Law & Regulation
Banking Control Law
The Banking Control Law governs licensed banking business and SAMA's prudential supervision of banks in Saudi Arabia. Although an older statute, it remains a current foundation supplemented by SAMA rules and the Saudi Central Bank Law. It regulates institutions rather than serving as a general loan or project-finance contract code.
Legal Significance
What This Instrument Does
The Law restricts banking business to authorized institutions, governs licensing, capital and reserves, imposes operational and prudential limits, requires reporting and inspection, and enables corrective action and sanctions. Cross-border and currency-related bank activity contributes to its supporting FX role.
Why It Matters
Project lenders, account banks, guarantee issuers and hedging banks may be regulated under this framework. Counterparty authority, prudential restrictions, exposure limits and SAMA intervention can affect transaction execution and bankability.
Key Provisions
- Definition and reservation of banking business
Restricts regulated activity. Transaction relevance: tests whether an entity may lawfully provide a financial service.
- Bank licensing
Establishes authorization requirements. Transaction relevance: core counterparty due diligence.
- Capital and reserve requirements
Supports solvency. Transaction relevance: contextual to lender strength and regulatory capacity.
- Restrictions on activities and exposures
Limits certain transactions/concentrations. Transaction relevance: may affect commitment size, affiliates and collateral structures.
- Liquidity and prudential controls
Enables financial-soundness requirements. Transaction relevance: relevant to funding and account-bank resilience.
- Accounts, audit and reporting
Requires financial information and controls. Transaction relevance: supports supervisory transparency, not borrower disclosure rights.
- Inspection and supervisory directions
Gives SAMA oversight powers. Transaction relevance: regulated counterparties remain subject to mandatory intervention.
- Confidentiality
Protects banking information within legal exceptions. Transaction relevance: affects information-sharing design and consents.
- Corrective measures and sanctions
Supports enforcement against non-compliant banks. Transaction relevance: counterparty replacement and disruption planning may be prudent.
When You Would Use This
Confirming that a lender, account bank or service provider is authorized.
Reviewing bank capacity and regulatory constraints in financing documents.
Assessing SAMA supervisory powers over a counterparty.
Structuring information-sharing and bank confidentiality consents.
Analysing account-bank or guarantee-provider replacement risk.
Mapping regulated cross-border payment activity.
InfraLex Relevance
The Law is a Banking Primary and a limited FX-supporting instrument. It should not be assigned Security coverage merely because banks take collateral.
Legal Framework Position
- Banking & FinancePrimary / Framework Instrument
- Foreign Exchange / Capital ControlsSupporting / Related Instrument
Instrument Overview
- Official Citation
- Royal Decree M/5, 22/2/1386H, as amended
- Instrument Type
- Law / Act
- Source Language
- Arabic
- Last Verified
- 6 September 2026