Islamic banking bill hurdles House panel

The House Committee on Banks and Financial Intermediaries on Tuesday approved an unnumbered substitute bill which seeks to expand the Islamic banking system in the Philippines for greater financial inclusion. (File photo: House of Representatives of the Philippines/Facebook)

MANILA — A bill seeking to organize and regulate Islamic banks in the country has hurdled committee level at the House of Representatives.

The House Committee on Banks and Financial Intermediaries on Tuesday approved an unnumbered substitute bill which seeks to expand the Islamic banking system in the Philippines for greater financial inclusion.

Eastern Samar Rep. Ben Evardone, committee chairman, said the bill’s passage would complement the Bangsamoro Organic Law.

“This will help further the efforts to help our Muslim brothers in Mindanao and elsewhere in the country,” said Evardone.

The bill defines Islamic banking business as a banking business whose objectives and operations do not involve interest (riba) which is prohibited by the Shari’ah and which conducts its business transactions in accordance with Shariáh principles.

Under the bill, the Bangko Sentral ng Pilipinas’ (BSP) Monetary Board may authorize the establishment of Islamic banks. It may also authorize conventional banks to engage in Islamic banking arrangements, including structures and transactions, through a designated Islamic banking unit within the bank.

Furthermore, foreign Islamic banks may also be authorized to establish banking operations in the Philippines under any of the modes of entry provided under Republic Act No. 7721 or “An Act Liberalizing the Entry and Scope of Operations of Foreign Banks in the Philippines and for Other Purposes”.

The BSP shall have supervision and regulatory powers over the operations of Islamic banks.