The Banking Control Law is a law that encompasses a set of procedures related to monitoring banks and conducting banking operations in the Kingdom of Saudi Arabia. It was issued in 1966 during the reign of King Faisal Bin Abdulaziz Al Saud.
Contents of Banking Control Law
The Banking Control Law comprises twenty-six articles, which include definitions of terms used in the law like entities licensed for conducting banking activities. It also includes the conditions for granting licenses for carrying out banking activities. It stipulates that a bank must retain with the Saudi Arabian Monetary Agency (currently the Saudi Central Bank) a statutory deposit of no less than 15 percent of its total deposit at all times. The law includes the activities prohibited for any bank, the activities that any bank is prohibited from conducting without obtaining prior written license from the central bank, the members of the banks' boards of directors and accountants, the matters that the Saudi Central Bank may, after the approval of the Minister of Finance, establish general rules for their regulation, the inspection by the Saudi Central Bank of the records and accounts of any bank, and the measures that the authority may take if it becomes apparent that a bank has violated the provisions of this law, as well as the penalties.
Licenses to carry out banking activities
The Banking Control Law in the Kingdom stipulates that an application for a license to carry out banking activities in the Kingdom must be submitted to the Saudi Arabian Monetary Agency (currently the Saudi Central Bank). Upon obtaining all necessary data, the authority reviews the application and provides its recommendations to the Minister of Finance.
According to the Banking Control Law, the chairman of the board of directors, the managing director, the board member, the head office manager, and the branch manager, each within their respective jurisdictions, are responsible for any violation by the bank of the provisions of this law or the decisions and rules issued for its implementation.
Prohibitions in the Banking Control Law
According to the Banking Control Law, it is prohibited for any person who is not licensed to carry out banking activities in the Kingdom on a primary basis to use the word (bank), its synonyms, or any similar expression in any language, whether in its papers, printed matters, or commercial address.
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