Banking (Licensing) Law, 5741-1981
חוק הבנקאות (רישוי), תשמ"א-1981
Published: 1981-04-26Consolidated Hebrew text as of 2026-08-03 · Last amended 2026-08-02✓ Amendment status checked against the Knesset legislation record on 2026-09-29
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Chapter IV-A: Committee for the Appointment of Directors in Banking Corporations
The Committee for the Appointment of Directors in Banking Corporations§
36a.
(a)The Governor shall appoint a committee for the appointment of directors in banking corporations (in this Chapter – the Committee).
(b)The Committee shall consist of five members, as follows:
(1)a retired judge of the Supreme Court or of the District Court, to be proposed by the Minister of Justice after consultation with the President of the Supreme Court, and that person shall serve as chairperson;
(2)two members, to be proposed by the chairperson of the Committee appointed pursuant to paragraph (1), in consultation with the chairperson of the Israel Securities Authority, who are persons of business and economic expertise and in respect of whom what is stated in section 16a of the Government Companies Law, 5735-1975 applies, or who are senior academic staff members at institutions of higher education in relevant fields, or who have previously served as such academic staff members;
(3)two directors serving as external directors in the banking corporation whose affairs the Committee is considering, to be proposed by the chairperson of the Committee and the members of the Committee appointed pursuant to paragraphs (1) and (2), in consultation with the Supervisor; for this purpose, "external director" – as defined in the Companies Law, or as defined pursuant to proper banking management directives on the board of directors issued by the Supervisor pursuant to the provisions of section 5(c1) of the Ordinance.
(c)The Committee and the members of the Committee shall not be regarded as holding means of control in the banking corporation whose affairs the Committee is considering, or as controlling such a corporation.
(d)The Committee is an audited body, as defined in section 9(6) of the State Comptroller Law, 5718-1958 [Consolidated Version].
Restrictions on tenure and limitation after end of tenure§
36b.
(a)In this section –
"related body" – a person who controls a banking corporation, or a corporation controlled by a banking corporation, or a corporation controlled by a person who controls a banking corporation;
"connection" – as defined in section 11e(e) of the Ordinance;
"material holder" – a person who holds more than two and a half percent of a particular type of means of control in the banking corporation whose affairs the Committee is considering or is expected to consider, a person who controls such a holder, a person controlled by either of them, a member of a group of holders as defined in section 11d(a)(3)(b) of the Ordinance, a person who controls a member of such a group of holders, and a person controlled by any of them;
"close relationship" – a relationship between a person and his or her relative, partner, employer, or a person to whom he or she is directly or indirectly subordinate, as well as a corporation in which that person is the controlling shareholder.
(b)A person in whom one of the following applies shall not be appointed and shall not serve as a member of the Committee:
(1)that person or his or her relative holds means of control of any type in a banking corporation, in a related body, or in a material holder, except for a holding of traded shares at a rate not exceeding one quarter of one percent of the issued and paid-up capital of any of them;
(2)a person who, within the two years preceding the date of appointment or from the date of appointment onwards, has or a person with whom he or she has a close relationship has a connection to a banking corporation, to a related body, to an office holder in a banking corporation, or to a material holder, and also a person who, from the date of appointment onwards, has a connection to a relative of an office holder in the banking corporation whose affairs the Committee is considering or is expected to consider, or to a relative or partner of a material holder; for this purpose, tenure as an external director by a Committee member appointed pursuant to section 36a(b)(3) shall not be regarded as a connection;
(3)that person is a Minister, Deputy Minister or member of the Knesset, or has a personal, business or political connection to a Minister or Deputy Minister, or is a State employee or an employee of a corporation established by law;
(4)in the opinion of the Governor, that person is not suitable to serve as a member of the Committee.
(c)Without prejudice to the provisions of subsection (b)(2), a person who has, or a person with whom he or she has a close relationship has, business or professional relationships with a banking corporation, with a related body, with an office holder in a banking corporation, or with a material holder, shall not serve as a Committee member, even if such relationships are not of a regular nature, save for negligible relationships.
