By Lee C. Chipongian Three banks – two are local big banks and one is a foreign bank – have expressed an interest to establish Islamic banking units (IBUs) in the country. Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said the central bank has jumpstarted the implementation of the Islamic Banking law and while he could expect more IBUs and Islamic bank branches in the future, they are not setting a limit to how many could enter the market at this point. “It’s premature to set a limit, we only have three (that are interested) at the moment. Let’s see if we are setting a limit for banks interested to come in, both domestic or from external sources,” Diokno said Thursday. The three banks are all conventional banks with established banking experience in the Philippines. Atty. Arifa A. Ala, BSP Managing Director for Financial Supervision Subsector III, disclosed that so far, three banks are exploring options for IBUs. “There are banks both foreign and domestic banks – that have signified their interests in Islamic banking and they are in the stage of exploring,” Ala said. She added that the issuance of BSP circulars or guidelines for IBUs and Islamic banks have “exposed them to the expectations of the BSP in terms of Shari’ah governance because that is basically the main difference between Islamic banking and conventional banking.” The regulations set by the BSP is designed to have Islamic banks operating alongside the conventional banks and basically, both are under the same regulatory and supervisory approach, except that Islamic banking operations are guided by the Shari’ah Governance Framework (SGF). The regulations cover corporate governance and consumer protection, the licensing framework on the establishment of Islamic banks and IBUs. While the licensing framework on the establishment of conventional banks and branches has been adopted, there are supplementary requirements to Islamic banking operations based on Shari'ah compliance. The Islamic banking law or Republic Act No. 11439 was signed into law last August 22, 2019. Last December, the BSP released the guildelines for the country’s Islamic banks and IBUs and also approved the SGF to ensure compliance to a set of “minimum” BSP rules. These rules are in BSP Circular No. 1069 while the SGF is under BSP Circular No. 1070. The SGF ensures that the Islamic bank or IBU adheres to Shari’ah principles and each Islamic bank or IBU must include a Shari'ah Advisory Council that will include “persons who are competent in the field of Shari'ah and banking, finance, law or such other related disciplines,” according to the circular. Shari'ah, which defines a set of rules and the lslamic financial system, refers to the practical divine law deduced from its legitimate sources such as the Qur'an, Sunnah, consensus of Muslim scholars, analogical sources of lslamic law. In the Philippines, the potential market for Islamic banking products mainly comprises the Muslim population which account for about 10 percent of Filipinos.