CBOS Law

The Bank, Its Branches, and Legal Personality

• The Bank's head office shall be located in Khartoum, and it may establish branches or agencies within Sudan and appoint correspondents outside Sudan.
• The Bank shall have an independent legal personality, perpetual succession, a common seal, and the right to litigate in its own name.

Primary Responsibilities of the Bank

The Bank shall have the following primary responsibilities:

• To ensure price stability, maintain exchange rate stability, ensure the efficiency of the banking system, and issue, regulate, and supervise currency in all its forms.
• To formulate and implement monetary policy, relying primarily on market mechanisms, in a manner that assists in achieving the national objectives of the macroeconomy, in consultation with the Minister.
• To regulate, supervise, and oversee banking activities, and to develop, improve, and enhance their efficiency in a manner that contributes to achieving balanced economic and social development.
• To act as the Government’s bank, advisor, and agent in monetary and financial matters.
• To comply, in performing its duties, achieving its objectives, exercising its powers, and carrying out its supervision and oversight of the banking system, with the principles of Islamic Sharia and established banking practices.
• To regulate, develop, and supervise payment systems to ensure their safety, stability, and efficiency.

Establishment, Composition, and Supervision of the Board

A Board shall be established for the management of the Bank consisting of seven persons as follows:

• The Governor — Chairman.
• The two Deputy Governors — Members.
• The Undersecretary of the Ministry of Finance and National Economy — Member.
• Three Sudanese nationals possessing high qualifications, competence, and experience, appointed by the President of the Republic — Members.

The Board shall be accountable to the President of the Republic.

Functions and Powers of the Board

The Board shall have the following functions and powers:

• To formulate the Bank’s policy in a manner that achieves its objectives and to manage its general affairs and operations on sound principles.
• To approve monetary policies and determine the exchange rate policies of the national currency upon the recommendation of the Governor.
• To determine the reserves maintained by the Bank from time to time in accordance with the provisions of this Act.
• To create and abolish positions within the Bank.
• To propose the terms and conditions of service of the Bank’s employees to the Governor for submission to the President of the Republic for approval upon the recommendation of the Minister of Finance and National Economy, the Minister of Labour and Administrative Reform, and the Higher Council for Wages, and to issue regulations concerning employee accountability.
• To approve the Bank’s budget and final accounts.
• To establish permanent or temporary committees and determine their functions and powers.
• To issue internal regulations governing its operations.
• To exercise any other functions or powers necessary to achieve the objectives of the Bank.

The Board may delegate any of its powers or functions to its Chairman, any of the Deputy Governors, any of its members, or any committee, subject to such conditions and controls as it considers appropriate.

Appointment of the Governor, Deputy Governors, and Their Terms of Service

• The President of the Republic shall appoint the Governor and the Deputy Governors from among persons possessing qualifications, competence, and experience, and shall determine their terms of service upon the recommendation of the Minister of Labour and Administrative Reform and the Higher Council for Wages.
• The Governor shall serve a term of five years, and each Deputy Governor shall serve a term of three years, and they may be reappointed.

Duties of the Governor and Deputy Governors

The Governor and the Deputy Governors shall devote their full professional time to the service of the Bank. During their term of office, they shall not hold any other position or engage in any other activity, whether paid or unpaid. However, with the approval of the Board, each of them may serve as:

• A member of any Board of Directors or any committee established by the Government.
• A Governor, Alternate Governor, Director, or member of the Board of any international bank or international financial institution established under an agreement or treaty to which the Government has acceded or approved.
• A member of the Board of Directors of any financial institution in which the Government or the Bank has a contribution in accordance with the provisions of Article (54).

The Governor shall manage the Bank’s daily affairs and shall be responsible to the Board for such affairs. The Governor shall have the authority to act and sign documents on behalf of the Bank and may delegate this authority to either of the Deputy Governors or any other employee of the Bank. In the absence of the Governor, he shall assign one of the Deputy Governors to manage the daily affairs of the Bank, who shall have the same powers and responsibilities as the Governor. Neither the Governor nor any of the Deputy Governors shall, without the approval of the Board, hold any position or acquire a substantial interest in any other bank or financial institution until one year has passed for the Governor and six months for the Deputy Governors from the date of leaving their position at the Bank. During such period, each of them shall continue to receive their full entitlements.