(d)A person who has served as a member of the Committee shall not be appointed as a director in the banking corporation whose affairs the Committee considered during his or her tenure, or in a related body to such banking corporation, shall not be employed as an employee by any of them, and shall not provide professional services to any of them, whether directly or indirectly, including through a corporation under his or her control, unless one year has elapsed from the end of his or her tenure as a member of the Committee; the provisions of this subsection shall not apply to a Committee member appointed pursuant to section 36a(b)(3) in respect of tenure as an external director in the banking corporation.
Term of tenure§
36c.
(a)A Committee member referred to in section 36a(b)(1) and (2) shall be appointed for a period not exceeding three years and may be reappointed for one additional term of tenure.
(b)A Committee member referred to in section 36a(b)(3) shall be appointed shortly after an annual general meeting and shall serve until after the next annual general meeting, and shall serve as a Committee member for as long as he or she serves as an external director in the banking corporation, as referred to in that section, and may be reappointed for additional terms of tenure.
Cessation of tenure§
36d.
A Committee member shall cease to serve before the end of his or her term of tenure in one of the following circumstances:
(1)he or she has resigned by delivering a letter of resignation to the Governor;
(2)the Governor has decided to terminate his or her tenure on account of one of the following:
(a)he or she is prevented from fulfilling his or her function or is not fulfilling his or her function properly;
(b)one of the grounds under section 36b that disqualifies that person from being eligible for tenure has become applicable to that person.
Rules of procedure§
36e.
(a)A majority of the members of the Committee shall constitute a quorum at its meetings, provided that in such a majority of Committee members there is no majority of members appointed pursuant to section 36a(b)(3).
(b)Decisions of the Committee shall be made by a majority of votes of its members participating in the vote; if votes are equal, the chairperson of the Committee shall have an additional casting vote.
(c)The Committee shall determine its own rules of procedure, including the manner of selecting the director it shall appoint as referred to in section 35a(b) and the manner of selecting the candidate for the position of director it shall propose to the general meeting as referred to in section 11d of the Ordinance; the rules of procedure of the Committee shall be approved by the Supervisor and published on the Bank of Israel website.
Validity of acts§
36f.
The powers of the Committee and the validity of its acts shall not be affected by reason of a vacancy in the position of a member, or by reason of a defect in the appointment of a member, or by reason of a defect in the continuation of a member's tenure.
Remuneration§
36g.
Members of the Committee shall be entitled to remuneration for participation in Committee meetings at the rate determined by the Governor and shall not be entitled to any other remuneration or reimbursement of expenses; such remuneration shall be paid by the Bank of Israel.
36h.§
(Repealed — תשע״ב)
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Contact Us →Chapter IV-B: Payment Service Provider of Systemic Importance
Definitions – Chapter IV-B§
36i.
In this Chapter –
"means of payment", "payment instruction", "issuance" of a means of payment, "payment account", "customer", "payee", "payer", "clearing" of a payment transaction, "payment transaction", "advanced initiation service" and "ATM services" – as defined in the Payment Services Law;
"company" – as defined in the Companies Law;
"payment company", "issuer with a broad scope of activity", "acquirer with a broad scope of activity" and "basic initiation service" – as defined in the Payment Services Regulation Law;
"Payment Services Regulation Law" – Payment Services and Payment Initiation Regulation Law, 5783-2023;
"Payment Services Law" – Payment Services Law, 5779-2019;
"issuer with a broad scope of activity", "acquirer with a broad scope of activity" and "basic initiation service" – as defined in the Payment Services Regulation Law;
"Supervisor of Financial Service Providers" – as defined in section 2 of the Financial Services Supervision Law (Regulated Financial Services), 5776-2016;
"payment service provider of systemic importance" – one of the following:
(1)an auxiliary corporation engaged in the provision of payment services;
(2)a corporation that is not an auxiliary corporation, in which the conditions listed in section 36j(b) are fulfilled and subject to the provisions of section 36j(c);
(3)a body in which the conditions determined by the Minister of Finance pursuant to section 36j(a) are fulfilled;
"systemic payment service provider licence" – a licence as defined in section 36l;
"payment services" – as defined in the Payment Services Regulation Law, except for advanced initiation service.
Determination of conditions regarding a payment service provider of systemic importance§
36j.
