Licensing
LR-1.1.5
Persons wishing to be licensed to undertake
regulated banking services within or from the Kingdom of Bahrain must apply in writing to the CBB.October 2007LR-1.1.6
An application for a license must be in the form prescribed by the CBB and must contain:
(a) A business plan specifying the type of business to be conducted;(b) Application forms for allcontrollers ; and(c) Application forms for allcontrolled functions .Amended: October 2010
October 2007LR-1.1.7
The CBB will review the application and duly advise the applicant in writing when it has:
(a) Granted the application without conditions;(b) Granted the application subject to conditions specified by the CBB; or(c) Refused the application, stating the grounds on which the application has been refused and the process for appealing against that decision.Amended: October 2010
October 2007LR-1.1.8
Detailed rules and guidance regarding information requirements and processes for license applications can be found in Section LR-3.1. As specified in Paragraph LR-3.1.14, the CBB will provide a formal decision on a license application within 60 calendar days of all required documentation having been submitted in a form acceptable to the CBB.
October 2007LR-1.1.9
In granting new licenses, the CBB will specify the specific types of
regulated banking service for which a license has been granted, and on what basis (i.e.conventional retail bank orconventional wholesale bank ).October 2007LR-1.1.10
All applicants for
conventional bank licenses must satisfy the CBB that they meet, by the date of their license, the minimum conditions for licensing, as specified in Chapter LR-2. Once licensed,conventional bank licensees must maintain these criteria on an on-going basis.October 2007LR-1.1.11
Conventional bank licensees must not carry on any commercial business in the Kingdom of Bahrain or elsewhere other than banking business and activities directly arising from or incidental to that business.October 2007LR-1.1.12
Rule LR-1.1.11 is intended to restrict bank licensees from undertaking any material non-financial business activities. The Rule does not prevent a bank undertaking commercial activities if these directly arise from their financial business: for instance, in the context of Islamic contracts, such as murabaha, ijara and musharaka, where the bank may hold the physical assets being financed or leased. Nor does it restrict a bank from undertaking commercial activities if, in the judgment of the CBB, they are incidental and do not detract from the financial nature of the bank's operations: for example, a bank may rent out spare office space in its own office building, and provide services associated with the rental (e.g. office security or cleaning).
October 2007LR-1.1.13
Rule LR-1.1.11 applies to the legal entity holding the bank license. A bank may thus own subsidiaries that undertake non-financial activities, although the CBB generally does not support the development of significant commercial activities within a banking group. Capital invested in such subsidiaries by a bank would be deducted from the bank's capital base under the CBB's capital rules (see Module CA). In addition, the CBB may impose restrictions — such as dealings between the bank and its commercial subsidiaries — if it was felt necessary to limit the bank's exposure to non-financial risks.
October 2007
