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MANILA, Philippines – President Rodrigo Duterte signed a law which allows the central bank to establish and regulate Islamic banks, paving the way for financial inclusiveness for the Muslim population.
Duterte signed on Friday, August 30, Republic Act no. 11439 or "An Act Providing for the Regulation and Organization of Islamic Banks."
The law mandates the Bangko Sentral ng Pilipinas (BSP) to exercise regulatory powers and supervision over the operations of Islamic banks, and to issue the implementing rules and regulations on Islamic banking.
Islamic banks differ from regular banks as they adhere to Shari’ah law and its economic principles. These banks prohibit collecting interests or “riba,” as well as share profits and losses.
Muslims, who account for about 10% of Filipinos, tend to not transact in conventional banking facilities due to their faith.
BSP Governor Benjamin Diokno cited the significance of the law.
“RA 11439 will unlock the full potential of Islamic financing in fostering inclusive economic growth. With a well-defined regulatory framework now in place, the BSP looks forward to seeing greater participation in Islamic financing by both domestic and foreign banks,” Diokno said in a statement.
“This is expected to widen opportunities for Muslim Filipinos, including those from the Bangsamoro Region, in accessing banking products and services. This is a great stride in our financial inclusion mandates,” he added.
An interagency working group comprised of officials from various agencies has been constituted to develop a regulatory framework for Islamic banking and finance, among others.
The agencies in the working group include the Asian Development Bank, Bureau of the Treasury, Department of Finance, Securities and Exchange Commission, Philippine Deposit Insurance Corporation, Insurance Commission, Bureau of Internal Revenue, Financial Reporting Standards Council, and National Commission on Muslim Filipinos –
The Bureau of Internal Revenue has already completed its draft regulation to implement the provision on tax neutrality for islamic banks.
The BSP said that Islamic banking can also be attractive to non-Muslims, particularly investors within or outside the Philippines who are looking to diversify their portfolios. – Rappler.com