BSP Circular No. 1116, Series of 2021, Guidelines on the Management of Liquidity Risk by Islamic Banks and Islamic Banking Units

The Guidelines on the Management of Liquidity Risk by Islamic Banks (IBs) and Islamic Banking Units (IBUs) (the "Guidelines") provide that IBs and IBUs are expected to have written policies on liquidity risk management. For IBUs, the policy should be established separately from that of the conventional bank proper. 

The Guidelines are based on the existing liquidity risk management framework for conventional banks with additional provisions to cover the specificities of Islamic banking. This is to allow IBs/IBUs to operate alongside the conventional banks under the same regulatory framework, while taking into consideration the unique features of Islamic financial transactions. 

The Guidelines also amend appendices of the Manual of Regulations for Banks to make certain frameworks and ratios applicable to IBs and IBUs subject to the requirement that the instruments to be used in liquidity management must be acceptable to the Shari'ah Advisory Council.