Other Members of the Board of Directors

• The members shall disclose to the Board all facts related to their commercial, financial, agricultural, industrial, or any other interests in any contract concluded with the Bank.
• They shall not act as representatives of their ministries, departments, or institutions and shall act in the best interest of the Bank.
• The members shall hold office for a period of three years, renewable.

Disqualification from Holding Office

The following persons shall not be eligible to hold office:

• A member of the Board of Directors of any commercial bank, or a manager or employee thereof.
• An employee receiving a salary from the Government.

Vacancy of Office and Filling of Vacancies

The office of any member of the Board shall become vacant in the following cases:

• Mental incapacity or a disabling physical illness.
• Conviction for an offence involving breach of trust, forgery, or conduct affecting honour and integrity.
• Declaration of bankruptcy, suspension of payment, or entering into a settlement with creditors.
• Absence from three consecutive meetings without an acceptable excuse.
• Resignation or removal from office.
• Loss of eligibility to hold office.
• Death.

The President of the Republic, upon the recommendation of the Board, shall determine the occurrence of disqualification or vacancy of office. In the event of a vacancy, another person shall be appointed for the remaining term in accordance with the applicable appointment procedures.

Meetings of the Board

• The Board shall hold a regular meeting at least once every three months.
• The Chairman may call for an extraordinary meeting.
• The legal quorum shall be constituted by the attendance of five members.
• Decisions shall be adopted by majority vote, and in the event of equality of votes, the Chairman shall have a casting vote.
• The Governor or one of the Deputy Governors shall preside over meetings.
• No decision shall be invalidated due to the subsequent disqualification of any member.
• The Board shall have a Secretary appointed by the Governor, whose functions and remuneration shall be determined by the Governor.

Appointment and Accountability of Employees

• The Governor, in consultation with the Board and the Deputy Governors, shall appoint holders of senior positions within the Bank.
• The Governor shall appoint the Bank’s employees, take disciplinary action against them, and terminate their service in accordance with the provisions of the regulations, while observing professionalism and the principles of justice and equality.
• No employee shall be appointed except to positions established by a decision of the Board.
• The Bank shall not link any salary, fees, wages, benefits, or allowances to the net profits of the Bank.

Capital

The authorized capital of the Bank shall be thirty thousand and fifteen pounds, which has been fully paid by the Government. The Government may increase the capital whenever necessary.

Determination of Net Profits

The Bank shall determine its net profits for each financial year after deducting the value of its current expenses for that year, including bad or doubtful debts, depreciation and replacement of assets, obligations related to end-of-service benefits, or any other social solidarity schemes.

Allocation of Reserves and Distribution of Remaining Profits

At the end of each financial year, the following shall be allocated to the General Reserve Fund:

• 25% of the net profits until the balance of the fund reaches 50% of the capital.
• 15% of the net profits once the balance exceeds 50% of the capital until it reaches 100% of the capital.

Any other provisions or reserves as determined by the Board. The remaining net profits shall be paid to the Government.

Unit of Currency

• The unit of currency in Sudan shall be the Sudanese Pound.
• The Sudanese Pound shall be divided into one hundred equal units, each of which shall be called a Piastre.
• The Bank shall announce the new currency and the date on which it shall become legal tender in the Official Gazette.

Exchange Rate

The Board shall determine the exchange rate policies of the Sudanese Pound upon the recommendation of the Governor and in consultation with the Minister.

Exclusive Right of the Bank to Issue Currency

The Bank shall have the exclusive right to issue currency, and no person shall issue currency notes, banknotes, coins, or any documents which the Bank considers capable of circulation as legal tender.

Bank Functions Relating to Currency

The Bank shall:

• Take the necessary measures for printing banknotes, minting coins, and ensuring their safekeeping and security.
• Issue banknotes and coins through its offices and agencies established or designated from time to time. The Bank may also reissue and exchange such currency through those locations.
• Take the necessary measures to withdraw, destroy, cut, break, or dispose of banknotes and coins withdrawn from circulation under the provisions of Article (25)(3) or those determined by the Bank to be unfit for use.

Any foreign currency seized within Sudan and subject to a judicial ruling or settlement in accordance with the applicable laws shall devolve to the Bank.

Denominations, Designs, and Composition of Banknotes and Coins

The Bank shall issue banknotes and coins in denominations, forms, designs, and symbols that reflect the cultural diversity of Sudan. Such designs shall be approved by the President of the Republic upon the recommendation of the Governor and shall be announced in the Official Gazette.

