BSP lays groundwork for Islamic banking in PH
The policy making Monetary Board has approved the preliminary initiatives of the Bangko Sentral ng Pilipinas (BSP) to jumpstart the implementation of the law on Islamic banks, which President Duterte enacted last year, according to the regulator.
In a statement, the BSP said Republic Act No. 11439—An Act Providing for the Regulation and Organization of Islamic Banks, and the relevant provisions on Islamic banking under R.A. No. 11054, otherwise known as the Organic Law for the Bangsamoro Autonomous Region in Muslim Mindanao—provided it with the legal authority to issue a broader set of rules and regulations on Islamic banking.The law was signed on Aug. 22, 2019, and became effective on Sept. 22, 2019.
The BSP said it “aims to create an enabling environment that will allow Islamic banks to operate alongside the conventional banks under the same regulatory and supervisory approach, taking into consideration the unique features of the Islamic banking operations.”
“The goal is to provide a coherent, consistent and comprehensive set of regulations and standards to encourage wider investor and consumer participation on Islamic banking and finance without any regulatory arbitrage,” the regulator said.
The regulations reinforced BSP’s promotion of strong corporate governance and consumer protection as well as to cover the licensing framework on the establishment of Islamic banks and Islamic Banking Units and the BSP’s expectations on the Shari’ah Governance Framework.
Under the scheme, the BSP’s existing licensing framework on the establishment of conventional banks and branches is adopted, as appropriate, with supplementary requirements relevant to Islamic banking operations and Shari’ah compliance. The regulations will implement the legal provisions on the establishment of Islamic banks, which allows other players—either full-fledged Islamic banks or Islamic banking windows—to operate in the Philippines.
Subject to the approval of the Monetary Board, conventional banks, whether domestic or foreign banks, will be allowed to open Islamic banking unit or to establish a subsidiary Islamic bank.
