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Business

MOA on establishment of Shari’ah board signed

Lawrence Agcaoili - The Philippine Star

MANILA, Philippines — Various government agencies have signed the memorandum of agreement (MOA) on the establishment of a Shari’ah Supervisory Board (SSB) in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM).

Bangko Sentral ng Pilipinas Governor Benjamin Diokno led the signing of the MOA together with BARMM Minister Mohammad Yacob, Finance Undersecretary Bayani Agabin, and National Commission on Muslim Filipinos OIC Yusoph Mando.

Diokno said that the Philippines is now among a handful of jurisdictions that have institutionalized a Shari’ah governance oversight body for Islamic banking and finance through the creation of an SSB.

“Despite the disruptive effects of the pandemic, here we are, celebrating the fruits of our perseverance as we achieve another great milestone for Islamic banking and finance in the country,” the BSP chief said.

Diokno said the SSB in the BARMM was formally established last month when the Founding Agencies signed the joint circular on its creation.

He said the MOA supplements the joint circular and prescribes the agreement of government agencies on the roles and responsibilities of the SSB and the members thereof and the mandate of the SSB, among others.

Diokno said the MOA is meant to be dynamic and evolving as the Islamic banking and finance industry progresses.

“However, the collaboration does not end with the signing of the Joint Circular and the MOA. The government agencies and private sector must continue to collaborate until our vision on an Islamic banking and finance ecosystem that viably operates alongside the conventional system, is realized,” he said.

The SSB, Diokno said, would serve as a strong arm in reinforcing BSP’s commitment on financial stability grounded on sound corporate governance in the delivery of financial products and services in the country.

“By issuing Shari’ah opinions on Islamic banking products and services, the SSB will play a key role in driving the business model of Islamic financial institutions and the sustainability of the Islamic banking products or services that will be made available to all Filipinos,” the BSP chief said.

The regulator said that the creation of the SSB could also boost trading activities, participatory financing schemes and entrepreneurial undertakings with financial institutions that are committed to provide end-to-end Shari’ah compliant products and services.

Since the enactment of Republic Act 11439 or the Islamic Banking Law in 2019, the BSP has issued the key implementing regulations on licensing, Shari’ah governance framework, liquidity risk management and prudential reporting for Islamic banks and Islamic banking units.

BSP Deputy Governor Chuchi Fonacier said the central bank recognizes that the development of an Islamic banking and finance ecosystem is vital in expanding its financial inclusion agenda and maintaining its financial stability narrative.

“We share this meaningful commitment with our stakeholders who are present today, as we explore the untapped potentials of Islamic banking and finance,” Fonacier said. As we may already know, the Islamic finance ecosystem has an imperative component which is unique to itself, and that is, Shari’ah governance,” Fonacier said.

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