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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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Unofficial English translation — for reference only. It may contain errors or omissions and cannot be relied on as a legal text. Only the Hebrew text published in Reshumot is legally binding.More

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Despite these checks, it may contain errors, omissions, or imprecise renderings of legal terminology and cross-references, and it may not yet reflect the latest amendments. It cannot be relied upon as a legal text.

The Hebrew text as published in Reshumot (ספר החוקים) and on the Knesset website is the sole authoritative and legally binding version. In any discrepancy, the Hebrew text prevails.

This translation is provided for informational purposes only and does not constitute legal advice. For use in legal proceedings, request a certified Expert Legal Opinion.

Chapter V: Co-ordinations and Amendments to Legislation

Amendment of the Banking Ordinance§

37.
(a)Throughout the Ordinance, except in sections 4 and 4a, the word "bank" shall be replaced by "banking corporation".
(b)In section 2 of the Ordinance –
(1)the definitions of "bank", "banknote", "banking business", "company", "the Council" and "banking institution" – shall be deleted;
(2)the section shall be numbered (1) and thereafter the following shall be inserted:

"(2) Any other term in this Ordinance shall have the meaning assigned to it in the Banking (Licensing) Law, 5741-1981.".

(c)Sections 2a, 2b, 3 and 3a of the Ordinance – are repealed.
(d)In section 4 of the Ordinance –
(1)in subsection (1), the words "except a company authorised to engage in banking business in accordance with the provisions of section 3 of this Ordinance" shall be replaced by "except a bank, a foreign bank, a mortgage bank, an investment finance bank, and a business promotion bank";
(2)in subsection (2), the words "ten pounds" shall be replaced by "five hundred shekels";
(3)in subsection (4), the words "in respect of a person who is the holder of a licence to conduct banking business under section 7" shall be replaced by "in respect of a bank, foreign bank, mortgage bank, investment finance bank or business promotion bank";
(4)subsection (5) – is repealed.
(e)In section 4a(a) of the Ordinance –
(1)the words "a holder of a licence to conduct banking business" shall be replaced by "a banking corporation";
(2)the words "in banking business" shall be replaced by "in an occupation reserved exclusively to a banking corporation under sections 13 or 21 of the Banking (Licensing) Law, 5741-1981".
(f)In section 5 of the Ordinance –
(1)in subsection (a), the words "a bank to which this Ordinance applies" shall be replaced by "a banking corporation";
(2)in subsection (c), after the words "in matters of offences under this Ordinance" there shall be inserted "under the Banking (Licensing) Law, 5741-1981".
(g)Section 7 of the Ordinance – is repealed.
(h)In section 8(a) of the Ordinance, the words "other documents, passing to a trader" shall be replaced by "other negotiable documents" and the words "loans against promissory notes secured" shall be replaced by "secured loans".
(i)In section 8c of the Ordinance, the words "after consultation with the committee" shall be replaced by "after consultation with the Licensing Committee".
(j)In section 8d of the Ordinance –
(1)the word "the committee" shall be replaced throughout by "the Licensing Committee";
(2)subsection (d) – is repealed.
(k)In section 8f of the Ordinance, after subsection (d) the following shall be inserted:

"(e) The authorised administrator is empowered, after consultation with the management committee and with the approval of the Governor, to transfer all or part of the assets of the banking corporation to another banking corporation that assumes all the liabilities of the banking corporation.".

(l)Section 8n of the Ordinance – is repealed.
(m)In section 9 of the Ordinance –
(1)the words "a bank that is a foreign company within the meaning of section 2 of the Companies Ordinance" shall be replaced by "a foreign bank" and the words "of that foreign company" shall be replaced by "of the foreign bank";
(2)in subsection (2), the words "five pounds" shall be replaced by "five hundred shekels".
(n)In place of section 10(1) of the Ordinance the following shall be inserted:

"(1) A banking corporation shall publish its audited annual financial report, or a summary thereof, at the time, in the form and to the extent directed by the Supervisor.".

(o)In section 11(2) of the Ordinance, the words "one hundred pounds" shall be replaced by "twenty-five thousand shekels".
(p)In place of section 12 of the Ordinance the following shall be inserted:

"Annual fees

12. (1) A banking corporation shall pay to the State Treasury each year a licence fee and an additional fee for each branch; the Minister of Finance shall prescribe by Order, with the approval of the Finance Committee of the Knesset, the rates of the fees and the dates of their payment, and it shall be permissible to prescribe reduced fee rates for a foreign bank taking into account the scope of its activity in Israel.

