Bill on Islamic banking awaits Duterte signature

MANILA, Philippines — The Senate and the House of Representatives are set to transmit to Malacañang the Congress-approved bill that seeks to create an Islamic bank in war-torn Mindanao, especially now that a new Bangsamoro independent region has been established. 

The measure, likewise, aims to attract more investments in the country’s banking sector and complement the newly created Bangsamoro Autonomous Region in Muslim Mindanao which replaced the three-decades-old ARMM. 

Sitti Turabin-Hataman, wife of former ARMM governor Mujiv Hataman and incoming mayor of Isabela City in Basilan, was the main author of House Bill 8281, otherwise known as “An Act Providing for the Regulation and Organization of Islamic Banks.”

The bill refers to an Islamic bank as a business entity whose objectives and operations do not involve the usual bank interest which is prohibited by the Shari’ah and which conducts its business transactions in accordance to Shari’ah principles.

The Senate adopted the House-version of the bill and will no longer need the approval or the convening of the bicameral conference committee that usually irons out conflicting versions of a bill before it is forwarded to the President for his signature. 

The measure was overwhelmingly approved by the House in November 2018. 

Sitti Hataman thanked the Senate, led by outgoing Senator, and incoming Sorsogon governor, Francis “Chiz” Escudero for sponsoring the measure and adopting the House version without amendments, 

“We’d like to invite everyone, Muslim and non-Muslims, to take a closer look at Islamic banking as an alternative-financing modality, instrument and facility. This is very good for the economy, considering the enormous potentials of the halal industry. As we enter the ASEAN integration, we need to attain financial inclusion for the Muslims in the country,” Hataman said.

HB 8281 (An Act Providing for the Regulation and Organization of Islamic Banks) seeks to regulate and organize Islamic banks by mandating the Bangko Sentral ng Pilipinas to supervise, license and regulate the operations of Islamic banks.

The Monetary Board may authorize the establishment of Islamic banks and allow conventional banks to engage in banking – provided the banks create a system that will separate their Islamic banking transactions from their regular business clients.

Under the measure, Islamic banks are allowed to perform banking services, such as accepting or creating current, savings accounts and investment accounts, accept foreign currency deposits, and acts as a correspondent banks and institutions among others. 

The Islamic banks shall be licensed and regulated in the same manner as a universal bank and the BSP shall issue the necessary rules and regulations governing Islamic banking.