• No person, natural or juristic, unlicensed in accordance with the provisions of this Law, shall carry on basically any of the banking business. However;

  • a) Juristic persons licensed in accordance with another law or special decree to carry on banking business may practice such business within the limits of their intended purposes.

  • b) Licensed moneychangers may practice basically exchange of currency in the form of notes and coins, but no other banking business.

• The application for the grant of a license to conduct banking operations in the Kingdom is submitted to the bank, which, after obtaining all necessary data, studies the application and submits its recommendations regarding it to the Minister of Finance. The following conditions must be met for the license of a national bank:

  • 1- It must be a Saudi joint-stock company.

  • 2- Its paid-up capital must not be less than two and a half million Saudi Riyals, and all capital subscriptions must be paid in cash.

  • 3- Its founders and members of the Board of Directors must have a good reputation.

  • 4- The Minister of Finance must approve its Articles of Incorporation and its bylaws. For the license of a foreign bank to establish a branch or branches in the Kingdom, it must meet the conditions set by the Council of Ministers based on the proposal of the Minister of Finance, and the license is issued in all cases by the Minister of Finance after the approval of the Council of Ministers.

Notwithstanding the provisions of the previous article, the licenses and permits issued to individuals engaged in banking activities in the Kingdom and in effect on the date of the enforcement of this Law shall remain valid. However, the bank may request from these individuals any documents or information it deems necessary, and may request them, after obtaining the approval of the Council of Ministers, to comply with all or some of the provisions of Article Three of this Law within the period specified by it.

A person not licensed to primarily engage in banking business in the Kingdom may not use the word "bank," its synonyms, or any equivalent term in any language in his papers, publications, business address, name, or marketing materials.

The bank's liabilities from deposits shall not exceed fifteen times the total of its reserves and paid or invested capital. If the liabilities from deposits exceed this amount, the bank must, within one month from the date of submitting the statement referred to in the first paragraph of Article Fifteen, either increase its capital and reserves to the prescribed limit or deposit with the bank fifty percent (50%) of the excess amount.

Every bank must maintain at all times a statutory deposit with the bank of no less than (15%) fifteen percent of its deposit liabilities. The bank may adjust this percentage according to the requirements of the public interest, provided that it does not fall below (10%) ten percent and does not exceed (17.5%) seventeen and a half percent. However, the bank may exceed these limits with the approval of the Minister of Finance and National Economy. Additionally, each bank must maintain, in addition to the deposit stipulated in the previous paragraph, a liquidity reserve of no less than (15%) fifteen percent of its deposit liabilities, and this reserve must consist of cash, gold, or assets that can be converted into cash within a short period not exceeding thirty days.
The bank may, whenever it deems necessary, raise this percentage to a maximum of (20%) twenty percent.

It is prohibited for any bank to grant a loan, provide credit facilities, or offer a guarantee or any other financial assurance in favor of any natural or legal person in amounts exceeding a total of (25%) twenty-five percent of the bank's total reserves and paid or invested capital. The bank may, for the purposes of the public interest and under the conditions it specifies, increase this percentage to (50%) fifty percent.
The provisions of the previous paragraph do not apply to transactions conducted between banks or between the main offices of banks and their branches, or between these branches.

• A bank may not:

  • 1. use its stocks as security to extend a loan, grant a credit facility, provide a security or guarantee, or undertake any other financial obligation;

  • 2. extend, without security, a loan, grant a credit facility, provide a security or guarantee, or undertake any other financial obligation for the benefit of:

    • a) members of its board of directors or its auditors;

    • b) an entity that is not a joint stock company if any of its board members or auditors is a partner, manager, or has a direct financial interest therein; and

    • c) a person or an entity that is not a joint stock company if any of the bank’s board members or auditors is a guarantor thereof.

  • 3. extend, without security, a loan, grant a credit facility, provide a security or guarantee, or undertake any other financial obligation for the benefit of any of its officers or staff for an amount not exceeding four-months’ salary.

• Any member of the board of directors, auditor, or manager of a bank who violates paragraphs (2) and (3) of this Article shall be deemed to have resigned from his post.