Rules governing the operation of Islamic Banking Units (IBUs) have been amended to encourage more players and help boost the country’s Islamic banking sector.

The Bangko Sentral ng Pilipinas (BSP), in a press release on Wednesday, clarified that IBUs need not have a separate capital requirement since these are just a division or department of a conventional bank, even if it follows the principles of Shari’ah banking, which, among others, prohibit the imposition of interest on borrowings.

It also said that “processing fee for an IBU license will also follow the fees corresponding to the bank’s category.”

BSP said the new rules “also institutionalize the three-year observation period, starting from the launch of Islamic banking operations, for submitting prudential reports on Islamic banking operations” and these units “are no longer required to submit a separate liquidity report” on top of the ones submitted by the mother bank.

“This gives industry players time to get familiar with the reportorial requirements,” it said.

BSP Governor Eli Remolona said these changes are aimed “to encourage more players to enter and help develop the Philippine Islamic finance market.”

“This supports our goals of inclusive growth and a more diverse financial sector,” he said.