MANILA, Philippines — Government regulators have approved the establishment of a Shari’ah Supervisory Board (SSB) in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM), according to Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno.
Diokno said the BSP, Department of Finance, National Commission on Muslim Filipinos, and the Bangsamoro Government approved the joint circular (JC) and memorandum of agreement (MOA) on the establishment of the board that marks a milestone in the whole-of-government approach in promoting Islamic banking and finance in the country.
“The JC and MOA formalize the agencies’ collaborative efforts in Shari’ah governance, following the government’s strategy to provide an enabling environment for the Islamic banking industry. The SSB will provide essential Shari’ah compliance oversight to enable Islamic finance to flourish in the country,” he said.
The joint initiative implements relevant provisions of Republic Act 11054 or An Act Providing for an Organic Law for the Autonomous Region in Muslim Mindanao to promote Islamic banking and finance in the BARMM.
The SSB’s primary function is to issue Shari’ah opinions on Islamic banking transactions and products in the BARMM.
At the same time, the BSP, financial institutions, and other stakeholders may request the SSB to provide Shari’ah opinions on matters related to Islamic banking and finance.
The SSB complements the Shari’ah Advisory Council of Islamic banks required under the BSP’s licensing and Shari’ah governance frameworks, under BSP Circulars 1069 and 1070 issued on Dec. 27, 2019.
If warranted, Diokno said RA 11439 or the Islamic Banking Law provides flexibility for the government to convert the SSB into a national body when there are several Islamic banking players in the financial system.
The BSP continues to provide a supportive and enabling environment for Islamic banking that can operate alongside the conventional banking system.
For one, the regulator is reviewing the capitalization thresholds for the establishment of Islamic banks in the country, as part of efforts to establish an inclusive and sustainable Islamic finance ecosystem by pursuing regulatory reforms under a whole-of-government approach.
Noel Tianela, deputy director and head of Islamic banking supervision group, earlier said the BSP is reviewing the minimum capital requirement for the establishment of Islamic banks, which ranges from P10 billion to P20 billion depending on the number of branches.
“Right now we are also conducting a policy study to liberalize and relax the minimum capital requirement for the Islamic banking unit so that there will be other kinds of conventional bank that will be opened or to explore possibilities of opening Islamic banking units either a department, a unit or a branch of a conventional bank,” Tianela said.
The central bank has received a number of queries on the establishment of Islamic banks or Islamic banking units in the country.
“The inquiries include one relating to the establishment of a foreign Islamic bank within a foreign bank. However, the discussion on this are still in the exploratory stage,” Diokno earlier said.