Three banks have expressed interest in venturing into Islamic banking in the country as the Bangko Sentral ng Pilipinas (BSP) opened the sector to new players.
BSP Governor Benjamin Diokno said the Monetary Board has issued regulations to kick start the implementation of Republic Act 11439 or An Act Providing for the Regulation and Organization of Islamic Banks and the relevant provisions on Islamic banking under RA 11054, otherwise known as the Organic Law for the Bangsamoro Autonomous Region in Muslim Mindanao.
“These rules aim to create an enabling environment that will allow Islamic banks to operate alongside conventional banks under the same regulatory and supervisory approach, while considering the unique features of the Islamic banking operations,” Diokno said in a press conference.
Arifa Ala, managing director of the BSP’s Financial Supervision Subsector III, said three banks are interested in setting up Islamic banking units in the country.
“Of course there are banks, both foreign and domestic banks that have signified their interest in Islamic banking. Some are in the stage of exploring,” Ala said.
Ala explained universal and commercial banks could venture into Islamic banking as the law requires a minimum capitalization of P3 billion for the establishment of a head office and P15 billion to put up branches.
Ala said she is not at liberty to disclose the names of the interested banks.
The circulars issued by the central bank, which are consistent with BSP’s promotion of strong corporate governance and consumer protection, 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.
The BSP’s existing licensing framework on the establishment of conventional banks and branches has been adopted in the regulations, as appropriate, with supplementary requirements relevant to Islamic banking operations and Shari’ah compliance.
The BSP aims to provide a coherent, consistent, and comprehensive set of regulations and standards to encourage wider investor and consumer participation in Islamic banking and finance, without any regulatory arbitrage.