In force Last amended 6/1/1391 AH
Saudi Banking Control Law
نظام مراقبة البنوك
Regulates banking in Saudi Arabia, including licensing, the statutory deposit and liquidity requirements, lending limits, prohibited activities, board membership, oversight by the central bank, corrective measures and penalties.
- Articles
- 26
- In force
- 26
- Amended
- 1
- Issued
- 1/1/1386 AH
Issued by: مرسوم ملكي رقم م/5 بتاريخ 22 / 2 / 1386 · قرار مجلس الوزراء رقم 179 بتاريخ 5 / 2 / 1386
Each article shows the official Arabic text, which is the only legally binding version, followed by our plain-English explanation.
Browse Banking Control Law by topic
Definitions of Banking Business2 articlesLicensing Banking Business4 articlesStatutory Deposit and Liquidity2 articlesLending Limits and Credit Facilities2 articlesActivities Prohibited to Banks1 articleActivities Requiring the Agency's Approval1 articleBank Boards and Managers3 articlesBank Profits and Statutory Reserve1 articleAuditing Bank Accounts and Financial Statements4 articlesThe Agency's Supervision and Inspection5 articlesMeasures Against Violating Banks1 articlePenalties for Banking Law Violations4 articles
Articles of the Saudi Banking Control Law
- Article 1The article defines the key terms of the Banking Control Law: bank, banking business, national bank, foreign bank, the Agency and invested capital.
- Article 2The article prohibits anyone not licensed under the law from carrying on banking business as a principal activity in the Kingdom, with exceptions for entities licensed under another law and licensed money changers for currency exchange.
- Article 3The article provides that a banking license application is submitted to the Agency, sets conditions for licensing a national bank, refers conditions for foreign bank branches to the Council of Ministers, and has the license issued by the Minister of Finance after approval.
- Article 4The article keeps banking licenses and permits valid when the law took effect, with the Agency entitled to request documents and, with Council of Ministers approval, to require holders to meet Article 3.
- Article 5The article prohibits anyone not licensed for banking business from using the word "bank" or its synonyms or equivalents in any language in their papers, printed matter, trade name or advertising.
- Article 6The article bars a bank's deposit liabilities from exceeding fifteen times its reserves and capital, and requires it on excess to increase capital or deposit 50% of the excess with the Agency within a month.
- Article 7The article requires every bank to hold a statutory deposit with the Agency of at least 15% of its deposit liabilities and a liquidity reserve of at least 15%, with limits on the Agency's power to adjust both ratios.
- Article 8The article bars a bank from giving one person loans, facilities or guarantees exceeding 25% of its reserves and capital; the Agency may raise this to 50%, and it does not apply to dealings between banks and their branches.
- Article 9The article bars a bank from lending or guaranteeing against its own name, or without security to its directors, auditors and their related businesses, or to employees beyond four months' salaries.
- Article 10The article bars banks from trading, taking a direct interest in ventures, and buying bank shares without approval, sets limits on holding company shares and real estate, and gives time limits to dispose of assets received in settlement of debt.
- Article 11The article bars a bank from changing its capital, merging, owning shares abroad, ceasing business or opening branches without prior written license from the Agency and on its conditions.
- Article 12The article bars sitting on the boards of more than one bank, requires the Agency's approval to appoint anyone who worked in a liquidated banking business or was dismissed from one, and deems a bankrupt or dishonor-convicted director resigned.
- Article 13The article requires a bank to transfer at least 25% of annual net profit to the statutory reserve until it equals paid-up capital, restricts paying or transferring profits abroad, and voids contrary distributions.Amended M/2
- Article 14The article requires every bank to appoint two auditors each year from the list registered with the Ministry of Commerce, who submit a report on the balance sheet and profit and loss account to be sent to the Agency.
- Article 15The article requires every bank to send the Agency a true and correct consolidated monthly statement of its financial position by the end of the following month, and its certified annual balance sheet within six months of year-end.
- Article 16The article allows the Agency, after the Minister of Finance's approval, to set general rules on loan limits and types, dealing conditions, deposits, security ratios and assets kept in the Kingdom, and to set bank holidays and hours.
- Article 17The article allows the Agency to ask any bank at any time for any data it considers necessary to achieve the law's purposes, at the time and in the form it sets.
- Article 18The article allows the Agency, after the Minister of Finance's approval, to inspect any bank's records and accounts at its premises through its staff or auditors it appoints, and requires bank staff to provide documents and information.
- Article 19The article prohibits anyone who obtains information during or on the occasion of work relating to applying the law from disclosing it or benefiting from it in any way.
- Article 20The article requires the Agency to publish, periodically, consolidated figures on the main information in the statements banks send under Article 15.
- Article 21The article allows the Minister of Finance, in exceptional circumstances and after Council of Ministers approval, to exempt any bank from some provisions, decisions and rules of the law for a limited period and on conditions set for each case.
- Article 22The article allows the Agency, after the Finance Minister's approval, to take measures against a violating bank or one with a dangerous policy, and lets the Minister, after Council of Ministers approval, cancel its license if the violation continues.
- Article 23The article sets the penalties for violating the Banking Control Law with prison and fines by type of violation, treats related acts as one offense, and applies the more severe penalty where several provisions apply.
- Article 24The article makes the bank's board chairman, managing director, members, head office manager and branch manager responsible, each within his jurisdiction, for the bank's violation of the law's provisions and decisions and rules.
- Article 25The article provides that the Minister of Finance, at the Agency's request, appoints a committee of three persons from outside the Agency to decide penalized violations, and sets its working conditions and procedures.
- Article 26The article charges the Deputy Prime Minister and Minister of Finance and National Economy with implementing the Banking Control Law, and provides that it takes effect from its date of publication.