Specifics of banking in Bahrain

Bahrain's banking system consists of conventional and Islamic banks and is the largest component of the country's financial system, accounting for over 85% of total assets.

Banking System of Bahrain

The banking sector has played a key role in the establishment of Bahrain as a leading financial centre in the region. The growth of the industry has been facilitated by an open market economy, stable and prudent macroeconomic and fiscal policies, a robust regulatory framework in line with international standards, and a highly skilled local and expatriate workforce. All these factors have combined to strengthen Bahrain’s position as a regional banking hub, successfully attracting numerous foreign banking institutions to establish their presence in the country.

The Central Bank of Bahrain (CBB) is a public corporate body established under the Central Bank of Bahrain and Financial Institutions Law, 2006. It was established on 6 September 2006 and is responsible for maintaining monetary and financial stability in the Kingdom of Bahrain. The CBB succeeded the Bahrain Monetary Agency, which had previously served as the central bank and regulator since its establishment in 1973.

The CBB implements the Kingdom’s monetary and exchange rate policy, manages the government’s reserves and debt issuance, issues the national currency, and oversees the country’s payment and settlement systems. It is also the sole regulator of Bahrain’s financial sector, covering the full range of banking, insurance, investment, and capital markets activities. Bahrain’s banking system consists of both conventional and Islamic banks and is the largest component of the country’s financial system.

The CBB’s broad range of responsibilities allows for a consistent approach to policy across the Kingdom’s financial sector. It also provides a simple and effective regulatory framework for companies providing financial services in Bahrain.

Article 40 of the Central Bank of Bahrain and Financial Institutions Law 2006 provides that no person may carry out a regulated service in the Kingdom of Bahrain without a license from the Central Bank. Therefore, persons wishing to carry out a regulated service must obtain a license from the CBB before commencing such activity.

Islamic Finance

Bahrain has long been recognized as a global leader in Islamic finance, hosting the largest concentration of Islamic financial institutions in the Middle East and some of the world's preeminent Islamic standard-setting bodies. Islamic financial institutions offering a variety of Shariah-compliant products and services include 6 retail banks, 6 wholesale banks, 2 wholesale branches of foreign banks, 9 Islamic windows of conventional banks, 5 Takaful companies, 1 Re-Takaful company and 1 Islamic finance company. In addition, Bahrain is at the forefront of issuing Islamic securities (sukuk), including short-term government sukuk as well as long-term instruments. The Central Bank has played a leading role in introducing these innovative products.

The Central Bank of Bahrain has also introduced a separate regulatory framework along with a comprehensive prudential and reporting framework for the Islamic segment, specifically tailored to the specific concepts and needs of Islamic banking and insurance. The code of practice for Islamic banks covers areas such as Shariah governance, licensing requirements, capital adequacy, risk management, business conduct, financial crime and disclosure/reporting requirements. Similarly, the insurance code takes into account the specificities of takaful and re-takaful firms. Both codes were the first comprehensive regulations governing the Islamic finance industry in the region.

• Waqf Fund

The Waqf Fund was established in November 2006 under the auspices of the Central Bank of Bahrain (CBB) in partnership with financial institutions offering Shariah-compliant banking services in Bahrain. Member institutions contributed to the Waqf Fund corpus, which was invested in Islamic money market instruments, with returns used to fund the Fund’s initiatives. These initiatives are implemented through partner institutions such as the Bahrain Institute of Banking and Finance (BIBF). The mandate of the Waqf Fund is to serve its 22 member institutions through development initiatives and activities in the areas of training, education and research in the field of Islamic finance.

The Waqf Fund has a Board of Trustees consisting of 13 members. The founder and chairman of the Board is the Executive Director of Banking Supervision of the CBB. Other members include representatives of member institutions and three independent members. The Board meets regularly to decide based on industry experience and feedback.

