the development of Islamic banking in Singapore. Banks will provide a service where there is adequate demand for it to make commercial sense. That banks are already offering such products and services in the market shows that there is some demand in Singapore for Islamic banking products and services. Market demand will determine the pace at which the range of Islamic banking products and services available in Singapore grows in the future.