(2)The Minister of Finance may prescribe by Regulations provisions regarding reports that a banking corporation is required to submit for the purpose of calculating the fees and regarding the procedures for their payment.
(3)A banking corporation that has not paid a fee by its due date shall be liable to a fine of five hundred shekels for each day of delay.".
(q)In place of section 13 of the Ordinance the following shall be inserted:

"Early repayment of a loan

13. A person who has received from a banking corporation a loan for the purpose of purchasing a residential apartment or secured by a mortgage on a residential apartment may, notwithstanding any agreement providing otherwise, repay it before the date fixed for its repayment on the following conditions:

(a)the amount of the early repayment shall not be less than ten percent of the original amount of the loan or ten percent of the outstanding balance of the loan together with interest and linkage differentials that have accrued and have not been repaid up to the actual date of repayment, whichever is the higher;
(b)the banking corporation may make early repayment as aforesaid conditional on payment of a commission on the conditions and at the rate prescribed by the Governor by Order after consultation with the Committee and with the approval of the Minister of Finance and the Finance Committee of the Knesset.".
(r)In place of section 14 of the Ordinance the following shall be inserted:

"Issuance of banknotes

14. A banking corporation shall not issue a bearer note payable on demand.".

(s)Sections 14e, 14f and 14g of the Ordinance – are repealed.
(t)In section 15a of the Ordinance, after the words "under this Ordinance" there shall be inserted throughout "or under the Banking (Licensing) Law, 5741-1981".
(u)Section 15b(3) of the Ordinance – is repealed.
(v)After section 15b of the Ordinance the following shall be inserted:

"Auxiliary corporation

15c. For the purposes of sections 5, 8a, 8c, 8o to 8u, 13 and 13a, an auxiliary corporation shall have the same status as a banking corporation.".

Amendment of the Bank of Israel Law§

38.
(a)Throughout the Bank of Israel Law, 5770-2010 (in this section – the Law), except in sections 37 and 38, the words "banking institution" shall be replaced by "banking corporation".
(b)In section 1 of the Law, the definitions of "banking institution", "financial institution", "company" and "cooperative society" – shall be deleted, and at the end thereof the following shall be inserted:

"\"banking corporation\" – as defined in the Banking (Licensing) Law, 5741-1981, including an auxiliary corporation as defined in that Law.".

(c)In section 13(2) of the Law, the words "or financial institution" – shall be deleted.
(d)In section 37 of the Law –
(1)the words "banking institution in Israel" shall be replaced by "banking corporation";
(2)the words "banking institution outside Israel" shall be replaced by "a bank or financial institution outside Israel".
(e)In section 38 of the Law, the words "from a banking or financial institution outside Israel" shall be replaced by "from a bank or financial institution outside Israel".
(f)In section 53(b) of the Law, the words "which shall not in any case exceed 30% per annum of the amount of the overdraft" – shall be deleted.
(g)Section 70 of the Law – is repealed.

Amendment of the Cooperative Societies Ordinance§

39.

Sections 56(3), 56(4) and 62 of the Cooperative Societies Ordinance – are repealed.

Repeal of the Credit Banks Ordinance§

40.

The Credit Banks Ordinance – is repealed.

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Chapter VI: Transitional Provisions

Existing institutions§

41.
(a)A corporation incorporated in Israel that on the 25th of Adar Bet 5741 (31 March 1981) (hereinafter – the Appointed Day) lawfully conducted banking business as defined in the Ordinance – is entitled to a bank licence.
(b)A foreign corporation that on the Appointed Day lawfully conducted banking business in Israel – is entitled to a foreign bank licence.
(c)A corporation that on the Appointed Day engaged in the granting of long-term credit for the financing of the acquisition of real property and lawfully used the word "bank" in its name, or that held a licence as a credit bank under the Credit Banks Ordinance – is entitled to a mortgage bank licence.
(d)A corporation that on the Appointed Day engaged in the granting of long-term credit for the financing of investments and lawfully used the word "bank" in its name – is entitled to an investment finance bank licence.
(e)A corporation that on the Appointed Day held a licence under section 3a of the Ordinance – is entitled to a financial institution licence permitting it to continue in the same occupations permitted to a financial institution in which it was engaged on the Appointed Day.
(f)A corporation that on the Appointed Day lawfully conducted a business the continued conduct of which is prohibited under section 21(a)(2) – is entitled to a financial institution licence permitting it to continue in the same occupations permitted to a financial institution in which it was engaged on the Appointed Day.
(g)A corporation in which more than fifty percent of the means of control are held by a number of corporations entitled to a banking corporation licence under this section and that on the Appointed Day engaged in the provision of services to its members or their customers – is entitled to a joint services company licence.
(h)A corporation shall receive only one licence under this section, and if it is entitled to a licence of two or more types – it shall choose one of them.

