President Duterte has signed into law a measure creating a regulatory framework for the development of Islamic banks in the country.
Republic Act No. 11439 seeks to regulate and organize Islamic banks by authorizing the Bangko Sentral ng Pilipinas to exercise regulator powers and supervision over the operations of Islamic banks.
“The State recognizes the vital role of Islamic banking and finance in creating opportunities for greater financial inclusion especially for the undeserved Muslim population, in expanding the funding base for small and medium-sized enterprises as, well as large government infrastructure,” the law said.
The government also recognized the Islamic banks’ contributions to financial stability “through the use of financial contracts and services that are founded on risk sharing rather than speculation in compliance with Shari’ah principles.”
An Islamic banking unit is defined by the law as a division, department, office, or branch of a conventional bank that conducts business in accordance with the principles of Shari’ah.
The new law empowers Monetary Board to authorize the establishment of Islamic banks in the country while the BSP exercises supervision and regulation. (Genalyn Kabiling)
The Monetary Board may also allow conventional banks to engage in Islamic banking arrangements. The new law also allows the entry of foreign Islamic banks to operate in the country. (Genalyn Kabiling)