(a)
(1)For the purpose of ensuring the stability of the financial system or its orderly operation, and having regard to the consideration of competition in the financial system, the Minister of Finance shall determine –
(a)conditions upon the fulfilment of which a body shall be regarded as a payment service provider of systemic importance;
(b)provisions regarding the transition of a payment company from supervision under another law, including under the Payment Services Regulation Law, to supervision under this Law, or vice versa, which shall serve, among other things, to ensure continuity of supervision and enforcement; such provisions shall apply notwithstanding the provision of section 36k;
(2)Regulations pursuant to paragraph (1) shall be made on the proposal of the Israel Securities Authority or in consultation with it, on the proposal of the Governor or with his or her consent, in consultation with the Commissioner of Competition, and with the approval of the Economics Committee of the Knesset.
(b)The provisions of this Law applicable to a payment service provider of systemic importance shall also apply to a corporation that was an auxiliary corporation and engaged in the clearing of a payment transaction whose instruction was given by means of a debit card, on the eve of the publication of the Law for the Promotion of Competition and Reduction of Concentration in the Banking Sector in Israel (Legislative Amendments), 5777-2017.
(c)
(1)Notwithstanding what is stated in subsection (b), the Minister of Finance may prescribe in Regulations that a corporation as referred to in that subsection that is not listed in paragraphs (1) or (3) of the definition of "payment service provider of systemic importance" shall not be a payment service provider of systemic importance, if satisfied that this is required for the purpose of promoting competition in the financial system, having regard to the stability of the financial system and its orderly operation;
(2)Regulations pursuant to paragraph (1) shall be made in consultation with the Israel Securities Authority, with the Governor and with the Commissioner of Competition, and with the approval of the Economics Committee of the Knesset;
(3)Regulations pursuant to paragraph (1) shall include provisions regarding the transition of a body as referred to in that paragraph from supervision under this Law to supervision under another law, including under the Payment Services Regulation Law, which shall serve, among other things, to ensure continuity of supervision and enforcement.
Licensing requirement§
36k.
A payment service provider of systemic importance shall not engage in the provision of a payment service unless it has received a licence for this purpose pursuant to section 36l.
Licensing of a payment service provider of systemic importance§
36l.
(a)The Governor may, at his discretion and after consultation with the Licensing Committee, grant a systemic payment service provider licence to a payment service provider of systemic importance.
(b)The Governor shall not grant a systemic payment service provider licence under subsection (a) unless the licence applicant is a company whose issued and paid-up share capital is not less than the amount prescribed by the Governor by Order, with the approval of the Minister of Finance and the Finance Committee of the Knesset, and the provisions of section 7(c) shall apply to this matter, with the necessary modifications.
(c)The provisions of sections 6 and 8 shall apply to a systemic payment service provider licence, with the necessary modifications.
(d)The holder of a systemic payment service provider licence whose licence has been revoked shall, for the purposes of the Ordinance, have the same status as a holder of a systemic payment service provider licence for one year from the date of revocation, and the provisions of section 9(b) shall apply to this matter, with the necessary modifications.
Control and holding of means of control in a holder of a systemic payment service provider licence§
36m.
(a)The provisions of sections 34, 34a, 35 and 36 shall apply, with the necessary modifications, to a holder of a systemic payment service provider licence and to a corporation controlled by it, as if they were a banking corporation.
(b)The provisions of section 35b(a), (b), (c), (e) and (f) shall apply, with the necessary modifications, to a holder of a systemic payment service provider licence that engages in the clearing of debit card transactions as defined in section 11b(a), as if it were a banking corporation; however, the Governor may prescribe under section 35b(b) a rate different from the rate applicable under that section to a banking corporation, all subject to the provisions of that section.
(c)Notwithstanding subsection (a), the Governor may, for special reasons to be specified, exempt a corporation controlled by a holder of a systemic payment service provider licence from the application of the provisions of sections 34, 34a, 35 and 36, in whole or in part.
Permitted occupations for a holder of a systemic payment service provider licence§
36n.
