How the law views banks functions [Archives:2004/776/Business & Economy]

September 27 2004

Mahyoub Al-Kamaly
The law on Yemeni banks issued in 1996 regulates banking work and defines ways of establishing a bank according to criteria and functions of banks, including Islamic and commercial banks working in Yemen.
The law defines the bank as the juristic person who practices his activity as his principal characteristic in banking works, whether those banks were commercial, Islamic or specialized.
The law also defines the meaning of the national currency as banknotes or coins. As for credit it is the group of facilities, loans and monetary credits of various forms the banks and financial establishments offer. The law defines the banking work as accepting monetary deposits payable on demand or according to other arrangements or could be withdrawn on check of money order of payment order as well as granting loans and credit facilities.
Of the banking matters the law of banks mentions are selling and discount of bills, money orders, coupons and bonds for commercial purposes, procedures of banking and ordinary deals with correspondents and obtaining baking facilities.
The law adds that among the banking works are also buying and selling foreign currencies and gold and silver money and bullions and bonds and shares, issuing and discount of bills and credit letters, opening credits and collecting bonds of shipment as well as doing works of agent in banking and financial establishments and selling and buying state bonds and money orders. It also points to other banking works such as financial lease including the hiring of equipment or tools of production, transport vehicles or estates for definite purposes in return for certain fee with a promise of selling at the termination of the period according to terms agreed upon.
According to the law, the company is as any firm registered according to the law of commercial companies implemented in Yemen. The company also includes the establishment outside Yemen. As for obligations on demand, they are the deposits at any bank and must be paid on demand and there are obligations for a certain period the law definers them as all payable on demand deposits at any bank including the saving accounts.