Central Bank of Bahrain revises Kingdom’s crowdfunding rules

The Central Bank of Bahrain (CBB) yesterday expanded the scope of the services covered under the existing rules on “crowdfunding”. As per the revised guidelines, there will be a reduction in minimum capital given the nature of the risk profile of the crowdfunding platform operator.

CBB has also removed the prohibition on business to business lending or investing through platforms as well as raised the limits for lending. The revision removes certain restrictive conditions for lending /investing and calls for a consumer protection mechanism whereby, the lender or investor has the right to withdraw the commitment made within 48 hours from the time he /she makes a commitment to lend or invest.

Commenting on the move, Khalid Hamad, Executive Director at the CBB, said: “We reviewed the demands placed on the business models of crowdfunding platform operators and also considered the lack of access to credit and capital for some of the smaller businesses among other factors in making these important amendments to the rules.” The amended rules would be available on the CBB website under relevant Modules within the CBB Rulebook Volumes 5 and 6.