Duterte signs law regulating Islamic banking in PH
MANILA, Philippines—President Rodrigo Duterte has signed into law a measure creating a sound legal and regulatory framework for Islamic banks in the country.
Duterte signed Republic Act 11439 last August 22, a copy of which was shared with the media on Friday.
The new law refers to the establishment of Islamic banks, which operations will not involve interest – prohibited under the Shari’ah law, and will conduct its business transactions in accordance to Shari’ah principles.
Shari’ah refers to “the practical divine law deduced from its legitimate sources: the Qur’an, Sunnah, consensus of Muslim scholars, analogical deduction, and other approved sources of Islamic law.”
RA 11439 allows the Monetary Board to authorize the establishment of Islamic banks in the Christian-dominated Philippines and authorizes conventional banks to engage in Islamic banking arrangements.
It also authorizes foreign Islamic banks to establish operations in the country with the Monetary Board regulating the number of participants in the Islamic Banking system.
The Bangko Sentral ng Pilipinas, meanwhile, is mandated to exercise regulatory powers and supervision over the operations of Islamic Banks and is tasked to issue the implementing rules and regulations of Islamic banking.
Islamic banks are required to constitute a Shari’ah advisory council which will “render advice and review applications of Shari’ah principles, but it shall not involve itself directly in the operations of the Islamic bank or engage in any activity which may give rise to conflict of interest.” /muf
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