CP-2.1.1

The Scheme will apply to Eligible Accounts (as defined in Paragraph CP-2.1.2 below) held with the Bahrain offices of Islamic retail bank licensees which are licensed by the CBB.

CP-2.1.2

For Islamic retail bank licensees, Eligible Accounts means any Deposit Account (as defined in Paragraph CP-2.1.3) and Unrestricted Investment Account, and any other deposits or accounts similar in nature and which have similar characteristics which are approved by the CBB, regardless of currency, with the exception of bearer certificates of deposit.

CP-2.1.3

For the purpose of Paragraph CP-2.1.2, Deposit Account means the account that is defined being a deposit in accordance with the CBB Resolution No.(23) of 2009 in respect of Definition of Deposit.

CP-2.1.4

Without prejudice to Paragraph CP-2.1.1 above, the Board may, at its discretion, exclude (in whole or in part) from compensation payments any Eligible account holder of the defaulting bank in Bahrain who is entitled to claim in a similar scheme established in another jurisdiction, where such scheme covers the deposit liabilities and unrestricted investment accounts of the Bahrain offices of such relevant bank.

CP-2.1.5

For Islamic retail bank licensees, Eligible Depositor and/or Investor means any natural person, (resident or non-resident), holding an Eligible Account(s) with an Islamic retail bank in the Kingdom. It does not include Deposits and Unrestricted Investments Accounts held with an Islamic retail bank's foreign branches operating outside the Kingdom.

CP-2.1.6

Without prejudice to Paragraph CP-2.1.1, the Board may, at its discretion, exclude (in whole or in part) from the requirement to contribute to the Islamic Fund, any Islamic retail bank licensee in Bahrain whose Eligible Accounts (in whole or in part) are covered by a similar scheme established in another jurisdiction provided that evidence of such coverage is provided to the Board to its satisfaction.

CP-2.1.7

Without prejudice to the provisions of Paragraph CP-2.1.2, the Scheme will not apply to Deposits and unrestricted investment accounts which have, in the opinion of the Board, been illegally gained and/or relate to illicit or illegal matters. The Scheme will also not apply to:

CP-2.2.1

Each Eligible account holder shall be entitled under the Regulation to claim an amount equivalent to the amount deposited and/or invested by him in an Eligible Account save that no Eligible account holder shall be entitled to receive more than BD20,000 (Twenty Thousand Bahraini Dinars) from the total amount of his Eligible Account held with the defaulting bank regardless of the number and currency of Deposits and unrestricted investment accounts. Other currencies shall be converted into Bahraini Dinars at the exchange rate on the date on which the CBB determines that the Islamic retail bank licensee is a defaulting bank.

CP-2.2.2

In calculating the amount payable to an Eligible account holder, the Board shall have the right to set-off the debts of the Eligible account holder with the defaulting bank and deduct any expenses incurred by the Board in paying out such amounts.

CP-2.2.3

A joint Eligible Account should be treated as a single Eligible Account.

CP-2.2.4

If the Board is satisfied that a person is a trustee of an Eligible Account with a defaulting bank, and that the beneficial owner of any such Account has no other Eligible Account with the defaulting bank, the Board shall deem such beneficial owner as a separate Eligible account holder. However, in the event that a beneficial owner of any of such Eligible Account held in the name of the trustee is the same owner of other Eligible Account at the defaulting bank, such accounts, including the account(s) registered in the name of trustee, shall be treated as a single Eligible Account.

CP-2.2.5

No transfer of any part of an Eligible Account shall be considered valid if, in the opinion of the Board, the purpose of such transfer is to enable any person, including an Eligible account holder, to gain an advantage that is not permitted or intended by this Module.

CP-2.3.1

For the purpose of the Scheme, the Board administers two separate funds referred to as the "Conventional Banks Fund" and the "Islamic Banks Fund" as defined under Article 1 of the Regulation. Each Fund shall constitute a separate legal entity and shall have an independent balance sheet from the CBB.

CP-2.3.2

Islamic retail bank licensees collectively contribute an initial aggregate amount of BD20 million (Twenty Million Bahraini Dinars) over a period of fifteen years and title to such monies once contributed shall legally belong to the Islamic banks Fund.

CP-2.3.3

The Board periodically assesses the size of the Islamic Fund in relation to liabilities to be covered and, where appropriate, makes recommendations to the CBB for increasing or decreasing the amount of the Islamic Fund. No such adjustments to the aggregate amount BD80 million (Eighty Million Bahraini Dinars) for both Funds shall be made without the express approval of the CBB.

CP-2.3.4

The contribution of each Islamic retail bank licensee in the total amount of the Fund is determined on an annual pro-rata basis of the total Eligible Accounts of all Islamic retail bank licensees in Bahrain.

CP-2.3.4A

The CBB provides the Board with the necessary data to allow it to determine the amounts of contributions each Islamic retail bank licensee must make. The Board may allow the Islamic retail bank licensees to make its contribution in the form of quarterly installments which shall be charged against the profit & loss account of the banks.

CP-2.3.4B

Each Islamic retail bank licensee must submit to the CBB within 2 months of the financial year end a report on all eligible accounts in accordance with Section BR-1.4.

CP-2.3.5

No contribution (or part thereof) is refundable to an Islamic retail bank licensee in any circumstance.

CP-2.3.6

Islamic retail bank licensees pay the contributions referred to in Paragraph CP-2.3.4 within the periods specified by the Board. Each Islamic retail bank licensee is notified of the amount of its calculated contribution as well as the date of payment thereof.

