OBU and investment banking licences will from 1 July be merged into a ‘wholesale bank’ licence.
Licence-holders will be able to provide credit and accept deposits of a minimum of BD 7 million ($18.4 million). Investment business transactions of at least $250,000 will also be permitted with residents. The full commercial bank licence category will be replaced by a ‘retail bank’ licence.
‘The thinking behind the move was four-fold,’ says Khalid Hamad, executive director of banking supervision at the BMA.
‘We wanted to create a better definition of regulated activity, complement our role as a single regulator, enhance the transparency and clarity of the regulations and reduce the regulatory burden on banks.’
The new rules are the result of more than two years of consultations with interested parties.
A new central bank law defining and clarifying the BMA’s role as the single regulator of the insurance sector and stock market in addition to the banking sector was passed by the National Assembly (parliament) on 27 June.
It has been under preparation for more than four years and will increase the BMA’s freedom to develop and implement new regulations. The law will also see the BMA’s name changed to the Central Bank of Bahrain.