Islamic Retail Bank Licensees
LR-1.2.4
Islamic retail bank licensees are allowed to transact with both residents and non-residents of the Kingdom of Bahrain, and in both Bahraini Dinar and foreign currencies.LR-1.2.5
To qualify as an
Islamic retail bank licensee , the person concerned must undertake (as a minimum), the activity of accepting Shari'a money placements/deposits, and/or managing Shari'a profit sharing investment accounts, as well as the activity of offering Shari'a financing contracts (as defined in Rules LR-1.3.16, LR-1.3.17 and LR-1.3.18). The activity of offering Shari'a financing contracts must be a significant part of the bank's business, relative to other activities.LR-1.2.6
When assessing the significance of Shari'a financing contracts, in the context of Rule LR-1.2.5, the BMA would normally expect to see such contracts constitute at least 20% of the total assets of the institution. Other activities and criteria may also be taken into account, if the BMA believes they are of a financing-related nature, and that such activities constitute a significant share of the bank's overall business.
LR-1.2.7
In the case of new applicants, the above assessment is made based on the financial projections and business plan provided as part of the license application. Where existing licensees cease to satisfy the condition contained in Rule LR-1.2.5, the BMA will initiate discussion with the licensee as to the appropriateness of their license category; this may result in the licensee being required to change its license category.
LR-1.2.8
The purpose of Rule LR-1.2.5 is to ensure that, besides the activity of accepting Shari'a money placements/deposits, and managing Shari'a profit sharing investment accounts, that the core banking activity of providing finance also forms part of the definition of
Islamic retail bank licensees , and accounts for a significant share of their business, in keeping with their intermediation function.
