Section 3Sec./Art. 3

Establishment of Islamic Banks.

(a) The 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: Provided, That the bank shall have a system for segregating the transactions of the Islamic banking unit from its conventional banking business.

(b) The Monetary Board may, under such rules and regulations as it may prescribe, authorize foreign Islamic banks to establish Islamic banking operations in the Philippines under any of the modes of entry provided for under Republic Act No. 7721, as amended, otherwise known as The Liberalization of Entry and Operations of Foreign Banks. The Monetary Board may regulate the number of participants in the Islamic banking system taking into account the requirements of the economy, the preservation of the stability of the system, and the maintenance of healthy competition.

(c) For purposes of this Act, the Al-Amanah Islamic Investment Bank of the Philippines, other Islamic banks, designated Islamic banking units of conventional banks, and foreign banks that are authorized to conduct business in accordance with the principles of Shariah shall be referred to collectively as Islamic Banks" or "Islamic banking system".