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  • BC-4.2 BC-4.2 Dinar Certificates of Deposits – Rules

    • BC-4.2.1

      The purpose of the contents of this Section is to set out rules governing the issue of Dinar Certificates of Deposit by retail bank licensees.

      October 07

    • BC-4.2.2

      For the purpose of this Section, 'Dinar Certificates of Deposit' are financial instruments payable in Bahrain Dinars. They must be negotiable – in accordance with the Law of Commerce (No. 7) of 1987 – and must satisfy the conditions set out in this Section.

      October 07

    • Issue

      • BC-4.2.3

        Dinar Certificates of Deposit may be issued only by retail bank licensees and must be payable at their offices in Bahrain.

        October 07

      • BC-4.2.4

        Retail bank licensees may issue Certificates of Deposit to both resident and non-resident customers and to other banks inside and outside Bahrain.

        October 07

      • BC-4.2.5

        Retail bank licensees may not issue Certificates of Deposit until they receive the necessary funds.

        October 07

    • Denominations

      • BC-4.2.6

        Certificates of Deposit may be issued for any amount subject only to a minimum denomination of BD 30,000.

        October 07

    • Maturities

      • BC-4.2.7

        Certificates of Deposit may be issued for any maturity between 183 days (6 months) and 5 years.

        October 07

    • Interest Rates

      • BC-4.2.8

        The interest rates on Certificates of Deposit may be freely agreed between banks and their counterparties at the time of issue.

        October 07

      • BC-4.2.9

        Interest may be payable by agreement at a fixed or floating rate. In the case of a floating interest rate, the formula for revising the rate must be specified at the time of issue.

        October 07

      • BC-4.2.10

        Interest may be payable at maturity or on earlier dates specified at the time of issue.

        October 07

      • BC-4.2.11

        As an alternative to paying interest, Certificates of Deposit may be issued (like Treasury bills) at a discount to their face value (the repayment amount).

        October 07

      • BC-4.2.12

        Interest and discounted values should be calculated on the basis of a 360 day year.

        October 07

    • Negotiability

      • BC-4.2.13

        In view of their negotiability, Certificates of Deposit may be freely traded between banks, and between banks and customers. Issuing banks are permitted to re-purchase their own Certificates.

        October 07

    • Safe Custody

      • BC-4.2.14

        Although it is not obligatory, holders of Certificates of Deposit are advised to keep these certificates with a bank for safe custody and to handle them with care at all times.

        October 07

    • Reserve Ratio

      • BC-4.2.15

        Outstanding Certificates of Deposit are subject to reserve requirements in accordance with the provisions set out under Section BR-4.1.

        Amended: October 2013
        October 07

    • Other Conditions

      • BC-4.2.16

        Banks must not describe deposit receipts, confirmations and other non-negotiable documents relating to ordinary deposits as 'Certificates of Deposit' and must not include such liabilities among Certificates of Deposit in their monthly statistical reports (also see Module BR).

        October 07

      • BC-4.2.17

        In their statistical reports (also see Module BR), banks should always classify their outstanding Certificates of Deposit according to the type of customer (e.g. resident etc.) to whom they were first issued.

        October 07