Bahrain is also home to a number of international organizations that play a central role in the development of Islamic finance, including:

• Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI)
• International Islamic Financial Market (IIFM)
• General Council of Islamic Banks and Financial Institutions (CIBAFI)
• Islamic International Rating Agency (IIRA)
• Bahrain Institute of Banking and Finance (BIBF) - Centre for Islamic Finance

Major players in the Islamic banking sector in Bahrain:

• Al Baraka Islamic Bank

Al Baraka Islamic Bank is one of the leading financial institutions in the Islamic banking sector. Throughout its more than 30-year history, since its establishment in 1984, the bank has played a prominent role in establishing the infrastructure of the Islamic finance industry. As one of the leading financial institutions in the Islamic banking sector, the bank offers a full range of Shariah-compliant products and services.

• Al Salam Bank

Al Salam Bank, one of the first Shariah-compliant banks in the Kingdom, is licensed and regulated by the Central Bank of Bahrain as an Islamic retail bank. Al Salam Bank offers its customers a wide range of innovative Shariah-compliant financial products and services through its extensive and powerful network of branches and ATMs, leveraging its technology to meet various banking requirements.

In addition to its retail banking services, it also offers corporate banking, private banking, investment banking, as well as treasury services. The bank’s management team consists of highly qualified and internationally experienced professionals with proven expertise in key areas of banking, finance and related fields.

• Bahrain Islamic Bank (BisB)

Bahrain Islamic Bank (BisB) was established in 1979 as the first Islamic commercial bank in the Kingdom of Bahrain. Since its inception, BisB has demonstrated steady growth. The Bank maintains a leading position in the Islamic banking sector through the introduction of innovative Islamic investment and financial products, supported by excellent retail and corporate banking services.

The Bank is listed on the Bahrain Stock Exchange. The major shareholders are leading local and regional financial institutions. The Bank operates under the supervision and in accordance with the regulatory framework of the Central Bank of Bahrain. With 9 local branches, the Bank has established the largest network among Islamic banks in the Kingdom. These branches offer quality banking services, financing and investment opportunities that are Shariah compliant to individual and corporate clients.

• Khaleeji Commercial Bank

Khaleeji Commercial Bank is known as one of the leading Islamic banks in the Kingdom of Bahrain. Established in 2004, the bank has gained a well-recognized reputation in the field of Islamic banking. The bank aims to be a leader in local and regional Islamic banking as it is listed on the Bahrain Stock Exchange and Dubai Financial Market. It also offers innovative products and services to its clients. The bank’s Board of Directors consists of recognized veterans and eminent personalities in the field of banking. The management team consists of a group of banking experts and professionals. There is also a Shariah Supervision Board consisting of specialized lawyers known both in the region and around the world. The Supervisory Board regularly monitors the bank's compliance, operational process and management, ensuring adherence to the principles and provisions of Islamic Shariah.

• Kuwait Finance House-Bahrain

Kuwait Finance House-Bahrain is one of the leading providers of Islamic commercial and investment banking services. Established in January 2002 as a subsidiary of Kuwait Finance House-Kuwait, an industry leader for over 40 years, specializing in conceptualizing the development and implementation of innovative, Shariah-compliant banking and investment products, all delivered by a team of experienced professionals.

Leading Banks in Bahrain

• Ahli United Bank

Founded in May 2000 following the merger of The United Bank of Kuwait and Al-Ahli Commercial Bank, Ahli United Bank has quickly become a significant player in the Bahraini banking sector. The bank offers a full range of Sharia-compliant retail, commercial, private banking and wealth management services. It operates through 163 branches in eight countries, including Bahrain, Kuwait and the UK, giving it a strong presence in the MENA region.

• Arab Banking Corporation (Bank ABC)

Arab Banking Corporation, better known as Bank ABC, is a leading financial institution in Bahrain with total assets of $44 billion as of early 2025. It was founded in 1980. The bank specializes in providing a wide range of products and services, including retail and corporate banking, project and structured finance, syndicates, treasury services and trade finance. Although its retail banking services are primarily focused on the Middle East and North Africa, Bank ABC remains a trusted choice for businesses seeking reliable financial solutions. The company has clients on all five continents – the Middle East, North Africa, Europe, the United States and Asia.