CP-2.3.7

In the event of failure of any Islamic retail bank licensee in the payment of the full contribution during the periods specified by the Board, the CBB may take enforcement action against that bank, including the imposition of administrative fines in accordance with Article 129 of the CBB Law and, in cases of repeated violation, withdrawal of the licence granted by the CBB.

CP-2.3.8

In the event that a new Islamic retail bank licensee joins the Islamic Fund during any year, the Board determines the contribution of that bank to the Fund on the basis of the minimum payment made by other participating banks during that year for the remaining period of the year after dividing the full contribution amount over the number of months of a year. At the beginning of the following year, there will be an assessment of that bank's contribution based on the size of its Eligible Accounts base.

CP-2.3.9

The Board determines the investment policy of the Funds and the CBB is responsible for implementing such policy without receiving any commission or charges in return. Investments made from the Islamic Fund must comply with Islamic Shari'a principles and be under the supervision of the CBB's Shari'a Board.

CP-2.4.1

Upon the Board following the compensation process in accordance with Article 4 of the Regulation, the Board calculates the total amount of compensation payable thereunder to each Eligible account holder of the defaulting bank. The total amount of compensation payable shall be remitted to the Bank(s) designated by the Board to act as a Lead Mandated Bank and/or Mandated Bank(s) for processing compensation payments to Eligible account holders of the defaulting bank.

CP-2.4.2

For the purposes of this Module, Lead Mandated Bank means the bank appointed by the Deposits and Unrestricted Investment Accounts Protection Board to administer the procedures to make compensation payments.

CP-2.4.3

For the purposes of this Module, Mandated Bank(s) means such other banks mandated by the Lead Mandated Bank to assist and/or participate in the processing of compensation payments.

CP-2.4.4

In the event of the amounts of the Islamic Fund being insufficient to cover the total compensation payable in accordance with the Regulation, the Board may cover the shortfall by borrowing (upon such terms and conditions as it considers appropriate) and such borrowings shall be reimbursed by future contributions from the Islamic retail bank licensees as the case may be.

CP-2.4.5

Following the completion of the calculation referred to in Paragraph CP-2.4.1, the Lead Mandated Bank and/or Mandated Bank(s) pays, into a special account to be held by it/them, the total amount allocated to compensate the Eligible account holders with the defaulting bank.

CP-2.4.6

Upon receipt by the Board of confirmation from the Lead Mandated Bank that the requirements of Paragraphs CP-2.4.1 to CP-2.4.3 have been satisfied, the Board sends to each Eligible account holder a certificate in the form set out in Appendix CP-1A, informing each Eligible account holder of the amount of compensation due to him/her hereunder in respect of his/her Eligible Account(s) with the defaulting bank.

CP-2.4.7

Appendix CP-1A contains instructions as to the method by which, and time within which, the compensatory amount referred to therein may be collected by the Eligible account holder from the Lead Mandated Bank or Mandated Bank(s). No amounts of compensation shall be payable hereunder after the expiry of the period referred to in such certificate, which period shall not be more than 12 months.

CP-2.4.8

Appendix CP-1B, "Customer Acknowledgment and Waiver" form is signed by an Eligible account holder, and constitutes a waiver of any claims he (or his successors or assigns) may wish to make against the Lead Mandated Bank and/or the Mandated Bank(s) and/or the Board in the future in respect of the amount being paid to him, and, a waiver to the Board of all his rights and interests related to that proportion of his claim against the defaulting bank.

CP-2.4.9

Upon receipt of the signed Customer Acknowledgment and Waiver from an Eligible account holder, the Lead Mandated Bank and/or the Mandated Bank(s) shall pay the amount referred to in the certificate to such Eligible account holder.

CP-2.4.10

Once an Eligible account holder has waived his right to claim against the defaulting bank to the Board (pursuant to the Customer Acknowledgment and Waiver referred to above), no bank may deny the rights of the Board to recover the debt so waived by way of action against the bank in liquidation.

CP-2.4.11

The Lead Mandated Bank must reimburse the Islamic Fund for any excess monies it has received during the mandate period.

CP-2.4.12

The liquidator of the defaulting bank must, in making any payments to Eligible account holders thereof in liquidation of such bank, be responsible for ensuring that Eligible account holders shall not receive any payments in liquidation for any amount that constitutes a duplicate reimbursement that they have been compensated in accordance with the terms of the Regulation.

CP-2.5.1

All advertisements or other promotional publications issued by Islamic retail bank licensees in the Kingdom which contain an invitation to make deposits and unrestricted investment account with such banks and refer, directly or indirectly, to the Regulation Protecting Deposits and Unrestricted Investment Accounts hereunder, shall contain the following statement:

"Deposits and unrestricted investment accounts held with [name of Islamic retail bank licensee] in the Kingdom are covered by the Regulation Protecting Deposits and Unrestricted Investment Accounts issued by the Central Bank of Bahrain in accordance with Resolution No.(34) of 2010."

CP-2.6.1

Save as otherwise set out above, nothing in this Module shall affect the rights of Eligible account holders of a defaulting bank to claim the remaining proportion of their total claims as creditors in the liquidation of the defaulting bank, regardless of the basis on which such claim is made.

CP-2.6.2

The provisions of Article 119 of the CBB Law relating to confidential information shall apply to all matters discussed, decisions reached and records kept by the Board in accordance with the terms of Regulation.

CP-2.6.3

The Board is entitled to make subsidiary rules for the proper and regular enforcement of the Regulation and must be empowered to hear any dispute in relation to the application of the Regulation, without prejudicing the right of the person concerned to take judicial proceedings.

CP-2.6.4

The Regulation does not apply retrospectively to banks operating in the Kingdom which are already under administration or are being liquidated prior to the effective date of the Regulation.