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BSP mulls lower capital for Islamic banks

8 Apr 2022 | Friday Manila Buletin

The central bank is planning to reduce the required capital to set up an Islamic bank or Islamic banking unit (IBU), currently pegged at a minimum P3 billion up to P20 billion depending on the number of branches, to encourage local and foreign banks in the country to go into Islamic finance.

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said on Thursday, April 7, that the capital requirement is one of the reasons cited by banks why there is still no application to put up IBUs or Islamic banks.

A hefty capital is needed to establish a Sha’riah Governance Framework (SGF) and “this requirement entail resources,” said Diokno.

This is why the BSP is currently studying to lower the minimum capital requirement for Islamic banks and IBUs.

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