Section 2Sec./Art. 2

Definition of Terms.

(a) As used in this Act:

(1) Shariah refers to the practical divine law deduced from its legitimate sources: the Quran, Sunnah, consensus of Muslim scholars, analogical deduction and other approved sources of Islamic law;

(2) Current account refers to the total deposits at an Islamic bank which are repayable on demand and compliant with Shariah principles;

(3) Investment account refers to the total funds placed by an investor with an Islamic bank for a fixed period of time under an agreement to share the profits and losses on the investment of such funds in accordance with the principles of Shariah;

(4) Islamic hanking business refers to a banking business with objectives and operations that do not involve interest (riba) as prohibited by the Shariah and which conducts its business transactions in accordance with Shariah principles;

(5) Islamic banking unit refers to a division, department, office or branch of a conventional bank that conducts business in accordance with the principles of the Shariah;

(б) Participation refers to any agreement or arrangement under which the mode of joint investments or specific transactions shall not involve the element of interest charge other than as percentage share in profits and losses of business and which is conducted in accordance with the principles of the Shariah;

(7) Riba has the meaning assigned to it by Islamic law and jurisprudence as expounded by authoritative sources; in the context of banking business, the term refers to the receipt and payment of interest, including in the various types of lending and borrowing and in the exchange of currencies on forward basis; and

(8) Savings account refers to an account reflecting the total deposits at an Islamic bank which normally require the presentation of passbooks or in lieu thereof, such other legally acceptable documents approved by the Bangko Sentral ng Pilipinas (Bangko Sentral) for deposit or withdrawal of money.

(b) The Monetary Board may, by regulation, further define or clarify the terms used in this Act or commonly used in Islamic banking transactions, consistent with the declared State policy and taking into consideration the peculiar characteristics of Islamic banking.