More powers soon for CBB

BAHRAIN’S central bank is set to receive more powers under major structural changes approved by the Shura Council yesterday.

Amendments drafted by the government allow the Central Bank of Bahrain (CBB) to act during financial or monetary instability – locally, regionally or internationally.

It will also have the power to intervene to stabilise the nation’s finances.

The amendments to the 2006 Central Bank of Bahrain and Financial Institutions Law were approved by MPs last month.

Under the amendments, the CBB would be considered the government’s main bank with automatic powers to stabilise the currency in co-operation with the Finance and National Economy Ministry and other authorities concerned.

Should financial institutions fail to provide external auditors information on their operations within four months from the start of the year then the CBB would have the right to intervene.

The CBB would also be able to take disciplinary action, including summary dismissal, against violators in any financial establishment.

It can also investigate, inspect and enter any financial establishment or its affiliates through its employees or others assigned by powers granted in this law.

For any violation, the fine would be up to BD100,000.

Islamic banking rules would be those authorised by the CBB.

CBB Governor Rasheed Al Maraj, reappointed last week in the post, said current practices have shown difficulty in conducting monitoring, raids and taking punishments.

“Since 2006 things have evolved and developed but we found it difficult to intervene in several cases because we did not have the power,” he said during the session yesterday.

“We need special powers to act against violators and wrongdoers and our hands are cuffed with current restrictive authority as we need the consent of the board of a financial establishment to take action against individuals.

“There have also been cases in which whenever we decide to inspect an establishment, important documents are destroyed, hidden or are in the possession of someone beyond our legal reach.

“We have to ignore procedures to catch culprits, and those who we want to take action against have 30 days to file grievances.”

Mr Al Maraj said Islamic banking has grown but the current rules were vague.

“There are problems with Islamic banking despite us having a special religious panel under the CBB because current rules are vague and could be interpreted differently.”

Shura financial and economic affairs committee chairman Khalid Al Maskati said the new powers were necessary for the CBB to be able to play a bigger role.

Meanwhile, the chamber also voted on urgent government-drafted amendments to dissolve a judicial rents dispute panel from the 2014 Rents Law and transfer its duties to the Higher Civil Court.

If the disputed amount is less than BD1,000 then the verdict is final and cannot be appealed. The amendments were approved by MPs last Tuesday.

Justice, Islamic Affairs and Endowments Minister Shaikh Khalid bin Ali Al Khalifa said the panel was delaying legal procedures despite involving municipal officials and judges with it being important at one point.

Shura also voted on a mutual taxation agreement with Pakistan and an aviation agreement with Spain.

All four legislations have been referred to His Majesty King Hamad for ratification.

After two months of debate, the Shura members voted on the 32-article Organisational and Monitoring Law for International Trade of Animals and Plants on The Verge of Extinction and referred it back to Parliament due to differences.




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