Article 9 of the Saudi Banking Control Law

المادة 9 من نظام مراقبة البنوك

The 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.

Official text (Arabic)

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

يحظر على أي بنك أن يزاول الأعمال الآتية:

1 - أن يعطي بضمان اسمه قرضا أو أن يمنح تسهيلات ائتمانية أو أن يقدم كفالة أو ضمانا أو أن يتحمل أي التزام مالي آخر.

2 - أن يعطي بلا ضمان قرضا أو أن يمنح تسهيلات ائتمانية أو أن يقدم كفالة أو ضمانا أو أن يتحمل بأي التزام مالي آخر لأي من:

أ - أعضاء مجلس إدارته أو مراقبي حساباته.

ب - المنشآت الغير متخذة شكل شركات مساهمة متى كان أحد أعضاء مجلس إدارتها أو أحد مراقبي حساباتها شريكا فيها أو مديرا لها أو له فيها مصلحة مالية مباشرة.

ج - الأشخاص أو المنشآت الغير متخذة شكل شركات مساهمة متى كان أحد أعضاء مجلس إدارة البنك أو أحد مراقبي حساباته كفيلا لها.

3 - أن يعطي بلا ضمان قرضا أو أن يمنح تسهيلات ائتمانية أو أن يقدم كفالة أو ضمانا أو أن يتحمل بأي التزام مالي آخر لصالح أحد موظفيه أو مستخدميه بمبالغ تزيد على رواتبه مدة أربعة أشهر.

وكل عضو مجلس إدارة بنك أو مراقب حسابات أو مدير له يخالف حكم الفقرتين (2 و 3) من هذه المادة يعتبر مستقيلا من وظيفته.

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 9 explained in plain English

This article addresses the risk of conflicts of interest. It prevents the bank from certain forms of financing that could be exploited for the benefit of insiders in its management or put its funds at risk. The prohibitions cover loans, credit facilities, guarantees, security and any other financial commitment:

Against the bank's own name: the bank is prohibited from providing any of these against its name.
Without security to any of:
- its board members or auditors;
- businesses not in the form of joint-stock companies, where one of their board members or auditors is a partner in them, a manager of them, or has a direct financial interest in them;
- persons or businesses not in the form of joint-stock companies, where a member of the bank's board or one of its auditors is their guarantor.
Without security to the bank's employees or staff in amounts exceeding the employee's salaries for four months.

In the second and third cases what is prohibited is financing without security; the article does not address secured financing for these categories.

Consequence for the position: every board member, auditor or manager who violates paragraphs 2 and 3 is deemed to have resigned from his position. The article follows Article 8, which sets a general limit on financing a single person. Anyone who falls into one of these situations may consult a lawyer specialized in banking and finance.

Practical example

Khalid is an employee of a bank in Riyadh with a monthly salary of SAR 15,000, and he asked the same bank for a personal loan without providing any security. The bank may not give him more than four months' salaries without security, that is SAR 60,000, and a manager who approves a larger amount without security is deemed to have resigned from his position.

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 content

Banking, Finance & Securities lawyers: ask a specialist about your case

Describe your situation briefly and we'll suggest a lawyer who specialises in this law