Article 3 of the Saudi Banking Control Law
المادة 3 من نظام مراقبة البنوك
The 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.
Official text (Arabic)
This article has not been amended since the law was issued.
يقدم طلب منح الترخيص لمزاولة الأعمال المصرفية في المملكة إلى المؤسسة التي تقوم بعد حصولها على كافة البيانات الضرورية، بدراسة الطلب وتقديم توصياتها بشأنه لوزير المالية والاقتصاد الوطني، ويشترط في هذا الترخيص لبنك وطني:
1 - أن يكون شركة مساهمة سعودية.
2 - ألا يقل رأس مالها المدفوع عن مليونين ونصف مليون ريال سعودي، وأن تدفع جميع اكتتابات رأس المال نقدا.
3 - أن يكون مؤسسوها وأعضاء مجلس إدارتها حسني السمعة.
4 - أن يوافق وزير المالية والاقتصاد الوطني على عقد تأسيسها ونظامها. ويشترط للترخيص لبنك أجنبي بتأسيس فرع أو فروع له في المملكة أن تستوفي الشروط التي يحددها مجلس الوزراء بناء على اقتراح وزير المالية والاقتصاد الوطني، ويصدر الترخيص في جميع الأحوال من وزير المالية والاقتصاد الوطني بعد موافقة مجلس الوزراء.
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 3 explained in plain English
After Article 2 prohibited banking business without a license, this article explains how the license is requested and what its conditions are.
Procedure: the application is submitted to the Saudi Arabian Monetary Agency, which obtains all the necessary data and studies the application, then submits its recommendations to the Minister of Finance and National Economy.
Conditions for licensing a national bank (that is, one whose head office is in the Kingdom):
- It must be a Saudi joint-stock company.
- Its paid-up capital must be not less than two and a half million Saudi riyals (SAR 2,500,000), and all capital subscriptions must be paid in cash.
- Its founders and board members must be of good reputation.
- The Minister of Finance and National Economy must approve its articles of incorporation and its bylaws.
A foreign bank that wants to establish a branch or branches in the Kingdom must meet the conditions set by the Council of Ministers on the proposal of the Minister of Finance and National Economy; the article does not state these conditions itself.
In all cases the license is issued by the Minister of Finance and National Economy after the approval of the Council of Ministers. Article 4 regulates the position of those who were carrying on banking business under valid licenses before the law took effect. Because establishment requires precise legal arrangements, founders are advised to consult a lawyer specialized in banking and finance.
Practical example
A group of businessmen in Riyadh wants to establish a national bank. They must take the form of a Saudi joint-stock company with cash-paid capital of not less than SAR 2,500,000, they and the board members must be of good reputation, and they then submit the application to the Agency, which submits its recommendation to the Minister of Finance. The license is issued only after the approval of the Council of Ministers.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
How we write and review contentCommercial & Corporate Law lawyers: ask a specialist about your case
Describe your situation briefly and we'll suggest a lawyer who specialises in this law
Commercial & Corporate Law lawyers
Lawyers who handle this kind of case
Ibrahim Al Salem Law Firm
Active contributor
Dr. Ali Al-Rubaie Law Office and Ittihad Al-Asr Legal Company
Frequently asked questions about Article 3 of the Saudi Banking Control Law
What is the minimum capital of a national bank under this article?
Paid-up capital of not less than two and a half million Saudi riyals, with all subscriptions paid in cash.
Where is a bank license application submitted?
To the Saudi Arabian Monetary Agency, which studies it and submits its recommendations to the Minister of Finance and National Economy.
Who issues the license to a bank?
The Minister of Finance and National Economy, after the approval of the Council of Ministers, in all cases.
What are the conditions for opening a foreign bank branch in the Kingdom?
The bank must meet the conditions set by the Council of Ministers on the proposal of the Minister of Finance; the article does not detail these conditions.
More articles on Licensing Banking Business
- Article 2
The 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.
يحظر على أي شخص طبيعي أو اعتباري غير مرخص له طبقا لأحكام هذا النظام أن يزاول في المملكة أي عمل من الأعمال المصرفية بصفة أساسية، ومع ذلك: أ - يجوز للأشخاص الاعتب
- Article 4
The 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.
استثناء من أحكام المادة السابقة، يعمل بالتراخيص والتصاريح الصادرة للأشخاص الذين يزاولون الأعمال المصرفية في المملكة والسارية المفعول في تاريخ نفاذ هذا النظام. و
- Article 5
The 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.
يحظر على أي شخص غير مرخص له بمزاولة الأعمال المصرفية في المملكة بصفة أساسية أن يستعمل كلمة (بنك) ومرادفاتها أو أي تعبير يماثلها في أية لغة سواء في أوراقه، أو مط
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.