The Bangko Sentral ng Pilipinas (BSP) is collaborating with the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) to promote and encourage Islamic banking in the Philippines.
BSP Governor Benjamin E. Diokno in a statement Wednesday, Dec. 15, said working closely with AAOIFI, an Islamic finance standard-setting body, could accelerate the growth of Islamic finance here.
With the recent signing of a memorandum of understanding (MOU) with AAOIFI, Diokno said this will “cover the possible adoption of relevant AAOIFI standards by the local Islamic banking and finance industry, and cooperation in the areas of capacity building and technical assistance.”
He also said that “BSP initiatives towards an enhanced Islamic banking and finance industry are in line with the vision of Republic Act No. 11439 or the Islamic Banking Law enacted in August 2019.”
“As banking system supervisor, the BSP recognizes the importance of establishing formal ties with AAOIFI as this strengthens the BSP initiatives on Islamic banking and finance in the country,” Diokno added.
BSP Deputy Governor Chuchi G. Fonacier and Sheikh Ebrahim Bin Khalifa Al Khalifa, Chairman of the AAOIFI Board of Trustees, signed the MOU during a virtual ceremony held as part of the AAOIFI–Islamic Development Bank 16th Annual Conference.
The AAOIFI is a non-profit standard-setting body established to develop, maintain, and promote standards on Shari’ah, accounting, auditing, governance, and ethics for Islamic financial institutions.
The BSP said 45 countries support the organization including central banks and regulatory authorities, financial institutions, accounting and auditing firms, and legal firms.
In addition to the MOU with AAOIFI, BSP is also an associate member of the Islamic Financial Services Board which also issues global prudential standards for the Islamic financial services in banking, capital markets and insurance.
The BSP earlier this year have started to approach banks, especially the large lenders both local and foreign, if they are interested in establishing an Islamic bank or an Islamic banking unit (IBU).
In January 2020, before COVID-19 pandemic happened, there were three banks – two local big banks and one foreign bank – already talking with BSP for IBU plans.