Article 16 of the Saudi Banking Control Law

المادة 16 من نظام مراقبة البنوك

The 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.

Official text (Arabic)

This article has not been amended since the law was issued.

يجوز لمؤسسة النقد بعد موافقة وزير المالية والاقتصاد الوطني أن تضع قواعد عامة لتنظيم المسائل الآتية:

1 - الحد الأعلى لمجموع القروض التي يجوز لبنك أو أكثر تقديمها.

2 - منع أو تحديد أنواع معينة من القروض أو المعاملات الأخرى.

3 - تحديد الأوضاع والشروط التي يجب على البنك مراعاتها عند تعاملها في أنواع معينة من الأعمال مع عملائها.

4 - التأمينات النقدية التي يجب أن يحتفظ بها البنك مقابل أنواع معينة من الاعتمادات أو الكفالات.

5 - الحد الأدنى لنسب الضمان التي يجب مراعاتها في أنواع معينة من القروض بين مبالغ القرض والأصول المقدمة ضمانا لها.

6 - تحديد الموجودات التي يجب على كل بنك الاحتفاظ بها داخل المملكة، والتي لا يجوز أن تقل قيمتها عن نسبة مئوية من التزامات الودائع تحددها المؤسسة من وقت إلى آخر. ويجوز للمؤسسة بقرارات تصدرها من وقت إلى آخر:

1 - تحديد المقصود في هذا النظام باصطلاح (التزامات الودائع).

2 - تحديد أيام عطلات البنوك وساعات العمل فيها.

This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers

Article 16 explained in plain English

This article gives the Agency a flexible regulatory tool, because the law cannot detail every changing banking matter.

First: general rules after the approval of the Minister of Finance and National Economy on the following matters:

The maximum total of loans that one or more banks may provide.
Prohibiting or limiting certain types of loans or other transactions.
The conditions and terms a bank observes when dealing with its customers in certain types of business.
The cash margins a bank holds against certain types of letters of credit or guarantees.
The minimum security ratios between loan amounts and the assets provided as security for them in certain types of loans.
The assets a bank must keep inside the Kingdom, in an amount not less than a percentage of deposit liabilities that the Agency sets from time to time.

Second: decisions the Agency issues from time to time (for which the text does not require the Minister's approval):

Defining what is meant by the term "deposit liabilities" in the law.
Setting the days of bank holidays and working hours in them.

The article itself does not state the content of these rules, but only grants the power; the reference for their details is what the Agency issues. Customers and companies affected by these rules may consult a lawyer specialized in banking and finance.

Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.

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