BSP streamlines capital rules for Islamic banking units

The Bangko Sentral ng Pilipinas (BSP) is streamlining regulations on Islamic banking in the country, easing capitalization requirements for Islamic banking units (IBUs) while enhancing reporting and liquidity risk standards in line with global best practices.

- By KEISHA TA-ASAN

In a draft circular posted for public comment, the BSP proposed amendments to several sections of the Manual of Regulations for Banks, covering licensing, prudential reporting and liquidity requirements for full-fledged Islamic banks and IBUs operated by conventional banks.

One key amendment removes the previously required five-year transition period and the need for a capital build-up plan for IBUs.

"The minimum capitalization requirements for a universal bank shall apply to a full-fledged Islamic bank. A conventional bank which complies with the applicable capital requirements, may be allowed to operate an IBU, subject to compliance with the minimum requirements thereon," the regulator said.