Branch permits§

42.

A person entitled to a banking corporation licence is also entitled to a branch permit for each place in which that person lawfully conducted business on a permanent basis with customers on the Appointed Day.

Holding of a foreign corporation§

43.

A banking holding corporation or a corporation entitled to a banking corporation licence that on the Appointed Day held more than ten percent of a particular type of means of control in a foreign corporation to which section 31 applies is entitled to a permit under section 31 in respect of that foreign corporation.

Granting of licences and permits to those entitled§

44.
(a)A person entitled to a licence or a permit under sections 41 to 43 who has not submitted an application therefor to the Governor by the end of six months after the Appointed Day – shall be regarded as having waived that entitlement.
(b)The Governor may make a licence or a permit under sections 41 to 43 subject to conditions similar to those that applied to the person entitled under the Ordinance.

Period for completion of capital§

45.

A banking corporation that has received a licence under section 41 and whose capital is less than the amount specified in the Schedule for that type of banking corporation shall be required to increase its capital to that amount by the end of three years from the Appointed Day.

Prohibited occupation§

46.
(a)A banking corporation that on the Appointed Day lawfully engaged in an occupation that it is prohibited from engaging in under the provisions of Chapter III, may continue in that occupation until the end of three years from the Appointed Day.
(b)A corporation that on the Appointed Day lawfully conducted a business the continued conduct of which is prohibited under section 21(a)(2) and that does not wish to receive a licence as a financial institution as referred to in section 41(f), shall not be considered as having contravened the provisions of section 21(a)(2) if it fulfils both of the following:
(1)it notifies the Governor within six months of the Appointed Day that it waives its right to receive a financial institution licence;
(2)for as long as all the securities it has issued as referred to in section 21 have not been redeemed, it shall not engage in the granting of new credit as defined in section 21, except for credit replacing credit that has been repaid, in order to maintain cover for the securities it issued up to the Appointed Day.

Permitted control in real corporations§

47.
(a)A banking corporation that on the 24th of Adar Bet 5749 (31 March 1989) controlled or was an interested party in a real corporation may continue to control it or to be an interested party in it, until the dates and subject to the following conditions:
(1)the banking corporation shall not be an interested party in the real corporation after the 21st of Tevet 5757 (31 December 1996);
(2)the banking corporation shall not control the real corporation after the 12th of Tevet 5759 (31 December 1998);
(3)the banking corporation shall not grant credit to the real corporation except in the ordinary course of business and on conditions similar to credit granted to customers of the same type; the Supervisor may prescribe a maximum rate for such credit, whether generally or in respect of a particular corporation;
(4)directors or employees of the banking corporation or of banking corporations under its control shall not constitute the majority of all directors of the real corporation.
(b)The provisions of Chapter III shall not apply to control and interested-party status in a corporation (hereinafter – a grandchild corporation) arising from a holding through a real corporation controlled under the provisions of subsection (a), provided that the following conditions are met:
(1)the banking corporation shall not assist the real corporation, directly or indirectly, in financing the acquisition of means of control in a grandchild corporation;
(2)the provisions of paragraph (3) of subsection (a) shall also apply to a grandchild corporation;
(3)directors or employees of the banking corporation or of banking corporations under its control shall not be office holders in a grandchild corporation.
(c)If the holdings of a banking corporation in controlled real corporations have not been reduced as required under the provisions of subsection (a), the District Court may, on the application of the Supervisor, appoint a receiver for the sale of the excess means of control.

Reduction of total means of control in real corporations§

47a.

A banking corporation that on the 24th of Adar Bet 5749 (31 March 1989) held means of control in real corporations in an amount exceeding that permitted under the provisions of section 23a shall be required to reduce them to the permitted amount, in the following proportions:

(1)one fifth by the 14th of Tevet 5751 (31 December 1990);
(2)one fifth in each of the years 1991 to 1994.

