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  • LR-2.5 LR-2.5 Condition 5: Financial Resources

    • Capital Adequacy

      • LR-2.5.1

        Islamic bank licensees must maintain a level of financial resources, as agreed with the CBB, adequate for the level of business proposed. The level of financial resources held must at all times meet the minimum risk-based requirements contained in Module CA (Capital Adequacy), as specified for the Category of banking license held.

        October 2007

      • LR-2.5.2

        This paragraph was deleted in April 2017.

        Deleted: April 2017
        October 2007

      • LR-2.5.2A

        All Bahraini Islamic retail bank licensees must maintain a minimum total shareholders' equity of BD 100 million.

        Amended: October 2018
        Added: April 2017

      • LR-2.5.2B

        All Bahraini Islamic wholesale bank licensees must maintain a minimum total shareholders' equity of US$100 million.

        Amended: October 2018
        Added: April 2017

      • LR-2.5.3

        Persons seeking a license as an Islamic bank licensee must submit a 3-year business plan, with financial projections. Their proposed level of paid-up capital must be sufficient to cover expected regulatory capital requirements over that period, based on projected activities.

        October 2007

      • LR-2.5.4

        In practice, applicants seeking an Islamic bank license are likely to be required to hold significantly more capital than the minimum paid-up capital specified in Rule LR-2.5.2.

        October 2007

      • LR-2.5.5

        Foreign bank applicants are required to provide written confirmation from their head office that the head office will provide financial support to the branch sufficient to enable it to meet its obligations as and when they fall due. Foreign bank applicants must also demonstrate that the bank as a whole is adequately resourced for the amount of risks underwritten, and that it and its group meet capital adequacy standards applied by its home supervisor.

        Amended: July 2017
        October 2007

      • LR-2.5.6

        For Islamic retail bank licensees, funds placed with the bank by way of call and/or unrestricted investment accounts (or similar) must not exceed 20 times their capital and reserves.

        Amended: April 2017
        October 2007

      • LR-2.5.7

        Factors taken into account in setting endowment capital for branches includes the financial strength of the parent company, the quality of its risk management, and the nature and scale of the Bahrain operations of the branch.

        October 2007

    • Liquidity

      • LR-2.5.8

        Islamic bank licensees must maintain sufficient liquid assets to meet their obligations as they fall due in the normal course of their business.

        Amended: October 2022
        October 2007

      • LR-2.5.9

        The CBB would normally expect the mark-to-market value of assets that could be readily realised at short-notice, to exceed 25% of deposit liabilities at all times. Liquidity arrangements may vary, however, particularly for branches of foreign Islamic banks, as agreed with CBB and documented in the liquidity management policy.

        Amended: July 2017
        Amended: January 2011
        October 2007

    • Reserve Requirements

      • LR-2.5.10

        Islamic bank licensees must maintain a minimum daily cash reserve balance with the CBB, set as a ratio of their total non-bank Bahrain Dinar funds, whether placed by way of call or unrestricted investment accounts (or similar), as well as taken through the issuance of Bahrain Dinar denominated Islamic investment certificates. The current required ratio is 5% and may be varied by the CBB at its discretion.

        Amended July 09
        Amended April 08
        October 2007