House Islamic banking bill clears committee

A BILL authorizing the Bangko Sentral ng Pilipinas (BSP) to regulate Islamic Banks cleared two House committees, putting the country on track to harmonize rules for the banking segment with oher countries in the region.
“Islamic banks will be regulated in the same way as the other banks under the jurisdiction of the BSP, but the BSP will promulgate rules specific to how Islamic banking and finance practices shall be conducted,” newly installed Banks and Financial Intermediaries Committee chair Henry C. Ong of the second district of Leyte said in a statement Friday.
If enacted, House Bill 8281 will align the Philippines with other Association of Southeast Asian Nations members with Islamic Banks.
“More Islamic banks mean more direct investment, including investment by international Islamic banks especially those here in ASEAN, the Middle East, and even Africa,” Mr. Ong said.
Islamic Banks, as provided, must be licensed as universal banks to be allowed to offer current, savings and investment accounts, among others.
Such banks may also issue “sukuk” bonds and carry out financing and joint investment operations through “mudarabah” or partnership, “musharakah” or joint venture, and ”ijara” or lease arrangements, among others.
The measure also ensures “neutrality in the tax treatment of Islamic banking transactions and equivalent conventional banking transactions.”
A Shari’ah Advisory Council, composed of individuals knowleadgeable in both the Shari’ah and banking principles, will also be constituted to provide advice and review compliance of Islamic Banks.
The Substitute Bill consolidated House Bills 492 and 3975, authored by Resigned AMIN party-list Rep. Sitti Djalia A. Turabin-Hataman and Speaker Gloria Macapagal Arroyo, respectively.
The bill was approved by the House Committees on Banks and Financial Intermediaries as well as Ways and Means and is now awaiting Rules Committee recommendation for plenary action.
Its counterpart measure, Senate Bill 668, the proposed Philippine Islamic Financing Act, authored by Senator Paolo Benigno A. Aquino, IV, remains pending at the committee level.