• Gulf International Bank (GIB)

Gulf International Bank was founded in 1975 in Bahrain. It began operations in 1976. GIB employs over 1,100 people worldwide and specializes in asset management, investment banking, treasury, wholesale banking, etc. Owned by the Public Investment Fund of Saudi Arabia and several GCC governments, GIB offers a comprehensive range of services in retail and wholesale banking, investment banking, asset management, and treasury services. The bank is known for its strong financial position and commitment to meeting the diverse banking needs of its clients across the region.

• Investcorp

The company was founded in 1982 and is headquartered in Manama. Since its inception, it has completed over 170 corporate investments and regularly maintains relationships with over 1,000 investors. The bank specializes in private equity, real estate, and hedge funds, serving high net worth individuals and institutional investors. With a significant presence in both the Middle East and North America, Investcorp has established itself as a leading alternative investment firm offering unique wealth creation opportunities.

• Bank of Bahrain and Kuwait (BBK)

One of the oldest banks in Bahrain, Bank of Bahrain and Kuwait was founded in 1971. The bank provides a full range of retail, wholesale and investment banking services with branches and representative offices in Kuwait, UAE, India and Turkey.

• Ithmaar Bank

It is one of the largest Islamic banks in Bahrain. It was founded on October 21, 2003. Ithmaar Bank has emerged as a key player in the Islamic banking sector with total assets of US$6.5 billion as of early 2025. Operating as an Islamic retail bank, Ithmaar provides a wide range of Shariah-compliant products and services to individuals and institutions. The bank is known for its innovative approach, having launched the region’s first biometric payments network in 2018, demonstrating its commitment to the use of technology in banking.

• National Bank of Bahrain (CBB)

Founded in 1957, the National Bank of Bahrain is the first local bank in the country. CBB provides retail, wholesale and investment banking services through a network of over 25 branches and 60 ATMs. The bank places a strong emphasis on customer service and community engagement, making it a popular choice among Bahraini citizens.

• Bahrain Development Bank

Founded on December 11, 1991, the Bahrain Development Bank focuses on supporting small and medium enterprises (SMEs) in the country. With a team of 203 employees, the bank aims to provide customized financial products and services to help SMEs thrive. Headquartered in Manama.

Arcapita

Arcapita was founded in 1997. It has been serving its clients for over 19 years and has completed over 70 transactions. Arcapita is renowned for its investment management services, particularly in the real estate sector. Although specific asset figures are not provided, Arcapita operates globally with a significant presence in the Middle East and North America. The bank focuses on private equity investments, offering unique opportunities for clients looking to diversify their portfolios across high-growth sectors.

FinTech Bahrain

The FinTech Bahrain revolution has changed the way financial services are accessed and delivered. Startups and established companies are using technology to improve efficiency, reduce costs and democratize financial services.

Bahrain is home to several fintech companies, including:

• Rain, a cryptocurrency exchange.
• Skiplino, a queue management platform.
• Tarabut Gateway, an open banking platform.
• Eazy Financial Services, a digital payments provider.

The Central Bank of Bahrain has embraced FinTech by introducing progressive regulations that encourage innovation while ensuring consumer protection and financial stability. This proactive approach has attracted numerous FinTech companies to operate in Bahrain.

The Central Bank of Bahrain has implemented a number of initiatives to promote innovation in the financial sector, including:

• "Regulatory Sandbox" allows fintech companies to test their products and services in a controlled environment before releasing them to the market.
• Fintech Bahrain was created to support the growth of the financial industry in the country.
• An electronic money transfer system that enables payments and transfers between banks in real time.
• Open Banking Framework allows customers to securely share their financial data with third-party providers.
• Customers now have seamless access to a wide range of financial services on their smartphone, from checking account balances to making investments.

Innovative digital payment solutions have gained significant traction in Bahrain. Mobile wallets, QR code payments and contactless transactions have changed the way people conduct their daily financial activities.

Bahrain has shown keen interest in exploring the potential of blockchain technology and cryptocurrencies. The government’s open approach has attracted blockchain startups and encouraged discussions about the regulatory framework for digital assets.

