The Macroeconomy and Finance Committee (MFC) XI conducted its 1st quarter CY 2022 meeting on March 3, 2022 via Zoom, presided by Regional Development Council (RDC) XI Private Sector Representative (PSR) for Information and Communication Technology (ICT) and MFC XI Chairperson Atty. Samuel R. Matunog.
Atty. Normina Datudacula of Bangko Sentral ng Pilipinas (BSP) Islamic Banking Supervision Group presented an overview on Islamic Banking and Finance in the Philippines. The operations of the Islamic Banking and Finance are carried according to Shari’ah principles prohibiting the Riba or charged interest and the financing of business activities prohibited by Islam such as gambling, intake of alcohol and pork products, and related to narcotics and weapons. The central role of Islamic banking is to operate as a trader, and depositors are considered investors. Islamic banks earn through trading activities such as sale of commodities, leasing of assets and provision of services. Instead of receiving interest from deposits like in conventional banks, depositors of Islamic banks receive shares in the profit or loss of the banks’ trading activities. The establishment of a comprehensive Islamic finance industry in the country is considered vital in promoting financial inclusion, especially that Bangsamoro Autonomous Region in Muslim Mindanao (BARMM), where majority of the Muslim population in the country reside, is considered the most unbanked region. This is attributed to the hesitancy of the Muslim population to engage in an interest-based banking system. Thus, the Islamic Banking Law (RA 11439), which provides the regulation and organization of Islamic Banks in the country, was enacted in August 2019. An Inter-agency Working Group composed of different government agencies was also created in order to establish the necessary financial infrastructure and ecosystem for Islamic banking to thrive in the country.
Ms. Imee Cabrera of BSP Financial Supervision Department presented the guidelines on licensing and registration of pawnshops and money service businesses (i.e., remittance and transfer centers, foreign exchange centers). This initiative was instituted to combat money laundering and regulate money exchanges, fund transfers and remittances. The BSP and the Department of the Interior and Local Government issued 2 Memoranda of Agreement in 2009 and Joint Memorandum Circular (JMC) No. 1 s. 2019 (Guidelines in the Issuance of Business License/Permit for Head Offices and Branches of Pawnshops and Money Services Businesses and on Information Sharing with the BSP) to institute information sharing between the BSP and the Local Government Units (LGUs) on the licensing and registration of pawnshops and money service businesses. This initiative is considered significant given that Philippines is under the grey list of countries under increased monitoring for money laundering and terrorism financing risks. Through the sharing of information by LGUs, BSP can identify pawnshops and money service businesses with BSP registration and business permits and those that lack pre-requisite requirements. As of February 2022, BSP reported that the LGU participation rate in Davao Region on the information sharing on Pawnshops and Money Services Businesses is only 83 percent. With this, the Committee recommended to the Regional Development Council XI to support the full implementation of the BSP-DILG JMC No. 1 s. 2019 and enjoin all Davao Region LGUs to share information on pawnshops and money service businesses and regularly submit reports to the BSP. -Pamela N. Yparraguirre, NEDA XI