MANILA -- President Rodrigo Duterte has signed a law on a regulatory framework for Islamic banking in the country following the creation of an expanded Bangsamoro Region.
Republic Act No. 11439 aims to provide greater financial access to Muslim businessmen with financial arrangements that adhere to Shari'ah principles.
The law was signed by President Duterte on Aug. 22, a copy of which was released only by Malacañang on Friday.
It seeks to regulate and organize Islamic banks by placing it under the supervision of the Bangko Sentral ng Pilipinas.
The measure is expected to widen access to banking services for Filipino Muslims including those from the Bangsamoro region, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said.
"With a well-defined regulatory framework now in place, the BSP looks forward to seeing greater participation in Islamic financing by both domestic and foreign banks," Diokno said.
"This is a great stride in our financial inclusion mandate," he said.
Under the measure, an Islamic bank is defined as a business with objectives and operations that do not involve interest or riba, which is prohibited by the Shari'ah.
Islamic banks, therefore, are prohibited from participating in profit and loss of savings accounts unless otherwise authorized by the account holders to be invested.