FinTech has introduced new lending and borrowing platforms that use data analytics and alternative credit scoring methods. This has improved access to credit for individuals and businesses that were previously underserved by traditional banks.

Technology has enabled financial institutions to offer personalized and seamless customer experiences. Chatbots, AI-powered advisory services, and user-friendly apps are all part of the solution. Here are just some of the ways Bahrain's financial sector is improving customer satisfaction.

Types of Bank Accounts

There are several types of bank accounts available in Bahrain, each designed to meet the specific needs of different individuals and businesses.

• Current Account

A current account is a checking account that allows consumers to deposit and withdraw money, make payments, and write checks.

• Savings Account

A savings account is designed for people who want to save money and earn interest on their savings. This type of account typically has lower transaction fees, but may have limits on the number of withdrawals or transfers.

• Term Deposit Account

A Fixed Deposit Account is a form of savings account that gives you a higher yield in exchange for a fixed deposit term. The period can be from 1 month to several years, and the interest rate is fixed for the term.

• Foreign Currency Account

A foreign currency account allows clients to hold funds in a foreign currency, which can be beneficial for individuals or businesses involved in international transactions.

• Children's Savings Account

Designed to meet the needs of minors, these accounts offer parents or guardians a safe haven to save on behalf of their children. With an emphasis on security, these accounts often come with lower fees and minimum balance requirements.

• Business Account

A business account is created by companies and organizations to manage their finances and transactions.

• Islamic Account

Islamic accounts follow the principles of Islamic finance and are designed to be compliant with Sharia law. This type of account does not charge or pay interest, but instead, clients share in the profits or losses caused by the bank's acquisitions.

How to Open a Bank Account in Bahrain

• Research and choose a bank

There are several banks in Bahrain and it is important to research and choose a bank that suits your needs and requirements.

• Gather the necessary documents

The first step is to provide legal identification documents such as your passport and residence permit (if applicable), proof of address and other supporting documents such as a letter of recommendation and proof of income.

• Make an appointment

Contact the bank and make an appointment to open an account.

• Visit the bank

On your scheduled appointment, visit the bank with your documents and fill out the required application forms.

• Make funds to the account

After authorizing your form, you will need to deposit the required minimum amount to activate your account. The amount may vary depending on the bank and the type of account you are expanding.

Once your account is activated, you can start using it for various financial transactions such as receiving and sending money, paying bills and more.

Documents Required to Open a Bank Account

To open a bank account in Bahrain, you will need to provide the following documents:

• A valid passport. A valid passport is required to prove your identity and ethnicity.
• A residence permit. If you are not a resident of Bahrain, you will need to provide a residence permit to prove your legal status in the country.
• A Bahraini Identity Card (CPR). Bahraini citizens are required to present their national identification card, called a CPR (Central Registry of population).
• Proof of Address. You will need to provide proof of address, such as a utility bill or rental agreement, to prove that you reside in Bahrain.
• Letter of Reference. Some banks may require a review letter from your last bank or employer to confirm your economic stability and status.
• Proof of Income. Some banks may require proof of income, such as a salary slip or bank statement, to assess your financial situation.
• No Objection Letter (NOC). Some banks may ask your employer for a No Objection Certificate (NOC) that confirms their approval for you to open a bank account.

Can foreigners open a bank account in Bahrain?

Yes, foreigners can open a bank account in Bahrain. Bahrain has a well-developed banking system and many banks welcome foreign clients. However, the requirements and documentation required may vary from bank to bank.

To open a bank account in Bahrain as a foreigner, you will generally need to provide identification documents such as your passport and residence permit. You may even need to provide proof of address, such as a utility bill or lease, as well as a letter of reference from your current bank.

It is important to note that some banks may require a minimum deposit amount to open an account, and some may charge fees for certain services, such as using an ATM or wire transfers.

In addition, certain rules may apply to non-resident accounts, such as limits on the percentage of cash that can be deposited or withdrawn. Therefore, it is important to research different banks and their account requirements before choosing the one that best suits your needs.