Standard Weight of Coins

The standard weight, composition, permissible deficiency, and variation of coins shall be determined upon the approval of the President of the Republic based on the recommendation of the Governor and shall be announced in the Official Gazette.

Legal Tender

• Banknotes issued or reissued by the Bank shall be legal tender and constitute a valid discharge of obligations in the Republic of Sudan.
• Coins issued by the Bank shall be legal tender in the Republic of Sudan to the extent determined by the Governor from time to time, unless they have been subject to unlawful use in accordance with Article (26)(1). The Bank may, after obtaining the approval of the President of the Republic, issue special coins and/or banknotes for specific purposes, and such currency shall be legal tender for any amount determined by the Bank.
• Notwithstanding the provisions of paragraphs (1) and (2), the Bank shall have the authority, after publishing a notice in the Official Gazette, to withdraw any banknotes or coins from circulation in exchange for their face value. Any banknotes or coins subject to such notice shall cease to be legal tender upon the expiry of the period specified in the notice.
• Banknotes and coins shall not be exported except to the extent determined by the Bank.

Currency Subjected to Unlawful Use

• Coins shall be considered to have been subjected to unlawful use if they have been damaged, reduced in size, reduced in weight for reasons other than normal wear and tear, or defaced.
• The Bank may withdraw any coins that have been subjected to unlawful use and may cut, break, or destroy them.
• Paper currency shall be considered to have been subjected to unlawful use as determined by the regulations.

Redemption of Lost, Defaced, or Defective Currency

No person shall have the right to recover from the Bank any lost, stolen, defaced, or defective banknotes. The Bank shall have the absolute discretion to determine the circumstances under which the value of defective or defaced banknotes may be redeemed, subject to the conditions and limits prescribed by the regulations.

Gold Reserve and Foreign Assets

The Bank may maintain a reserve of gold and foreign assets denominated in currencies determined by the Board from time to time, including any or all of the following:

• Foreign currency.
• Bills of exchange and instruments denominated in foreign currency and payable at any place outside the Republic of Sudan.
• Financial instruments or investment deposits determined by the Board from time to time and issued by foreign governments.
• Instruments determined by the Board from time to time that are issued or guaranteed by foreign governments or international institutions.

The Bank shall maintain a reserve determined by the Board from time to time in accordance with the provisions of paragraph (1).

Deposit of Balances

• The official foreign balances of the Republic of Sudan shall be deposited with the Bank.
• The Bank may permit any other official authority to maintain and manage foreign balances.

Transactions in Gold, Gold Bullion, and Foreign Exchange

The Bank may:

• Purchase, sell, or deal in gold or silver coins, gold or silver bullion in accordance with the Sharia principles governing exchange contracts, or any other precious metals inside or outside the country. It may also retain any gold coins, gold bullion, or other precious metals deposited with it.
• Purchase, sell, or deal in foreign exchange using for such purposes any documents commonly used by banks.
• Purchase and sell treasury bills and other instruments issued or guaranteed by foreign governments or international financial institutions.
• Open and maintain accounts and appoint agents and correspondents outside the country.
• Open and maintain accounts and act as an agent or correspondent for banks, governments, foreign government agencies, and international institutions.

Limitation of Foreign Exchange Operations

Except under special circumstances, the Bank shall not conduct the operations referred to in Article (30) except with banks, approved non-banking entities, authorized persons operating in Sudan, the Government and its institutions, central and commercial banks, foreign governments and their institutions, and international institutions.

Authority to Grant and Receive Foreign Financing

The Bank shall have the right to provide financing to any of the institutions referred to in Article (31) or obtain financing from them, provided that such financing is consistent with the nature of the Bank’s activities.

Functions of the Bank Regarding Exchange Control

The Bank shall carry out the functions and duties related to the supervision and control of foreign exchange operations as conferred upon it by law. The Bank shall be the sole authority empowered to grant licenses relating to foreign exchange transactions.

Opening Accounts for Banks

The Bank may open accounts for banks and other financing institutions operating in the Republic of Sudan and may accept deposits from them.

Liquidity Management

The Bank may:

• Issue, purchase, and sell all types of instruments for the purpose of managing and regulating liquidity.
• Provide financing to or guarantee banks, when necessary, through Sharia-compliant modes of financing against guarantees and conditions determined by the Bank in each case.

