Central Bank of Bahrain

Deposits & Unrestricted Investment Accounts Protection Scheme

Summary of the Deposits & Unrestricted Investment Accounts Protection Scheme

The Central Bank of Bahrain has issued on the 13th January 2011, Resolution No. (34) for the year 2010 with respect to promulgating a Regulation "Protecting Deposits and Unrestricted Investment Accounts" in accordance with the provisions of Article 177 of the Central Bank of Bahrain and Financial Institutions Law No. (64) for the year 2006. This is considered an amendment to the current scheme which is in accordance with the resolution No. (3) for the year 1993. The CBB has taken this initiative considering the need to develop the previous post-funded scheme and replace it with a new prefunded scheme to bring deposit protection more closely in line with international best practices, as most of those schemes in developed countries have turned to a prefunded schemes where funds being collected and paid in advance to compensate depositors.

The new scheme overcome the disadvantages of the previous scheme, most importantly to have funds available in its capacity instead of depending on commitments difficult to collect in a short time period without leaving a adverse effect on the banking and financial system. In order to maintain a level playing field and to encourage a healthy competitive environment between Conventional and Islamic banks, the new scheme provides protection to unrestricted investment accounts in Islamic banks vis-a-vis the deposits in conventional banks. The new scheme requires the establishment of two separate funds (Conventional fund and Islamic fund) which shall be maintained and administered by one board in which the funds are accumulated separately in advance based on regular contributions by the member banks. The two funds cover eligible accounts which include all types of deposits in conventional and Islamic banks in addition to the unrestricted investment accounts in Islamic banks.

The new scheme covers eligible account holders of individuals up to BD20,000 from the total amount of their eligible accounts compared with the previous scheme which covers the lower of 75% of total deposits or BD15,000.

Full details of the scheme are given in Modules CP, of Volume 1 (conventional banks) and 2 (Islamic Banks) of the CBB Rulebook. The Regulation is also published on the CBB website in both Arabic and English language under this link.

Financial Statements


The financial statements as at year end on 31st December:


Conventional Fund


  2014 English  

Islamic Fund  

  2014 English  
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