The Central Bank of Bahrain (‘CBB’) has released a new set of Rules specifically tailored for microfinance institutions. The CBB prides itself as being at the forefront of the regulatory process by continuously enhancing the CBB Rulebook to cater to the dynamic nature of the financial system in Bahrain.
The Rules for microfinance institutions are part of the Volume 5 of the CBB Rulebook, developed specifically for specialised licensees. The complete framework for microfinance institutions includes a series of common Modules for all specialised licensees as well as 9 specific Modules for microfinance institutions. The initial launch of the specific microfinance Modules include 7 Modules. These are:
- · Module AU (Authorisation)
- · Module HC (High-level Controls/Corporate Governance)
- · Module GR (General Requirements)
- · Module CA (Capital Adequacy and Liquidity Requirements)
- · Module BC (Business Conduct)
- · Module BR (CBB Reporting)
- · Module PD (Public Disclosure)
The above Modules will be supplemented in the future by Module RM (Risk Management) and Module TC (Training and Competency).
As part of the development of its regulatory framework, the CBB undertook a public consultation with the industry seeking feedback on its latest proposals for microfinance institutions. It furthered its research by onsite visits to the microfinance institutions currently licensed in Bahrain to gain insight into this financial activity and to ensure that any rules issued recognise the unique characteristics of this industry.
Khalid Hamad, Executive Director, Banking Supervision commented that “throughout the years, the CBB has conducted various consultations in line with the implementation of international standards, seeking feedback from the industry to ensure that due consideration is given to various queries and issues raised and thereby translating international standards to take into account the financial services industry in Bahrain. The consultation process ensures that the CBB has a transparent regulatory process, and all consultations are publicly available on its website (www.cbb.gov.bh) along with feedback statements reflecting industry comments and the CBB’s reply or actions taken in light of the comments received”.
