THE BANGKO SENTRAL ng Pilipinas (BSP) is
set to issue the implementing rules for the country’s Islamic banking law after
the Monetary Board (MB) approved two circulars outlining the licensing
framework and discussing Shari’ah governance principles, a senior official
BSP Deputy Governor Chuchi G. Fonacier said
the Monetary Board okayed on Dec. 13 two new circulars on Islamic banking: one
on licensing of Islamic banks and setting up of Islamic banking window by
existing banks and the other discussing the principles of Shari’ah governance.
“IRR (implementing rules and regulations)
on Islamic Bank was approved by MB. BSP is set to issue circular on licensing
of Islamic banks and setting up of Islamic banking window by existing banks,”
Ms. Fonacier told BusinessWorld in a mobile phone message on Friday.
She said one foreign Islamic bank has
expressed interest in putting up a branch in the Philippines, while several
domestic banks are also considering setting up their own Islamic banking
Currently, Al Amanah Islamic Bank is the
only Islamic bank operating in the country, which is now under the Development
Bank of the Philippines when the latter took control of its operations in 2008.
BSP Managing Director of Financial
Supervision Subsector III Arifa Ala earlier said several banks have expressed
interest on Islamic banking but most were still waiting for the rules.
Republic Act No. 11439 or the act providing
for the regulation and organization of Islamic banks signed on Aug. 22,
mandates the central bank to act as the sector’s regulatory body and allows it
to authorize Islamic banks, both local and foreign, to establish Islamic
banking operations in the country.
The law also allows traditional banks to
participate in Islamic banking operations upon securing approval from the
Under Shari’ah principles, Islamic banking
is an asset-backed banking business with operations that do not involve “riba”
Under the law, Islamic banks can accept
current accounts, savings accounts, investment accounts and foreign currency
deposits, among others.
Islamic banks can also issue
Shari’ah-compliant funding instruments such as “sukuk” upon approval by the MB
to use on their operations and other capital needs.