The Market Monitor Minding the Nation's Business
The Bangko Sentral ng Pilipinas (BSP) has amended the rules governing Islamic Banking Units (IBUs) to attract more players and strengthen the country’s Islamic finance industry.
In a statement last week, the BSP clarified that IBUs will no longer be required to maintain separate capital since they operate as divisions or departments within conventional banks, even while observing Shari’ah principles that prohibit the charging of interest.
The central bank also said the processing fee for an IBU license will be based on the category of the parent bank.
Among the key amendments is the institutionalization of a three-year observation period—starting from the launch of Islamic banking operations—for the submission of prudential reports. IBUs will also be exempted from filing a separate liquidity report beyond what their mother banks already submit.
“This gives industry players time to get familiar with the reportorial requirements,” the BSP said.
BSP Governor Eli Remolona said the move aims to make Islamic banking more accessible and appealing to local and foreign institutions.
“These changes are meant to encourage more players to enter and help develop the Philippine Islamic finance market,” Remolona said. “This supports our goals of inclusive growth and a more diverse financial sector.”