The Bangko Sentral ng Pilipinas (BSP) supports the development of Islamic banking and finance in the country, consistent with the goal of financial inclusion of all Filipinos. Islamic banking and finance serves everyone — granting Muslims much-needed access to financial services and providing non-Muslims with alternative banking and finance options.

By applying the same regulations to conventional and Islamic banks—with supplemental guidelines for the unique features of Islamic banking—the BSP enables a level playing field that allows Islamic banks to thrive and serve all Filipinos.

What's New

BSP Assistant Governor Ala Bags WOMANi Award Anew

January 24, 2024

Bangko Sentral ng Pilipinas (BSP) Assistant Governor (AG) Arifa A. Ala was named as one of the “Most Influential Women in Islamic Business and Finance” by WOMANi for the second consecutive year during ceremonies held in Dubai, United Arab Emirates, on 4 December 2023.

As BSP’s lead advocate for Islamic banking and finance, AG Ala was also recognized as “WOMANi Five-Star Alumni and Influencer” during the Cambridge Institute of Islamic Finance’s (IFA) prestigious “5th Annual WOMANi Symposium and Awards 2023.”

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Development of Islamic Banking in the Philippines

Audio-Visual Presentations on Islamic Banking

What is Islamic Banking?

Islamic Banking Products and Services

BSP's Role in the Development of Islamic Banking and Finance in the Country

Infographics on Islamic Banking

Islamic Finance Terms

Definition of terms


This refers to uncertainty.

Definition of terms


This refers to activities/items that are lawful or permitted under Shari’ah.

Definition of terms


This refers to activities/items that are unlawful or forbidden under Shari’ah.

Definition of terms

Ijara Financing (Operating Lease)

This refers to a binding contract of lease where the usufruct of an asset owned by the lessor is sold to the lessee against the payment of a specified amount of rent for a specified period.

Definition of terms

ljara Muntahia Bittamleek (Finance Lease)

This is a form of lease contract where the lessee (i.e., client) has an option to own the asset at the end of the lease period either through a separate: (l) sale contract for the purchase of the asset for a token consideration or payment of the market value; or (2) gift contract.

Definition of terms

Islamic Banking Unit

This refers to a division, department, office or branch of a conventional bank that conducts business in accordance with the principle of Shari'ah.

Definition of terms

Istisna’a Financing (Construction or manufacturing)

This refers to a sale contract where the seller (i.e., lB or IBU), based on the buyer's (i.e., client) request, sells an asset which is to be manufactured, developed or built according to the buyer's specifications and is to be delivered on a specified future date at a predetermined selling price.

Definition of terms


This refers to personal guarantee granted by a third party (Guarantor) in favour of a creditor guaranteeing the debt of a debtor. As a result, the creditor has the right of recourse on both the original debtor and the guarantor for the discharge of the debt obligations.

Definition of terms


This refers to gambling.

Definition of terms

Mudarabah (Silent Partnership)

This is a contract between the capital provider, in this instance the lB/|BU, and an entrepreneur (i.e., client) whereby the capital provider (rab-al-maal) contributes capital to an enterprise or activity to be managed by the entrepreneur (mudarib).

Profits are shared in an agreed ratio while losses are to be borne solely by the capital provider unless the losses are due to the mudarib's misconduct, negligence or breach of contract.

Definition of terms

Murabahah Financing (Profit-disclosed sale)

This refers to an arrangement where the lB/lBU buys a specified asset and subsequently sells that asset to a client at cost plus an agreed profit margin. Payment of the price may be on a deferred lump sum or installment basis.

Definition of terms

Musharakah Financing (Profit/loss Sharing)

This is a partnership contract between (in this instance) the lB/|BU and a customer to contribute capital to an enterprise, whether existing or new, or to ownership of an asset, on either a temporary or a permanent basis. Profits generated by that enterprise or real estate/asset are shared in accordance with the terms of the musharakah agreement while losses are shared in proportion to each partner's capital contribution.

Definition of terms

Qard (Loan)

This refers to a loan contract, under which the recipient has the obligation to return the exact initial loan value by the end of the contract term (if any).

Definition of terms


This refers to the holy book in Islam. The words of Allah SWT that are revealed to Prophet Muhammad SAW by the Gabriel AS in the Arabic language as His argumentation.