Determination of Profit Rates

The Bank may determine and announce from time to time to banks and approved non-banking entities the rate of profit and its distribution in various transactions and financing modes, the percentage of a partner's contribution to the capital of partnership arrangements, and any other matters that regulate and serve the public interest in this regard.

Determination of the Statutory Reserve for Banks

• The Bank may require banks to maintain a reserve in the form of deposits with the Bank or in any other form determined by it, provided that the reserve shall be a specified ratio of the liabilities of such banks, whether demand liabilities or term liabilities.
• Banks shall be notified sufficiently in advance before the first request is made, or they shall be given an adequate period to adjust their positions in compliance with such requirement.
• The Bank may amend from time to time the required reserve ratio and may prescribe different ratios for demand liabilities and term liabilities.
• If any bank fails to maintain the required reserve, it shall be subject to financial and administrative penalties as determined by the decisions issued by the Governor from time to time in accordance with the regulations.

Restriction of Bank Financing

The Governor may, whenever deemed necessary:

• Require banks to submit for approval all applications for financing exceeding the amount determined from time to time, and may approve such applications.
• Determine the maximum limit of financing for investment operations granted by each bank according to the various fields of activity in which such financing is used.
• Determine the maximum aggregate amount of financing for investment operations granted by any bank and outstanding at any given time.

Any bank that exceeds any of the limits determined by the Governor under the provisions of this Article shall be subject to the administrative and financial penalties prescribed by the regulations.

Requesting Information from Banks

The Governor or any person authorized by him may require banks to submit:

• Within four months from the end of the financial year, a certified copy of the balance sheet audited by external auditors, accompanied by a certified copy of the auditors’ reports.
• Within thirty days from the end of each month, a certified statement of the assets and liabilities of the concerned bank as of the end of the preceding month, in the form determined by the Governor.
• Any other information requested by the Governor or his authorized representative.

The Governor or any person authorized by him may require any bank to prepare its electronic or paper records for inspection and to provide documents and evidence proving compliance with the directives issued under the provisions of this Act. The Governor may request any financial institution carrying out part of the banking business to provide any information or data.

Treatment of All Branches of a Bank as One Bank

All branches of any bank within Sudan shall be considered as one bank for the purposes provided under Articles 37, 38, and 39.

Clearing and Settlement Systems

The Bank may establish electronic or manual clearing and settlement systems and regulate them in accordance with the regulations or orders issued for that purpose.

Establishment of New Banks or Conducting Part of Banking Activities

No person shall establish any bank or conduct banking business or any part thereof in the Republic of Sudan except under a license issued by the Bank.

Power to Issue Directives and Instructions to Banks

The Governor or any person authorized by him shall have the authority to issue directives and instructions to any bank or any person conducting banking business or any part thereof, and such bank or person shall comply with and implement those directives and instructions.

Bank of the Government and Its Financial Agent

The Bank shall act as the Government's bank, financial advisor, and financial agent.

Maintenance of Government Accounts

• The Government's funds shall be deposited with the Bank.
• The Bank shall receive Government funds and maintain its accounts.

Issuance and Management of Government Financing Instruments

The Bank shall be entrusted with the responsibility of issuing and managing Government financing instruments in accordance with the terms and conditions agreed upon between the Government and the Bank.

Performance of Other Functions on Behalf of the Government

The Bank may act as an agent of the Government in accordance with the terms and conditions agreed upon between the Government and the Bank, provided that such functions are carried out in accordance with the provisions of this Act.

Granting Financing to the Government

• The Bank may grant temporary financing to the Government under the conditions it determines, provided that such financing shall not exceed at any time 15% of the Government’s estimated public revenues for the financial year in which the financing is granted. The entire amount of financing shall be repaid within a period not exceeding six months following the end of the financial year in which it was granted.
• If all or part of the financing is not repaid within the period specified above, it shall be settled in the manner agreed upon between the Bank and the Government.

Dealing in Financing Instruments

The Bank may purchase and sell financing instruments issued by the Government and offered for public subscription or forming part of a public issuance.

