BSP aims to improve Islamic Banking in the Philippines, partners with AAOIFI

To further promote Islamic banking in the Philippines, the Bangko Sentral ng Pilipinas (BSP) has partnered with an Islamic finance standard-setting body.

Benjamin Diokno, BSP Governor, has said that the memorandum of understanding (MOU) with the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) is part of the initiative to enhance Islamic banking in the Philippines. As mandated by R.A. 11439, the Act which provides regulations for Islamic Banks.

“The BSP’s MOU with AAOIFI covers the possible adoption of relevant AAOIFI standards by the local Islamic banking and finance industry, and cooperation in the areas of capacity building and technical assistance,” Diokno said.

The pact between the two organizations was signed during the 16th Annual Conference of the AAOIFI by BSP Deputy Governor Chuchi Fonacier and AAOIFI chair, Sheikh Ebrahim Khalifa Al Khalifa.

“As banking system supervisor, the BSP recognizes the importance of establishing formal ties with AAOIFI as this strengthens the BSP initiatives on Islamic banking and finance in the country,” Diokno said.

AAOIFI is a non-profit standard-setting body that aims to develop, maintain, and promote standards on the Shari’ah accounting, auditing, governance, and ethics for Islamic financial institutions. The body has garnered support from various financial institutions and governments across 45 countries.

In addition to its collaboration with the AAOIFI, the BSP is also an associate member of the Islamic Financial Services Board.

To kickstart implementation, the regulations state that universal and commercial banks could venture into Islamic banking with a minimum capitalization of P3 billion to establish a head office and P15 billion to put up branches.

With these collaborations, the BSP looks to provide a coherent, consistent, and comprehensive set of regulations to encourage wider investor and consumer participation in Islamic banking and finance.  The regulator will also promote financial inclusion to Muslim Filipinos who do not subscribe to conventional banking.

Source: Philstar