The Bahrain Monetary Agency (BMA) is fine tuning a new, integrated licensing framework for the country’s financial services industry.
A final consultation has been issued on the proposed licensing framework, which is slated to come into effect before the end of this year.
“The revised framework builds on the December 2004 consultation paper and subsequent comments received from the industry,” said Dr Khalid Abdulla Ateeq, Executive Director, Banking Supervision, at the BMA.
The overall approach remains the implementation of a single, consistent framework covering all segments of the financial services industry. However, the original proposals have been further refined and clarified to take into account comments received from industry.
The revised framework remains focused on the underlying activities to be undertaken and simplifies the existing list of over 20 different license categories. Activities will remain grouped under five ‘sector’ headings, each of which equates to a basic license category and, in turn, a specific volume of the BMA Rulebook, as follows:
Sector Heading Basic License Category Rulebook
Block 1: Banking services conventional bank licensees Volume 1
Block 2: Islamic banking services Islamic bank licensees Volume 2
Block 3: Insurance services insurance licensees Volume 3
Block 4: Investment services investment firm licensees Volume 4
Block 5: Specialised services specialised licensees Volume 5
The revised proposals have been simplified by making each block of activities self-contained, such that they each include the complete range of possible activities available to that particular license category.
The revised framework also explicitly allows conventional banks to undertake Shari’a compliant transactions, clarifies definitions and regulated activities such as deposit taking, and proposes different thresholds for offshore banks wishing to do business in Bahraini Dinar or with residents.
The revised consultation paper has been issued to the financial services industry. It is also available on BMA’s website at www.bma.gov.bh
“As always, we welcome comments from the industry and other interested parties, to the proposals detailed in the second consultation paper,” said Dr Ateeq.
The consultation period runs until 15th October 2005.
“The single license framework will bring together and enhance the different existing frameworks applied in the banking, insurance and capital markets sectors,” Dr Ateeq pointed out. The new framework marks a significant improvement on current approaches, in terms of transparency and consistency of approach.
It will also provide for greater flexibility for those wishing to do business in or from Bahrain, in terms of the licensing options available to them.
However, for most existing licensees, it will be “business as usual”. The new framework will essentially represent a re-labelling rather than a fundamental change in how they operate.
