Two years after the creation of the Shari’ah Supervisory Board (SSB) in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM), the SSB conducted its first board meeting -- dubbed “historic” by the central bank – to help grow Islamic banking transactions and products in Mindanao and the rest of the Philippines.

BSP Governor Eli M. Remolona Jr., in a statement issued Tuesday, Jan. 16, said the SSB conducted its inaugural meeting last Dec. 15, 2023. Remolona was hopeful the SSB will add another level to the growth of Islamic banking and finance in the country.

“The SSB is a convergence of expertise in Islamic jurisprudence and contemporary finance. It will strengthen Shari’ah oversight on Islamic banking and finance while complementing existing conventional governance frameworks," Remolona said during the inaugural meeting.

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, and analogical sources of lslamic law.

With SSB, the Philippines is now among a handful of jurisdictions that have institutionalized a Shari'ah governance oversight body for Islamic banking and finance.

The SSB is intended to further promote Islamic banking and finance through prudential regulatory reforms, inter-agency cooperation, capacity building, and information campaign.

During the meeting, the Bangsamoro Government announced the appointments of Dr. Muhammad Nadzir S. Ebil and Dr. Ashraf Bin Md Hashim as SSB’s Chairperson and Deputy Chairperson, respectively. Both are alumni of the Islamic University of Madinah, Kingdom of Saudi Arabia, according to the BSP in a statement Tuesday, Jan. 16.

The BSP also said that Ebil, who currently serves as the Dean of Graduate Studies and College of Shari’ah at Jamiat Cotabato and Institute of Technology and a Jurist of the Bangsamoro Darul-Ifta’ which is an Islamic Advisory Council in the BARMM.

Hashim, meanwhile, is internationally recognized as the Chairman of the Shari’ah Advisory Council of Bank Negara Malaysia, as well as the Chairman of the Shari’ah Committee of Bursa Malaysia, and member of the Shari’ah Advisory Council of Securities Commission Malaysia.

“The appointment of Dr. Ebil and Dr. Hashim guarantees a partnership of local and international Shari’ah scholars at the helm of the SSB,” said the BSP.

Other members of the SSB from the founding agencies are BSP Assistant Governor Arifa A. Ala; Finance Undersecretary Bayani H. Agabin; Bangsamoro Government Minister Mohammad S. Yacob; and Division Chief Aleah S. Marabur of the National Commission on Muslim Filipinos (NCMF).  

Private sector representatives are also included, such as: Dr. Rusni Binti Hassan, who serves as Dean of Institute of Islamic Banking and Finance at International Islamic University Malaysia and Chairperson of Shari’ah Committees of various Islamic financial institutions in Malaysia; Abdulwahid A. Inju, Mufti of Province of Tawi-Tawi; and Salih D. Musa, Philippine representative to the World Assembly of Muslim Youth.

The SSB and its creation is based on the joint circular among its founding agencies the BSP, the Department of Finance, NCMF and the Bangsamoro Government.

“The SSB was formed to implement the founding agencies’ shared mandate under Republic Act No. 11054 or the Bangsamoro Organic Law on the promotion of Islamic banking and finance in the BARMM and to complement the BSP’s Shari’ah Governance Framework for Islamic banks and Islamic banking units,” said the BSP.

Its mandate is to issue opinions on Islamic banking transactions and products in the BARMM. The BSP, financial institutions, and other stakeholders may also request the SSB to provide opinions on matters related to Islamic banking and finance, said the central bank.

The SSB is a crucial partnership between the private sector and government agencies to push for Islamic banking until a viable Islamic finance ecosystem is in place alongside the conventional banking sector.

It will serve as a strong arm in reinforcing BSP's commitment on financial stability, grounded on sound corporate governance, in the delivery of financial products and services in the country.

In addition, the SSB will boost trading activities, participatory financing schemes and entrepreneurial undertakings with financial institutions that are committed to provide end-to-end Shari'ah compliant products and services.

Last August 2023, the BSP announced that it has issued the country’s first Islamic banking unit or IBU license granted to a conventional or non-Muslim bank.

Before the first IBU license, the Philippines only has one Islamic bank which is the state-owned Al Amanah Islamic Investment Bank. It is a subsidiary of the Development Bank of the Philippines and created by a presidential decree in 1973.