Definition of terms

Rahn (Pledge Contract)

This is contract under which one party (Pledgor) charges an asset in favour of the second party (Pledgee) in order to guarantee the repayment of a debt in case of the debtor’s failure or default in payment.

Definition of terms

Riba (Interest)

This generally refers to the receipt and payment of interest imposed/charged on various types of lending and borrowing and in the exchange of currencies on forward basis.

Definition of terms

Salam Financing (Sale with deferred delivery and spot payment)

Salam is a sale contract involving immediate payment of an agreed sale price and deferred delivery of a specified quality and quantity of a fungible commodity.

Definition of terms


This refers to the practical divine law deduced from its legitimate sources: the Qur'an, Sunnah, consensus of Muslim scholars (Ijma), analogical deduction (Qiyas) and other approved sources of Islamic law. Shari'ah defines a set of rules and principles governing the overall Islamic financial system.

Definition of terms

Shari'ah Advisory Council (SAC)

This refers to a bank's board-appointed committee that is empowered to consider, decide, and oversee all Shari'ah-related matters of the IB/IBU.

Definition of terms

Shari'ah Governance Framework (SGF)

The SGF is a comprehensive system that defines a set of appropriate institutional measures, arrangements, requirements, structure and policies of an lB or lBU to ensure that there is effective and independent oversight of Shari'ah compliance of its lslamic banking business. The SGF complements the existing regulatory corporate governance framework.

Definition of terms

Shari'ah Supervisory Board (SSB)

This refers to the supervisory body constituted to implement Article XIII Section 32 of Republic Act No. 11054, Bangsamoro Organic Law. The SSB shall issue Shari'ah opinions on Islamic banking transactions and Shari'ah products in the BARMM, and when requested by the BSP, financial institutions and other stakeholders. The SSB may advise the BSP on Shari'ah matters related to Islamic banking and finance and may also conduct Shari'ah compliance assessment, if the BSP deems it necessary.

Definition of terms

Shari'ah-compliant Securities

This refers to securities issued by listed companies which activities conform to the Shariah doctrines.

Definition of terms

Sukuk (lslamic Bonds)

This refers to certificates of equal value representing undivided shares in ownership of tangible assets, usufructs, and services or (in the ownership of) assets of particular projects or special investment activity that is undertaken in accordance with Shari'ah principles.

Definition of terms

Takaful (Islamic Alternative to Conventional Insurance)

This refers to a mutual guarantee for the commitment to donate a specified contribution to the participants' risk fund whereby a group of participants agree to support one another for losses arising from risks.

Definition of terms

Tawarruq (Commodity Murabahah) Financing

This refers to a cash generating facility involving the purchase by the client from the lB or IBU of a commodity at a deferred price determined through mark-up sale, and then selling the same commodity to a third party at spot and at a lower price in order to obtain cash.

Definition of terms

Wakala (Agency Contract)

It refers to an arrangement wherein one party known as the principal authorizes another party known as the agent or wakil to perform a particular task as may be delegated by the principal, with or without imposition of a fee.

Definition of terms

Zakat Payable

This refers to a Muslim's annual religious obligation of almsgiving for charitable purposes.

  • Gharar
  • Halal
  • Haram
  • Ijara Financing (Operating Lease)
  • ljara Muntahia Bittamleek (Finance Lease)
  • Islamic Banking Unit
  • Istisna’a Financing (Construction or manufacturing)
  • Kafala
  • Maysir
  • Mudarabah (Silent Partnership)
  • Murabahah Financing (Profit-disclosed sale)
  • Musharakah Financing (Profit/loss Sharing)
  • Qard (Loan)
  • Qur'an
  • Rahn (Pledge Contract)
  • Riba (Interest)
  • Salam Financing (Sale with deferred delivery and spot payment)
  • Shari’ah
  • Shari'ah Advisory Council (SAC)
  • Shari'ah Governance Framework (SGF)
  • Shari'ah Supervisory Board (SSB)
  • Shari'ah-compliant Securities
  • Sukuk (lslamic Bonds)
  • Takaful (Islamic Alternative to Conventional Insurance)
  • Tawarruq (Commodity Murabahah) Financing
  • Wakala (Agency Contract)
  • Zakat Payable