Philippine central bank extends observation period for Islamic banks

The Philippines’ central bank plans a further observation period of up to three years for Islamic lenders to craft liquidity‑risk frameworks before full compliance with global standards. A draft Bangko Sentral ng Pilipinas circular says the extension will let banks pick liquidity tools and allow Islamic interbank, money and sukuk markets to deepen. The sector has already been under observation from June 2021 to Dec 2024, with 100 % liquidity coverage and net stable funding ratios due 1 Jan 2025. Compliance will be assessed on a consolidated basis with parent conventional lenders, easing reporting obligations. The draft reclassifies Islamic financing as loans, sukuk as debt instruments, and removes the previously allowed five‑year capital build‑up period. Banks must still meet minimum capital rules without transitional relief.