Press Release June 4, 2019 Bill authorizing more Islamic banks in PH gets Senate nod A bill authorizing the expansion of Islamic banking system in the Philippines under the supervision of the Bangko Sentral ng Pilipinas (BSP) and regulation by the Monetary Board (MB) has been approved on third reading by the Senate. During Monday's plenary proceedings, 20 senators voted to approve House Bill No. 8281, entitled "An Act Providing for the Regulation and Organization of Islamic Banks." The measure, which seeks to put in place a sound legal and regulatory framework for the development of Islamic banks in the country, will likewise pave the way for the entry of foreign Islamic banks to operate in the Philippines. This, however, does not exclude conventional banks from engaging in Islamic banking arrangements, including structures and transactions through a designated Islamic banking unit within the bank, and provided that there will be a system for segregating the transactions of the Islamic banking unit from its conventional banking transactions. "Under this proposed measure, we will provide Islamic banking and finance a policy infrastructure that shall enable Islamic banks to organize and thereafter provide all Filipinos that economic opportunity for inclusive growth," said Sen. Francis "Chiz" Escudero, chair of the Committee on Banks, Financial Institutions and Currencies and sponsor of the bill. "Such infrastructure shall provide regulations of organization, capitalization requirements, powers and supervision of Islamic banks. The Philippines is seen as a top source of growth in Islamic finance and now is the most opportune time that we tap on Islamic banking and finance to broaden the participation of Muslim Filipinos in nation-building," he added. Once enacted into law, the Islamic banks may perform the following banking services:
Under the bill, the BSP shall exercise regulatory powers and supervision over the operations of Islamic banks and shall issue the implementing rules and regulations on Islamic banking. The MB may regulate the number of participants in the Islamic banking system, taking into account the requirements of the economy, the preservation of the stability of the system and the maintenance of health competition. The Al-Amanah Islamic Investment Bank of the Philippines, is the first and the only Islamic bank operating in the country. Established in 1973, Amanah Bank's operations sought to address the need to expand the banking and credit system in Mindanao. The bank's charter was revised in 1974 with the mandate that it shall operate "based on the Islamic Concept of Banking," and to follow and respect the religious beliefs and practices of Muslim Filipinos. "Despite this early and promising start, the Philippines still has an inadequate legal and regulatory framework for Islamic finance. According to the Asian Development Bank, the lack of an appropriate legal and regulatory framework has slowed the development of Islamic finance in the country," Escudero said. |
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