Limitation on Lending to the Government

• Except as provided under Articles (46), (47), and (48), the Bank shall not directly or indirectly provide loans or financing to the Government. However, the Bank may continue to hold the non-transferable Treasury Bills received from the Sudan Currency Board.
• State Governments may borrow domestically or externally in accordance with the following conditions:
  • The financial ability to meet the obligations arising from borrowing.
  • Compliance with the standards and controls established by the Board of Directors of the Bank to regulate borrowing in accordance with the requirements of monetary and banking policy and foreign exchange and currency policies.
  • Such borrowing shall not negatively affect the overall macroeconomic policies.
  • Domestic borrowing shall not be obtained from the Bank.
  • Neither the Central Government nor the Bank shall provide any guarantees against such borrowing.
  • Governments undertaking borrowing shall provide the concerned national authorities with the necessary statistical and financial data for use in national statistics.

Banking Operations

Subject to the provisions of Article (55), the Bank may undertake any type of banking operation not expressly prohibited by this Act, provided that such operations do not conflict with the nature of the Bank’s functions.

Issuance of Sight Bills

The Bank may issue sight bills and other types of transferable instruments payable at its offices or at the offices of its agents or correspondents.

Opening Accounts for Other Persons

The Bank may open accounts and accept deposits from public institutions and authorities, state governments, local governments, and the entities referred to in Articles (30), (31), and (45).

Ownership of Shares in Financial Institutions

The Bank may subscribe to, purchase, hold, or sell shares in any institution whenever participation in that institution or its establishment serves the objectives of the Bank or is generally in the interest of the national economy.

Operations Prohibited to the Bank

The Bank shall not:

• Draw or accept any bills of exchange other than those payable on demand.
• Engage in trade or participate directly in the ownership of any agricultural, commercial, industrial, or other business not provided for under Article (54) for the purpose of making a profit.
• Purchase or retain ownership of real estate except to the extent necessary for carrying out its functions.
• Grant unsecured loans or financing other than those granted in accordance with the provisions of Article (48).
• Grant loans or financing secured by collateral contrary to the provisions of this Act. However, if the Bank has any debts that are feared to be unrecoverable, it may accept real estate or other property as security for such debts. If such security is enforced, the Bank may retain the property with the intention of selling it at the earliest opportunity.
• Purchase, own, or accept shares as additional security except in accordance with the provisions of Article (54).
• Provide guarantees for obtaining financing except in favor of the Government and commercial banks.

Supervision by the National Assembly

At the end of each year, the Governor shall submit to the National Assembly a statement containing the general policies, plans, and future programs of the Central Bank, as well as a report on its overall performance during the preceding year, in accordance with the procedures followed for the submission and approval of ministers’ statements before the National Assembly, while taking into consideration the confidentiality of the Central Bank’s information.

Financial Year

The financial year of the Bank shall be the calendar year, commencing on the first day of January and ending on the thirty-first day of December of the same year.

Audit of the Bank’s Accounts

The accounts of the Bank shall be audited in accordance with the provisions of the National Audit Chamber Act of 1999.

Annual Financial Statements and Annual Report

• The Bank shall submit to the President of the Republic, within three months following the end of each financial year, an audited copy of the annual financial statements, and such statements shall be published in the Official Gazette.
• The statement referred to above shall be accompanied by a report from the Board on the operations of the Bank during the concluded financial year.

Exemption from Taxes and Stamp Duties

The Bank’s profits, operations, capital, properties, and documents shall be exempt from all taxes and fees.

Confidentiality of the Bank’s Affairs

Every member of the Board and employees of the Bank shall maintain confidentiality regarding matters related to the affairs of the Bank and its customers, except to the extent required for the performance of their duties under the provisions of this Act.

Liquidation of the Bank

The Bank shall not be liquidated except by a law.

Power to Issue Regulations

• The Board may issue the regulations and orders necessary for the implementation of the provisions of this Act.
• The Governor may issue the decisions necessary for the implementation of the provisions of this Act.

Certification

I hereby certify that the National Assembly has passed the "Central Bank of Sudan (Amendment) Act of 2012" at its Session No. (24) of the Fifth Legislative Term held on 17 Rajab 1433 AH, corresponding to 6 June 2012. The Joint Standing Committee of the Two Councils also decided, at its Meeting No. (5) held on 25 Rajab 1433 AH, corresponding to 14 June 2012, that the Act does not affect the interests of the States. Ahmed Ibrahim Al-Tahir Chairman of the National Assembly Chairman of the Joint Standing Committee of the Two Councils Approved: Field Marshal Omar Hassan Ahmed Al-Bashir President of the Republic Date: 8/8/1433 AH Corresponding to: 28/6/2012