AhlulBayt News Agency (ABNA): The Bangko Sentral ng Pilipinas (BSP) has taken a significant step to develop the country’s Islamic finance sector by revising and simplifying Islamic banking guidelines. The reforms aim to encourage conventional banks of all tiers to enter the Sharia-compliant banking sector more easily.
Under the new regulations, conventional banks that meet capital requirements appropriate to their banking category can establish “Islamic banking units” without additional barriers. The central bank has removed the requirement to maintain separate capital for these units, instead allowing their capital to be included within the parent bank’s capital structure. This decision substantially reduces the cost of entering the Islamic finance market.
To support new entrants, the BSP has introduced a three-year “supervisory and compliance transition” period from the start of Islamic banking operations, during which banks can familiarize themselves with reporting obligations and regulatory data requirements, including supplementary financial reporting packages.
Additionally, under the new framework, Islamic banking units are no longer required to provide separate liquidity reports and may consolidate their liquidity positions within the parent bank’s overall reports. Monetary authorities have emphasized that, while the domestic Islamic banking sector is still in its early stages, a flexible regulatory compliance approach will be maintained to foster growth.
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