Client updates /  Bank of Israel

The Banking Supervision Department has published for public comment a draft Proper Conduct of Banking Business Directive titled “Supervisory Framework for Small and New Banks.” The purpose of the draft directive is to adapt regulatory and supervisory requirements to the size and complexity of small and new banking corporations’ operations, in accordance with the Basel Committee’s principle of proportionality, while maintaining banking system stability and protecting customers.

The Bank of Israel recently issued its decision to expand the identification code used by banking corporations and nonbank entities to connect to payment systems from two digits to three digits. While ostensibly only a technical change, in practice it is a significant step that will enable financial entities to hold accounts and transfer funds for customers directly and independently, without relying on existing banks.

On December 30, 2025, the Supervisor of Banks published Directive 412, aimed at instructing banking corporations on providing services to customers subject to international sanctions.

On August 6, 2025, the interministerial team to increase competition in the retail banking sector (established by Israel’s Minister of Finance in collaboration with the Governor of the Bank of Israel) published its recommendations on the measures needed to increase competition in banking services.