In a move poised to significantly bolster the burgeoning Islamic banking and finance sector in the Philippines, the Shari’ah Supervisory Board (SSB) of the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) has officially unveiled comprehensive guidelines 1 governing requests for Shari’ah opinions.
This landmark announcement marks a crucial step towards establishing a robust and ethically sound Islamic financial ecosystem within the region and beyond, aligning with national aspirations to broaden financial inclusion and cater to the needs of Muslim Filipinos.
New Shari’ah counselors taking their oath at the Supreme Court
The newly released guidelines delineate a clear pathway for financial institutions and other stakeholders to seek expert rulings from the SSB on the Shari’ah compliance of their Islamic banking transactions and product offerings.
This proactive measure underscores the BARMM government’s commitment to ensuring that all Islamic financial activities adhere strictly to Islamic principles, fostering trust and transparency within the industry.
The SSB, a pivotal body established through a collaborative effort between the Bangko Sentral ng Pilipinas (BSP), the Bangsamoro Government, the Department of Finance, and the National Commission on Muslim Filipinos in April 2022, holds the authority to issue authoritative opinions on a wide array of Islamic financial matters.
Its mandate extends to evaluating the Shari’ah legitimacy of products and services proposed by Islamic banks, takaful 2 and retakaful 3 operators, and other entities operating within the BARMM. Furthermore, the SSB will also respond to inquiries from the BSP and other stakeholders seeking clarity on Islamic finance principles.
Introducing clearer financial procedures to ensure compliance
The recently published guidelines meticulously outline the procedures for submitting formal requests for Shari’ah opinions. Recognizing the need for accessibility and efficiency, the SSB will accept submissions via both traditional postal mail and a designated official email address managed by the SSB Secretariat.
This secretariat will play a central role in overseeing the entire process, from the initial submission to the final issuance of the Shari’ah opinion, ensuring a streamlined and accountable workflow.
The scope of matters eligible for Shari’ah review under these guidelines is broad, encompassing the intricate details of Islamic banking products, investment instruments adhering to Shari’ah, and the operational frameworks of Islamic financial institutions. Importantly, the guidelines clearly identify the parties eligible to seek these crucial opinions.
This includes not only fully-fledged Islamic banks but also takaful and retakaful operators – vital components of a comprehensive Islamic financial system.
Recognizing the collaborative nature of financial development, the guidelines also extend eligibility to regulatory bodies, non-governmental organizations, government agencies, cooperatives, and other financial and non-financial institutions actively engaged in offering Islamic finance products.
Laying the groundwork for nationwide Shari’ah finance adoption
This inclusive approach signals a commitment to fostering a widespread understanding and adoption of Shari’ah-compliant finance across various sectors.
The establishment of the SSB and the issuance of these guidelines are deeply rooted in the Bangsamoro Organic Law (Republic Act No. 11054), which mandates the promotion of Islamic banking and finance within the autonomous region.
This initiative also strongly complements the broader national policy articulated in the Islamic Banking Law (Republic Act No. 11439), which aims to cultivate a dynamic and resilient Islamic banking ecosystem throughout the Philippines.
Furthermore, the SSB’s work is intrinsically linked to and supportive of BSP Circular No. 1070, issued in December 2019.
This circular provides the Shari’ah Governance Framework for Islamic banks and Islamic banking units operating in the country, setting the foundational principles for Shari’ah compliance and oversight. The BARMM’s SSB provides a crucial regional mechanism for implementing and reinforcing these national guidelines, ensuring a consistent and rigorous application of Shari’ah principles.
In the end, the development of the Shari’ah Governance Framework for Islamic banks in the Philippines has the potential to contribute to the country’s economic growth, social development, and financial inclusion. By tapping into the vast potential of Islamic banking, the Philippines can unlock new opportunities and create a more prosperous future for its people.
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1 SSB Circular No. 1 on the Guidance Note on Submission of Requests for Shari’ah Opinion 2 Islamic alternative to conventional insurance 3 Islamic reinsurance.
2 Islamic alternative to conventional insurance.
3 Islamic reinsurance.