Philippines’ central bank eases rules for Islamic banking units

Says changes give industry players time to get familiar with reportorial requirements 

MANILA, Philippines (MNTV) — The central bank of the Philippines (Bangko Sentral ng Pilipinas or BSP) has eased its rules governing Islamic banking units, reports ABS-CBN.

In a statement, the BSP said the rules institutionalize the three-year observation period, starting from the launch of Islamic banking operations, for submitting prudential reports on these. 

The BSP said this gives industry players time to get familiar with the reportorial requirements. 

Islamic banking units are also no longer required to submit a separate liquidity report. They can now integrate it with the bank-wide liquidity report.

The rules also clarify that Islamic banking units are not subject to a separate capital requirement. Instead, conventional banks with Islamic units will follow the capital requirements that apply to their bank category. 

The processing fee for an Islamic banking unit licence will also follow the fees corresponding to their bank’s category. 

The BSP said this is in line with their efforts to develop the country’s Islamic banking industry.

“We want to encourage more players to enter and help develop the Philippine Islamic finance market,” said BSP Governor Eli Remolona Jr.

“This supports our goals of inclusive growth and a more diverse financial sector,” he said.

The Philippines has been venturing into Islamic banking since President Rodrigo Duterte signed a law regulating it in 2019.

In 2022, the BSP signed an agreement to establish the Shari’ah Supervisory Board, which would oversee Islamic banking in the Philippines.