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  • AU-1.2 AU-1.2 Definition of Regulated Microfinance Services

    • AU-1.2.1

      Regulated microfinance services are any of the following activities, carried on by way of business:

      (a) Providing conventional or Shari'a compliant microfinance to eligible beneficiaries; and
      (b) Providing consultancy and information services to its eligible beneficiaries and prospective eligible beneficiaries.
      January 2014

    • AU-1.2.1A

      Where licensees are undertaking regulated activities in accordance with Shari'a, all transactions and contracts concluded by regulated microfinance services must comply with Sharia standards issued by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). The validity of the contract or transaction is not impacted, if at a later date, the relevant AAOIFI Sharia standards are amended.

      Added: October 2020

    • Providing Conventional Microfinance

      • AU-1.2.2

        Providing conventional microfinance to an eligible beneficiary is defined as the provision of credit to a person in his capacity as borrower or potential borrower. The maximum amount provided under the microfinance shall not exceed BD 7,000 in aggregate per eligible beneficiary. The repayment period must not exceed 3 years.

        Amended: April 2019
        January 2014

    • Offering Shari'a Compliant Microfinance Contracts

      • AU-1.2.3

        Offering Shari'a compliant microfinance contracts is defined as entering into, or making arrangement for an eligible beneficiary to enter into, a contract to provide finance in accordance with Shari'a principles. The maximum amount provided under the microfinance contracts shall not exceed BD 7,000 in aggregate per eligible beneficiary. The repayment period must not exceed 3 years.

        Amended: April 2019
        January 2014

      • AU-1.2.4

        For the purpose of this Section, eligible beneficiary(ies) means: Low income individuals and small businesses, who are not eligible to secure financing facilities through the banking system that intend to get a credit facility to engage in small economic activities (examples: small farmers, fishermen, related activities etc.).

        January 2014

      • AU-1.2.5

        For the purposes of Rule AU-1.2.1, carrying on a regulated microfinance service by way of business means:

        (a) Undertaking the regulated microfinance service of (a) and (b), as defined in Section AU-1.2, for commercial gain;
        (b) Holding oneself out as willing and able to engage in such activities; or
        (c) Regularly soliciting other persons to engage in transactions constituting such activities.
        January 2014

    • General Exclusions

      • AU-1.2.6

        A person does not carry on an activity constituting a regulated microfinance service if the activity:

        (a) Is carried on in the course of a business which does not ordinarily constitute the carrying on of microfinance services;
        (b) May reasonably be regarded as a necessary part of any other services provided in the course of that business;
        (c) Is not remunerated separately from the other services; and
        (d) Is carried out by a government entity in Bahrain authorised to provide such activity by Royal Decree or relevant legislation or a non-government organisation (NGO) registered with the Ministry of Social Development for that purpose.
        January 2014