The Bangko Sentral ng Pilipinas (BSP) has approved the prudential reporting framework for Islamic banks and banking units as part of its initiatives to promote Islamic banking in the country.
BSP Governor Benjamin Diokno said the reporting framework sets the accounting treatment of common Islamic banking arrangements.
“The reporting framework is aligned with the BSP’s single regulatory and supervisory framework, which highlights that existing regulations apply to Islamic banks and banking units insofar as these are consistent with Shari’ah principles,” Diokno said.
According to Diokno, the framework also considers the applicable provisions of the Philippine Financial Reporting Standards to ensure a level playing field for Islamic banking and conventional banking.
The guidelines require an Islamic banking unit to segregate its books and records from those of its parent conventional bank for transparency and to ensure that the transactions of the IBU are carried out in a manner that meets Shari’ah requirements.
Aside from the existing Financial Reporting Package (FRP), Islamic banks and banking units are required to submit a supplemental report that captures the details of accounts that are unique to them.
The framework also provides guidelines on how selected accounts of Islamic banks and banking units will be mapped onto the FRP to ensure fair presentation, consistency, and comparability of reports.
An observation period on the submission of the reports will commence from the reporting period of end-June 2022 until end-December 2023 with full implementation on end March 2024.
The prudential reporting framework is part of the series of regulations being issued by the BSP in keeping with Republic Act 11439 or An Act Providing for the Regulation and Organization of Islamic Banks, which was signed into law in August 2019.