During Tuesday's session, the lower chamber overwhelmingly approved on third and final reading House Bill 8281 with 221 affirmative votes.
The bill defines Islamic banking business as a banking business whose objectives and operations do not involve interest (riba) which is prohibited by the Shari'ah and which conducts its business transactions in accordance with Shariáh principles.
Under the bill, the Bangko Sentral ng Pilipinas' (BSP) Monetary Board may authorize the establishment of Islamic banks. It may also authorize conventional banks to engage in Islamic banking arrangements, including structures and transactions, through a designated Islamic banking unit within the bank.
Foreign Islamic banks may also be authorized to establish banking operations in the Philippines under any of the modes of entry provided under Republic Act 7721 or "An Act Liberalizing the Entry and Scope of Operations of Foreign Banks in the Philippines and for Other Purposes".
The BSP shall have supervision and regulatory powers over the operations of Islamic banks.
The bill mandates Islamic banks to create internal advisory councils to review, advise, and generally to ensure their compliance with Shariah banking principles.
Islamic banks shall also be granted general corporate powers and such other powers necessary to carry out the business of banking.
The bill provides for neutrality in the tax treatment between Islamic banking transactions and equivalent conventional banking transactions.