Regulatory reforms on Islamic Bank licensing, Shari’ah governance and taxation have been instrumental in making the Philippines an attractive site for Islamic banking, according to the Bangko Sentral ng Pilipinas (BSP).
“The reforms convey to the market that the country fosters an open and competitive financial system that is also Shari’ah compliant and principles-based. This is consistent with our efforts to foster financial inclusion and a high quality of life for Filipinos,” said BSP Governor Benjamin E. Diokno.
The BSP has issued policies to implement the Islamic Banking Law and the provisions on Islamic banking under the Bangsamoro Organic Law.
These are Circular No. 1069 on the Guidelines on the Establishment of Islamic Banks and Islamic Banking Units, which is aligned with the BSP’s risk-based licensing framework; and Circular No. 1070 on the Shari’ah Governance Framework, which provides for decentralized compliance wherein adherence to Shari’ah principles will be the responsibility of the Islamic bank.
The Bureau of Internal Revenue, on the other hand, issued Revenue Regulation No. 17-2020, which provides that Islamic banking transactions shall not be taxed more heavily nor more lightly than conventional transactions.
Aside from these, the BSP revealed that regulations in the pipeline will cover liquidity, reporting, and capital adequacy and leverage ratios for Islamic banks or Islamic banking windows. The BSP’s Supervisory Assessment Framework will also be adopted for Islamic banks.
“Islamic Banking is for Muslims and non-Muslims alike, as it is seen to appeal to investors who may want to diversify their portfolios,” said the Governor.
