Article 22 of the Saudi Banking Control Law
المادة 22 من نظام مراقبة البنوك
The 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.
Official text (Arabic)
This article has not been amended since the law was issued.
يجوز للمؤسسة إذا تبينت أن بنكا خالف أحكام هذا النظام أو القرارات والقواعد الصادرة تنفيذا له أو اتبع سياسة من شأنها التأثير بصورة خطيرة على قدرته على الوفاء بالتزاماته أو على سيولة الأموال لديه، أن تتخذ بعد موافقة وزير المالية والاقتصاد الوطني إجراء أو أكثر من الإجراءات الآتية:
أ - تعيين مستشار أو أكثر لتقديم المشورة للبنك في إدارة أعماله.
ب - إيقاف أو عزل أي عضو من أعضاء مجلس إدارة البنك أو أي من موظفيه.
ج - تحديد أو منع البنك من منح القروض أو قبول الودائع به.
د - إلزام البنك باتخاذ أي خطوات أخرى تراها ضرورية.
وإذا تبينت المؤسسة أن بنكا استمر في مخالفة أحكام هذا النظام أو القرارات والقواعد الصادرة تنفيذا له، جاز لها أن تطلب منه تقديم أسباب ذلك مصحوبة باقتراحاته لتصحيح الأوضاع في خلال المدة التي تحددها، فإذا رأت المؤسسة أن هذه الاقتراحات لا تفي بالغرض أو إذا قصر البنك في تنفيذ إجراء تعهد به في خلال المدة المذكورة، جاز لوزير المالية والاقتصاد الوطني بعد موافقة مجلس الوزراء إلغاء الترخيص الممنوح للبنك المذكور.
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 22 explained in plain English
This article sets out the corrective tools the Agency has against violating banks, escalating up to license cancellation.
When does the Agency step in? If it finds that a bank:
- has violated the provisions of the law or the decisions and rules issued under it, or
- has followed a policy likely to affect seriously its ability to meet its obligations or the liquidity of its funds.
Measures (one or more, after the approval of the Minister of Finance and National Economy):
- Appointing one or more advisors to advise the bank in managing its business.
- Suspending or removing any board member or any employee.
- Limiting or preventing the bank from granting loans or accepting deposits.
- Requiring it to take any other steps it considers necessary.
If the violation continues: the Agency may require the bank to give reasons for this along with its proposals to correct the situation within a period it sets. If it considers that the proposals do not serve the purpose, or the bank fails to carry out a measure it undertook within the period, the Minister of Finance may, after the approval of the Council of Ministers, cancel the bank's license.
These are supervisory administrative measures separate from the penalties provided in Article 23. Board members and employees affected by them may consult a lawyer specialized in banking and finance.
Practical example
The Agency noticed that a bank in Jeddah is expanding into high-risk loans that threaten its liquidity. After the approval of the Minister of Finance it decided to appoint an advisor to the bank and temporarily bar it from granting new loans. If the bank continued the violation and submitted insufficient correction proposals, the Minister of Finance could, after the approval of the Council of Ministers, cancel its license.
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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Frequently asked questions about Article 22 of the Saudi Banking Control Law
What measures does the Agency take against a violating bank?
Appointing an advisor, suspending or removing board members or employees, limiting or preventing granting loans and accepting deposits, or requiring other steps, after the approval of the Minister of Finance.
Can a bank's license be withdrawn?
Yes. The Minister of Finance may, after the approval of the Council of Ministers, cancel the license if the violation continues and the bank's proposals are insufficient or it fails to carry out what it undertook.
Must there be a clear violation for the Agency to step in?
No. It is also enough that the bank follows a policy that seriously affects its ability to meet its obligations or its liquidity.
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.