(a)Subject to the provisions of any law, a holder of a systemic payment service provider licence may engage in the provision of payment services, and may also engage in the occupations listed below, and in respect of the occupations listed in paragraphs (4) to (7) – if it has received prior written approval therefor from the Supervisor:
(1)the granting of credit;
(2)currency exchange in connection with a payment service;
(3)the provision of ATM services;
(4)the provision of a basic initiation service or an advanced initiation service;
(5)the provision of a financial information service as defined in the Financial Information Service Law, 5782-2021;
(6)the receipt of funds of a payment company as referred to in section 24(b) of the Payment Services Occupation Regulation Law;
(7)any other activity ancillary to the provision of a payment service or to an occupation referred to in paragraphs (1) to (6).
(b)Notwithstanding subsection (a), a holder of a systemic payment service provider licence may engage in occupations additional to those referred to in subsection (a) if the Supervisor has approved this in advance and in writing, provided that the Supervisor has found that these are not likely to impair the fulfilment of the obligations of a holder of a systemic payment service provider licence under law or in the interests of its customers, and do not raise a substantial concern of a conflict of interests in its activities.
(c)The Governor may issue instructions to a holder of a systemic payment service provider licence regarding the separation of an activity unconnected to the occupation of providing payment services under its licence into a separate corporation, provided that the licence holder has been given an opportunity to present its arguments.
(d)A holder of a systemic payment service provider licence shall not control a corporation and shall not be an interested party in a corporation, unless both of the following conditions are met:
(1)the corporation engages in occupations permitted to a holder of a systemic payment service provider licence as referred to in subsections (a) or (b);
(2)it has received therefor approval from the Supervisor, in advance and in writing, which approves, inter alia, the fields of activity of the corporation.
Acquirer with a broad scope of activity§
36o.
(a)If the Minister of Finance considers it necessary to ensure competition in the field of clearing of payment transactions or to ensure the benefit of payers or payees, the Minister may, after consultation with the Securities Authority, the Governor or the Supervisor of Financial Service Providers, as the case may be, and after consultation with the Commissioner of Competition, instruct a holder of a systemic payment service provider licence that is an acquirer with a broad scope of activity, clearing payment transactions whose payment instructions for their execution were given by means of a payment instrument of a particular type, to contract with an issuer of that type of payment instrument for the purpose of clearing payment transactions as aforesaid, if the Minister has found that such an acquirer refused to contract with the issuer on unreasonable grounds; for this purpose –
(1)the imposition by an acquirer of unreasonable conditions on contracting with an issuer shall be regarded, inter alia, as a refusal on unreasonable grounds;
(2)an acquirer's refusal to contract with an issuer that is not subject, under law, to supervision by the Supervisor, the Securities Authority or the Supervisor of Financial Service Providers, shall be regarded as a refusal on reasonable grounds.
(b)In this section, "issuer" – as defined in section 30(b) of the Payment Services Occupation Regulation Law.
Issuer with a broad scope of activity§
36p.
(a)A holder of a systemic payment service provider licence that is an issuer with a broad scope of activity, issuing payment instruments of a particular type, shall not refuse, on unreasonable grounds, to contract with an acquirer that clears payment transactions whose payment instructions for their execution were given by means of that type of payment instrument, for the purpose of carrying out the clearing of payment transactions as aforesaid; for this purpose, the imposition by an issuer of unreasonable conditions on contracting with an acquirer shall be regarded, inter alia, as a refusal on unreasonable grounds.
(b)The Minister of Finance, on the proposal of the Supervisor or after consultation with the Supervisor, and after consultation with the Securities Authority and the Commissioner of Competition, may exempt a holder of a systemic payment service provider licence that is an issuer with a broad scope of activity from the provisions of subsection (a), including for a fixed period as the Minister shall determine, if the Minister considers that the application of the provisions of that section to that issuer is likely to harm competition in the field of issuing payment instruments in such a way that the benefit from applying the provisions in order to ensure competition in the field of clearing payment transactions will be less than the harm referred to, taking into account the benefit of payers or payees; if the Minister of Finance decides to grant an exemption to an issuer with a broad scope of activity as aforesaid, the Minister shall notify the Supervisor accordingly.
(c)In this section, "acquirer" – as defined in section 29(c) of the Payment Services Occupation Regulation Law.
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