BSP Signs Agreement to Create Shari’ah Supervisory Board for PH Islamic Banking

The Bangko Sentral ng Pilipinas (BSP) has signed a joint memorandum agreement with the Department of Finance, the National Commission on Muslim Filipinos, and the Bangsamoro government to establish the Shari’ah Supervisory Board which will oversee Islamic banking in the Philippines. The agreement was signed by the parties involved during the recent Muslim holiday, Eid’l Fitr.

“For us in the BSP, Islamic banking promotes our financial inclusion agenda as it is a tool for poverty alleviation and inclusive growth. For the DOF, it opens investment opportunities for the Southern Philippines and complements ongoing government initiatives to develop the BARMM [Bangsamoro Autonomous Region in Muslim Mindanao],” says BSP Deputy Governor Chuchi Fonacier.

Unlike conventional finance, Islamic finance forbids paying and receiving interest as this goes against Shari’ah law. Instead of interest, Islamic banks garner profit from their shares from borrowing businesses. Muslims are also prohibited from engaging in highly speculative investments such as futures markets, as well as gambling.

BSP Governor Benjamin Diokno remarks that the Shari’ah Supervisory Board will generate a competitive advantage for both the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) and the Philippines. The governor also says that besides the creation of the SSB, much more needs to be done in terms of financial inclusion, poverty alleviation, and economic development. “The collaboration does not end with the signing of the joint circular and memorandum of agreement. The government agencies and private sector must continue to collaborate until our vision of an Islamic banking system is realized,” Diokno adds.

“A respected Islamic bank can help the Philippines attract investments from Muslim investors, particularly in Mindanao. This will support our efforts to develop the Autonomous Region of Muslim Mindanao as a dynamic part of Filipino Society,” says Yusoph Mando, an officer in charge at the National Commission on Muslim Filipinos (NCMF).

The BARMM was the fastest-growing region in the Philippines last 2021, according to the Philippine Statistics Authority (PSA). Refinitv, a finance research group, has also estimated the international Islamic finance industry’s value at $3.374 trillion last 2020 and is projecting its value to grow up to $4.94 trillion by 2025.

Source: ABS CBN News