Definitions§

47b.

In sections 47c, 47d and 47e –

"Amendment No. 13" – Banking (Licensing) Law (Amendment No. 13), 5764-2004;

"commencement of Amendment No. 13" – the 15th of Elul 5764 (1 September 2004).

Holdings of a banking corporation in another banking corporation§

47c.
(a)A banking corporation whose lawful holdings of means of control in another banking corporation, on the eve of the commencement of Amendment No. 13, are contrary to the provisions of section 20a, may continue to hold them, provided that from the commencement of Amendment No. 13 it shall not acquire any means of control in the other banking corporation except in accordance with the provisions of that section.
(b)Notwithstanding section 20a(a), a banking corporation may control another banking corporation together with others if all of the following conditions are met:
(1)the banking corporation acquired the control and the means of control from a banking corporation (in this section – the selling banking corporation);
(2)the selling banking corporation controlled the other banking corporation together with others on the eve of the commencement of Amendment No. 13;
(3)the selling banking corporation undertook, before the commencement of Amendment No. 13, towards others that upon the sale of the control and means of control in the other banking corporation, the acquirer would control it together with those others.

Holdings of Related Institutional Investors§

47d.
(a)Related institutional investors as defined in section 27a, who together lawfully hold, on the eve of the commencement of Amendment No. 13, more than five percent of a particular type of means of control in another banking corporation, may continue to hold them, provided that from the commencement of Amendment No. 13 they shall not acquire any means of control in that banking corporation if, after such acquisition, their holding would exceed five percent.
(b)Notwithstanding the provisions of subsection (a), a related institutional investor shall not be regarded as having received a permit under the provisions of section 34(a) as worded after the commencement of Amendment No. 13, in respect of the right to appoint a director in the banking corporation, as referred to in paragraph (2) of the definition of "means of control" in section 1.

Control and Holding of Means of Control in a Banking Corporation§

47e.
(a)A person who, on the eve of the commencement of Amendment No. 13, controls a banking corporation or a banking holding corporation, or who at that date holds more than five percent of a particular type of means of control in a banking corporation or a banking holding corporation, pursuant to a permit granted to that person under the provisions of section 34 as worded on the eve of the commencement of Amendment No. 13, or without having been required to obtain such a permit, shall not be regarded for the purposes of this Law as acting without a permit under the provisions of section 34 as worded from the commencement of Amendment No. 13, and the following provisions shall apply to that person, as the case may be:
(1)a person who holds a permit granted before the commencement of Amendment No. 13 – the provisions of the permit granted to that person shall continue to apply;
(2)a person who was not required to obtain a permit before the commencement of Amendment No. 13 – shall not, from the commencement of Amendment No. 13, acquire without a permit under section 34 any means of control in that banking corporation or in that banking holding corporation, if after such acquisition his or her holding would exceed five percent.
(b)Notwithstanding the provisions of subsection (a), a person who, on the eve of the commencement of Amendment No. 13, held ten percent or less of a particular type of means of control in a banking corporation or a banking holding corporation, without having been required to obtain a permit, shall not be regarded as having received a permit under section 34(a) as worded after the commencement of Amendment No. 13, to hold that rate of means of control, in respect of the right to appoint a director in the corporation, as referred to in paragraph (2) of the definition of "means of control" in section 1.
(c)The provisions of this section shall apply, with the necessary modifications, also to a person who holds means of control in a banking corporation or a banking holding corporation that were intended in good faith to serve as security for an obligation.

Special Provident Funds§

47f.

Notwithstanding the provisions of sections 10, 11 and 27e –

(1)a bank may control and hold an interest in a managing company of a central severance-pay provident fund whose sole member is the bank, and may engage in managing it;
(2)a bank may engage in managing a provident fund all of whose members are employees of the bank or employees of a corporation under its control and which, on the 24th of Sivan 5765 (1 July 2005), new members could not join pursuant to its regulations.

Transitional Provision Regarding a Branch Permit Granted by the Governor§

47g.

A branch permit granted by the Governor under the provisions of section 28(a), before the commencement of the Banking (Legislative Amendments) Law, 5772-2012, which was in force on the eve of the commencement of that Law, shall be deemed to be a permit granted by the Supervisor under the provisions of section 28(a) as worded after the commencement of that Law.

48.§

(Repealed — תשנ״ד)

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