BSP lauds new Islamic banking law

The Bangko Sentral ng Pilipinas (BSP) lauds the recent signing of Republic Act 11439 or “An Act Providing for the Regulation and Organization of Islamic Banks.”

The law, which was signed by President Duterte on 22 August, mandates the BSP to exercise regulatory powers and supervision over the operations of Islamic banks and to issue its implementing rules and regulations.

This is expected to widen opportunities for Muslim Filipinos, including those from the Bangsamoro Region, in accessing banking products and services.

According to BSP Governor Benjamin Diokno, RA11439 “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.”

“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,” the governor added.

Islamic banking business, as defined under RA 11439, refers to a banking business with objectives and operations that do not involve interest (riba) as prohibited by the Islamic or Shari’ah Law and which conducts its business in accordance with the principles of the Shari’ah.

Under the new law, Islamic banks shall have such powers as shall be necessary and prudent to carry out the business of a bank in accordance with Shari’ah principles, in addition to the general powers granted to corporations. In line with this, Islamic banks may provide Shari’ah compliant financing contracts and structures and undertake various investments in all transactions allowed by Shari’ah principles.