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  • AU-1.1 AU-1.1 Microfinance Institutions Licensees

    • General Prohibitions

      • AU-1.1.1

        No person may:

        (a) Undertake (or hold themselves out to undertake) microfinance services, by way of business within or from the Kingdom of Bahrain unless duly licensed by the CBB;
        (b) Hold themselves out to be licensed by the CBB unless they have as a matter of fact been so licensed: or
        (c) Market any financial services in the Kingdom of Bahrain unless:
        (i) Allowed to do by the terms of a license issued by the CBB;
        (ii) The activities come within the terms of an exemption granted by the CBB by way of a Directive; or
        (iii) Has obtained the express written permission of the CBB to offer financial services.
        January 2014

      • AU-1.1.2

        In accordance with Resolution No.(16) for the year 2012 and for the purpose of Subparagraph AU-1.1.1(c), the word 'market' refers to any promotion, offering, announcement, advertising, broadcast or any other means of communication made for the purpose of inducing recipients to purchase or otherwise acquire financial services in return for monetary payment or some other form of valuable consideration.

        January 2014

      • AU-1.1.3

        Persons in breach of Subparagraph AU-1.1.1(c) are considered in breach of Resolution No.(16) for the year 2012 and are subject to penalties under Articles 129 and 161 of the CBB Law (see also Section EN-10.3).

        Amended: April 2014
        January 2014

      • AU-1.1.4

        Licensees are prohibited from taking deposits.

        January 2014

      • AU-1.1.5

        Only persons licensed to undertake regulated microfinance services can use the term 'microfinance' in their corporate or trading names, or otherwise hold themselves out to be a microfinance institution. Licensees are not allowed to transact with non-residents of the Kingdom of Bahrain, and in foreign currencies. To qualify as a microfinance institution, the person concerned must undertake (as a minimum), the activities of providing credit to eligible beneficiaries.

        January 2014

      • AU-1.1.6

        Licensees are obliged to include the word 'microfinance' in their corporate or trading names and are required to make clear their regulatory status in their letter heads, customer communications, website and other communication as required under Section GR-2.2.

        January 2014

      • AU-1.1.7

        For the purposes of Rule AU-1.1.5, persons will be considered in breach of this requirement if they attempt to operate as, or incorporate a microfinance institution in Bahrain with or without a name containing the word "microfinance" (or the equivalent in any language), without holding the appropriate CBB license or obtaining the prior approval of the CBB.

        January 2014

    • Licensing

      • AU-1.1.8

        Persons wishing to be licensed to undertake regulated microfinance services within or from the Kingdom of Bahrain must apply in writing to the CBB. An application for a license must be in the form prescribed by the CBB as indicated in Chapter AU-4.

        January 2014

      • AU-1.1.9

        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
        January 2014

      • AU-1.1.10

        Detailed rules and guidance regarding information requirements and processes for license applications can be found in Section AU-4.1. As specified in Paragraph AU-4.1.14, the CBB will provide a formal decision on license application within 60 calendar days of all required documentation having been submitted in a form acceptable to the CBB.

        January 2014

      • AU-1.1.11

        All applicants for microfinance institution licenses must satisfy the CBB that they meet, by the date of their license, the minimum conditions for licensing, as specified in Chapter AU-2. Once licensed, licensees must maintain these criteria on an on-going basis.

        January 2014

      • AU-1.1.12

        Licensees must not carry on any other business in the Kingdom of Bahrain or elsewhere other than microfinance business and activities directly arising from or incidental to that business.

        January 2014

      • AU-1.1.13

        Rule AU-1.1.12 is intended to restrict licensees from undertaking any material non-financial business activities. The Rule does not prevent a licensee 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 company may hold the physical assets being financed or leased. Nor does it restrict a licensee from undertaking commercial activities if, in the judgment of the CBB, they are incidental and do not detract from the financial nature of the licensees.

        January 2014