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Manila Bulletin devider Business devider Banking & Finance devider Islamic banks now need ₱3-billion capital—BSP

Islamic banks now need ₱3-billion capital—BSP

Published Oct 21, 2025 04:05 pm

At A Glance

  • Full-fledged Islamic banks are required to meet the minimum capital requirement for a universal bank (UB) of at least ₱3 billion, while conventional banks that meet the capital standards for their category may secure a license to operate an Islamic banking unit (IBU), according to the new central bank rule.
The Bangko Sentral ng Pilipinas (BSP) is raising stakes for Islamic finance, requiring full-fledged Islamic banks to hold a minimum capital of ₱3 billion—matching universal banks—while allowing conventional banks to open an Islamic banking unit (IBU), provided they satisfy existing capital standards.
Based on the latest Circular published by the BSP, “the minimum capitalization requirements for a UB shall apply to a full-fledged IB [Islamic bank].”
Under the 2022 Manual of Regulations for Banks (MORB), universal banks with only a head office must maintain at least ₱3 billion in capital. Banks with up to 10 branches need ₱6 billion, P15 billion for banks with up to 100 branches, while those with over 100 branches must have ₱20 billion.
“A conventional bank that complies with the capital requirements applicable to its banking category may be allowed to operate an IBU," the BSP further said.
Islamic banks are allowed to take necessary steps to list their shares on any registered stock exchange.
In terms of securing an IBU license, the central bank said an applicant “shall submit a corporate plan which describes the organization and business model to be used in delivering Islamic banking products and services to its clients.”
Meanwhile, the BSP has warned that the authority to establish an IBU “shall be automatically revoked if the IBU is not commenced for business within one year after receipt by the bank of the notice of approval by the Monetary Board [MB] of their application.”
Banks must submit their Financial Reporting Package (FRP) along with a Supplemental FRP Report for IBs and IBUs, which maps accounts specific to Islamic banking operations to existing FRP templates.
“There shall be an observation period of three years from the commencement of Islamic banking operations to allow new IBs and IBUs to familiarize with data requirements and make necessary system adjustments before full implementation.”
The BSP said it is taking a gradual approach in enforcing liquidity standards and ratios for IBs and IBUs units to account for their unique operations and the limited availability of suitable liquidity instruments.
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