VARIOUS government agencies on Monday announced that they have approved the establishment of the Shari’ah Supervisory Board (SSB) in the Bangsamoro Autonomous Region in Muslim Mindanao (Barmm).
In a statement released by the Bangko Sentral ng Pilipinas (BSP), the central bank said they—along with the Department of Finance, the National Commission on Muslim Filipinos, and the Bangsamoro Government—approved the Joint Circular (JC) and Memorandum of Agreement (MOA) to effectively put up the SSB.
This, according to the government agencies involved, marks a milestone in the whole-of-government approach in promoting Islamic banking and finance in the country.
“The JC and MOA formalize the agencies’ collaborative efforts in Shari’ah governance, following the government’s strategy to provide an enabling environment for the Islamic banking industry,” BSP Governor Benjamin E. Diokno said. “The SSB will provide essential Shari’ah compliance oversight to enable Islamic finance to flourish in the country.”
The joint initiative implements relevant provisions of Republic Act (RA) 11054 (An Act Providing for an Organic Law for the Autonomous Region in Muslim Mindanao) on the promotion of Islamic banking and finance in the BARMM.
“The SSB’s primary function is to issue Shari’ah opinions on Islamic banking transactions and products in the Barmm. At the same time, the BSP, financial institutions, and other stakeholders may request the SSB to provide Shari’ah opinions on matters related to Islamic banking and finance,” the BSP said.
The SSB currently complements the Shari’ah Advisory Council of Islamic banks required under the BSP’s licensing and Shari’ah governance frameworks, under BSP Circulars 1069 and 1070 dated December 27, 2019.
“RA 11439 or the Islamic Banking Law provides flexibility for the government to convert the SSB into a national body, if warranted, such as when there is already a critical number of Islamic banking players in the financial system.” Diokno said.
Earlier this month, the governor said they currently have policy studies on Islamic banking in the pipeline to ramp up efforts to establish an inclusive and sustainable Islamic finance ecosystem.
These policy studies are said to include research on profit sharing investment accounts, minimum capital requirements of Islamic banking units (IBUs), and the capital adequacy ratio of Islamic banks and IBUs.
“We aim to provide a supportive and enabling environment for Islamic banking that can operate alongside the conventional banking system,” Diokno earlier said.